African-Americans in business.
African-Americans in business.

As America’s jobs crisis, brought about by the Great Recession, drags into a fourth year, there is a rare bright spot on the job creation horizon. Black-owned businesses have grown faster since 2007 than the overall rate of growth for small businesses.

According to a new report compiled by the National Urban League Policy Institute, State of Urban Business 2011: U.S. Cities That Lead the Way, cities with strong diversity supplier policies and which allow easy access to business-to-business and government contracts were the best environments for black-owned businesses to grow.

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A major factor in that growth has been the success of minority business set-aside programs instituted by city and state governments, and corporate-level supplier diversity programs. As the nation searches for ways out of the persistent jobs crisis, the success of these policies on the local, state and federal level cannot be ignored. Certainly the leadership of enlightened mayors, governors and corporate CEOs are essential to the continuation of the growth of black-owned businesses.

Our study determined that, of the top metro areas for black-owned businesses, five included cities where the National Urban League operates Entrepreneurship Centers.

Additionally, the New Market Tax Credit Program and Strategic Alliance between Stonehenge Community Development and the National Urban League has led to the creation of more than 8,000 jobs through the deployment $352.5 million in allocations.

The top metro areas for black-owned businesses, according to the report, are

1) Washington-Arlington-Alexandria, DC-VA-MD-WV
2) Los Angeles-Long Beach-Santa Ana, CA
3) (tie) Chicago-Joliet-Naperville, IL-IN-WI & Detroit-Warren-Livonia, MI
4) (tie) Atlanta-Sandy Springs-Marietta, GA & Charlotte-Gastonia-Rock Hill, NC-SC
5) St. Louis, MO-IL
6) Dallas-Fort Worth-Arlington, TX
7) Cleveland-Elyria-Mentor, OH
8) New York-Northern New Jersey-Long Island, NY-NJ-PA
9) Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

Urban League affiliates operate Entrepreneurship Centers in Atlanta, GA, Chicago, IL, Cincinnati, OH, Cleveland, OH, Jacksonville, FL, Kansas City, MO, Los Angeles, CA, New Orleans, LA and Philadelphia, PA.The greatest weakness in African-American entrepreneurship is not in starting businesses, but rather in growing these businesses enough to create sustained and significant revenue. Inability to obtain credit remains more of an obstacle for African American business owners than for any other group.

Our report includes several recommendations for growing and strengthening black-owned businesses, from increasing the funding available for small business loans and raising the set-aside cap for government small business contracts to establishing robust procurement goals at all levels of government and encouraging support for private sector supplier diversity programs.

Additionally, an upcoming Urban League initiative, the Urban Empowerment Fund, a Community Development Financial Institution, or CDFI, is planned to fill a credit gap that has widened during the last two years, particularly in minority communities.

The Urban Empowerment Fund will invest in new and expanding small businesses, nonprofit organizations, community facilities and affordable housing development in underserved communities of color throughout the country.

Through its lending activity, the Urban Empowerment Fund will help empower African Americans to attain economic self-sufficiency and to create sustainable, vibrant minority communities throughout the country.

Moreover, the nation’s growing equity funds, hedge funds and venture funds would serve themselves and their investors well by accelerating their focus on the nation’s growing black-owned businesses. Access to capital is the key.

The report was prepared by economists Lucy J. Reuben, PhD, Duke University professor and a member of the National Urban League’s Council of Economic Advisors, and Valerie Rawlston Wilson, PhD, National Urban League’s Vice President of Research, along with National Urban League staffers Madura Wijewardena, Garrick T. Davis and Terry Clark.

The full report is available online at www.iamempowered.com/soub/2011