Black businesses are struggling during the pandemic — and feel left out of funding

Nadine Sparks, owner of Unity Wigs & Hair Services in Dartmouth, N.S., was just getting her business off the ground prior to the pandemic. She was gaining clientele, establishing her name in the community and things were really starting to come together.

"We wanted to bring people together, bring community together. The salon is here to offer services to all races, all people. There's not a lot of that in Halifax," said Sparks.

But since the pandemic hit things have taken a big downturn.

"I'm basically just scraping by right now," said Sparks. 

Sparks has not been approved for any government funding during the pandemic, and her salon isn't the only Black-owned business in that situation.

Many Black businesses are struggling across Canada to stay afloat during the pandemic despite government programs such as Canada Emergency Business Account (CEBA) and the Black Entrepreneurship Program, which was announced in September and is aimed at helping Black Canadians get business loans with national banks.

CEBA was designed to give small- and medium-sized businesses interest-free loans of up to $40,000 during the pandemic. However, in order to be eligible, businesses must have had a payroll of between $20,000 and $1.5 million the previous year. 

Back in June, the Canadian Black Chamber of Commerce identified more than 20,000 Black-owned businesses across the country and found that many faced barriers when it came to CEBA. Around 70 per cent were ineligible, including many that were too small to qualify or weren't registered as companies.

"Based on our very small sampling size that definitely a majority of those companies are mostly challenged," said Michael Forrest, founder and chairman of the chamber of commerce.

Colin Lynch is head of Global Real Estate Investments at TD Asset Management and co-founder of the Black Opportunity Fund (BOF), an endowment fund designed to help bolster the Black economy in Canada.

He said the introduction of the new Black Entrepreneur Program was definitely a good first step, but it's not fixing the problems Black businesses are facing right now.

"That program hasn't started to do anything yet," said Lynch. "It's great that the government is gearing to do something. It's even greater when the money actually begins to flow." 

Lynch adds that the entrepreneurship program is meant to provide a long-term investment in business, but what he's been seeing throughout the community is the need for small but immediate loans.

"We need funding to flow now, not later, and so far there hasn't been any funding flowing from that program yet," he said.

Lynch said Black businesses are struggling in Canada and it's not just in larger cities.

Telesphore Bizimana, co-owner of organic African grocery store Kalisimbi in the Halifax community of Fairview, was able to qualify for CEBA but said some of his friends in the city weren't so lucky.

"I have a friend running a clothing business. They're not doing well. And I have some other friends who have restaurants who have shut down or their operations are limited," said Bizimana. "Those not lucky enough to get the funds. I'm sure they are struggling."

The BOF recently finished conducting what it called the 100 Day Report — a series of roundtable meetings with 500 different businesses across seven provinces. It found there are still multiple barriers facing Black businesses when it comes to funding — barriers that have only been exacerbated by the pandemic. 

One of the primary issues is problems with obtaining bank loans. The report found that many Black businesses operate as sole proprietorships, which has been a hurdle when it comes to qualifying for government grants and bank loans.

It found that many Black businesses lacked generational wealth or family and friends with capital, making traditional bank adjudication processes involving collateral, personal guarantees and minimum credit scores a problem.

This lack of capital can be seen in a report released last year by the Canadian Centre for Policy Alternatives. The report indicated that during 2016 about 12 per cent of Canada's non-racialized population reported making capital gains (profit earned on the sale of an asset), compared to 8.3 per cent for racialized Canadians. Non-racialized Canadians reported an average of $11,428 in investment income, compared to $7,774 for racialized Canadians.

During their community roundtables, the BOF also found that anti-Black racism has been a roadblock for many Black businesses: Black business owners face various forms of discrimination and bias because of their skin colour, cultural name and accent.

Lynch said more needs to be done to help Black businesses access the funding they need, especially during crises like the pandemic — a big part of why the BOF was created in the first place. He said he'd like the organization's endowment fund to grow to $1.5 billion.

"We'd like to catalyse contributions from the federal government, other governments, Canadian corporations who we believe should play a leading role as well and from Canadian foundations and philanthropic individuals."

Jessica Bowden, CEO of Teens Now Talk magazine, also wants to help stimulate the Black economy right now, but in a different way. She's created an online shopping mall called the Ebony Shopping Plaza. It will focus on highlighting Black businesses, and businesses owned by allies and people of colour.

"Most of the people I spoke to don't have storefronts. They're relying on the markets or outdoor community events," said Bowden. "You have a bunch that are struggling to open online stores."

Bowden launched the website Dec. 10, just in time to help support Black businesses during the holiday and she said the online mall will help people who weren't previously able to market their businesses on their own.

"If I can make an opportunity happen where collaboration can happen with Black businesses. Even to get them started for the Christmas holidays. Even to bring in money to put food in their fridge, even if it's to buy their children some toys, we took away a piece of that poverty."

A press secretary for the office of federal Minister of Small Business Mary Ng told CBC in an email that the government has numerous programs that may be able to help Black businesses.

They include the Canada Business Resilience Network, which includes organizations like the Canadian Black Chamber of Commerce and the Canadian Minority and Aboriginal Supplier Council, as well as Canada Emergency Wage Subsidy, Canada Emergency Bank Account, Canada Emergency Rent Subsidy, and the Regional Relief and Recovery Fund.

The statement said they will continue working closely with Black Canadians, including business owners and entrepreneurs, to support their success for years to come.

The email did not say whether the federal government will support the BOF initiative.

Lynch said the BOF has already started to set in motion the resources required to be able to redistribute donated funds to the Black business sector and Black community.

"As money comes in, we now, by January will have the structure in place to be able to flow capital out,"  said Lynch. "If we're able to announce major contributions from corporations in January, we're able to get that money out the door in February."

For more stories about the experiences of Black Canadians — from anti-Black racism to success stories within the Black community — check out Being Black in Canada, a CBC project Black Canadians can be proud of. You can read more stories here.

MORE TOP STORIES