In the US in 2021, Black-owned firms (businesses with more than one employee) made up only 161,031 (2.7 percent) of all 5,893,425 employer firms, whereas Black people made up 13.7 percent of the population. In no US metropolitan area is the share of Black-owned employer firms proportionate to the Black population, highlighting the need for continued efforts to address this disparity. To contextualize this disparity and the importance of city officials in addressing it, we surveyed officials in seven majority-Black cities—Mobile, Alabama; Memphis, Tennessee; Helena-West, Arkansas; Detroit, Michigan; Jackson, Mississippi; Darlington, South Carolina; and Portsmouth, Virginia—on their economic development strategies and their efforts to address the needs of local Black-owned businesses. This brief presents findings from the responses of seven economic development leaders in these cities.

What We Found

Our findings, framed by the Access, Process, and Outcomes (APO) framework created by the National Economic Research and Resilience Center, highlight the importance of access (ensuring Black-owned businesses have access to necessary resources and opportunities), process (including Black-owned businesses in decisionmaking and economic development planning), and outcomes (achieving equitable economic outcomes that reflect the success and sustainability of Black-owned businesses). Our research also found that lending practices are a pivotal barrier for Black business owners. A study by the University of Washington’s Foster School of Business found that Black business owners paid 3.09 percentage points more in interest rates than their white counterparts. The study controlled for firm risk factors and found that these differences were not because of lender credit risks but systematic inequities. Our findings from our sample cities support that study’s findings, as our interviewees identified capital access as a barrier for their Black entrepreneurs.

We recommend ways that city governments—and mayors’ offices in particular—can advance Black economic prosperity by focusing on each part of the APO framework.

Access 

• Policy implementation: Develop and implement policies that ensure equitable access to resources such as capital, business development services, and market opportunities.
• Resource centers: Establish resource centers in predominantly Black neighborhoods that provide information, training, and support for aspiring and existing Black entrepreneurs.
• Partnerships with financial institutions: Partner with local banks and credit unions to design loan programs for Black-owned businesses.

Process 

• Inclusive decisionmaking: Ensure Black business owners and community leaders are included in economic development planning and decisionmaking.
• Streamlined processes: Simplify the application processes for permits, licenses, and funding to make it easier for Black entrepreneurs to start and grow their businesses.
• Capacity building: Invest in capacity-building programs that help Black-owned businesses improve their operations, management, and competitiveness.

Outcomes 

• Performance metrics: Develop and track performance metrics that measure the success of Black-owned businesses in terms of revenue growth, job creation, and market expansion.
• Recognition programs: Create recognition programs that highlight successful Black-owned businesses and their contributions to the local economy.
• Sustainable practices: Encourage Black-owned businesses to adopt sustainable practices by providing incentives and support for green initiatives.

Lastly, mayors can be powerful advocates for economic inclusivity. Their leadership can garner support from city officials, business leaders, and community stakeholders, uniting efforts to integrate Black-owned businesses into cities’ economic frameworks.

How We Did It

In May 2024, we developed a questionnaire to better understand and explore three critical areas of interest: (1) cities’ economic landscapes and organization, (2) their economic development plans, and (3) their Black-owned business agendas. We reviewed the metrics and indicators those cities use to measure economic prosperity and sustainability and the level of importance they place on potential barriers. We also interviewed stakeholders in two of the seven cities. We anticipated that our seven cities would provide insight on the difficulties municipalities encounter in fostering Black-owned businesses, offering valuable firsthand perspectives on the technical support needed to bolster the presence and success of Black-owned enterprises in their communities. After administering the questionnaire, we invited representatives and critical stakeholders to participate in interviews. We aimed to gather insights from these stakeholders on aspects of their experiences not reflected in the questionnaire, offering a more nuanced and holistic perspective on their small business expansion strategies. We paired the interviews and questionnaire with a literature review to understand the challenges and barriers Black business owners face.