An Uphill Battle: COVID-19’s Outsized Toll on Minority-Owned Firms

Abstract: Since COVID-19 sparked state-mandated lockdowns nationwide in March, data suggest that minority-owned small businesses have been disproportionately impacted by the pandemic, facing higher rates of closures and sharper declines in cash balances as compared to nonminority-owned small businesses. Research shows that Black-owned businesses closed at more than twice the rate of white-owned firms and experienced declines in cash balances nine times as steep as nonminority firms in some cases. Black-owned businesses faced the greatest impact of any racial group, though Latinx- and Asian-owned businesses also experienced outsized closures and declines in cash balances. This report collects insight from various sources into the pandemic’s effect on minority-owned firms thus far and examines possible explanations for race-level differences in COVID-19’s impact on businesses.

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Community Development Publications

Publication Date: 2020-10-08