(Newscko) ─ Small businesses, particularly micro businesses in crisis ignored again. Why simply small business disaster assistance loans or SBA loans are not enough for the most vulnerable women, minorities, disadvantaged, and self-employed, who depend on micro businesses for a solution for the competitive job market and discrimination.

Unfortunately, it looks like the Covid-19 situation is not the only element to blame for the closures of micro businesses and small businesses, particularly almost a total closure of micro businesses and not getting helpful support for several new startups of these vulnerable groups.

Nobody denies the conditional limited SBA economic injury disaster loans are available to areas of small businesses. However, many micro businesses considered a new path to success for the highest-poverty zip codes would not be eligible for these COVID-19 economic disaster loans.

But, first, let us examine the above-mentioned vulnerable groups. These groups depend on micro businesses and small businesses to empower self-employment, reduce poverty, and improve the economy. The financial crisis of 2007–2008 collapsed markets. This crisis affected millions of people in the US and globally. Before the COVID-19 recession started in 2020, the crisis of 2007–2008 was considered the most severe financial crisis since The Great Depression.

According to the Association for Enterprise Opportunity (AEO) “Microbusinesses represent of all U.S. businesses 92%.” AEO defines Microbusinesses as enterprises with fewer than five employees, including the owner. Women, minorities, and the disadvantaged find micro businesses for their self-employment. Examine any of these crises: the Great Depression, financial crises of 2007-2008, or the COVID-19 crisis; they did hit minorities and these groups very hard.

How it appears the Disparities of micro business deficit will steadily continue? Though micro businesses are “firms with 1-9 employees”, they are “the most common kind of employer” providing “0.8 percent of the private-sector jobs.” [1] Roberts & Wortham explain the average (2010-2015) micro businesses per 1,000 people in Rich ZIP codes (poverty rates <8%) is 19.1, and in Poor ZIP codes (poverty rates >20%) is 13.1. [2] The average population is almost 30,000 people in the 1,087 highest-poverty ZIP codes. The micro business deficit in these areas is 6.0 per 1,000 people. This area apart needs about 180 new micro businesses to close the gap. Therefore, overlooking the micro businesses will leave these groups vulnerable, and consequently, the disparities of small business of rich vs. poor will steadily continue. 

Scholars state that the economic impact of the Great Recession on minorities and immigrants, including Hispanic households, has been especially devastating. Studies show that this economic crisis impacts considerably Black and Latino Americans because of structural and institutional racism. The COVID-19 pandemic threatens women of color at work and home.

In this situation, it is concerning studies show that small businesses in communities of color remained with unequal access to federal COVID-19 relief. Indeed, considering the flexibility and nature micro businesses offer, we need to nurture micro businesses and small businesses for the future of our economic growth and future of employment to reducing disparities amongst women, minorities, disadvantaged, and self-employed.

References:

1. Brian, “The Role of ‘Microbusinesses’ in the Economy”, SBA Small Business Facts. https://www.sba.gov/sites/default/files/Microbusinesses_in_the_Economy.pdf

2. Roberts, Peter W. and Wortham, Deonta D. 2018. The Macro Benefits of Microbusinesses. Stanford Social Innovation Review.  https://ssir.org/articles/entry/the_macro_benefits_of_microbusinesses