Massachusetts must increase entrepreneurship among people of color to help counter a multi-year decline in the number of new startups launched each year, and achieving this will require increased support for minority-owned businesses, concluded a new report.
Between 2005 and 2018, fueled by the consolidation of the sector, the number of new Bay State companies with employees trained each year fell by 47%, wrote MassINC and the Coalition for a Fair Economy in a report published on Tuesday.
The number of minority-owned businesses is increasing, which MassINC research director Ben Forman called a “bright sign” for entrepreneurship prospects, but white residents remain about 2.5 times more likely to own a business as black residents.
“The growth in business ownership among people of color has been very strong over the past decade in Massachusetts, but we are building from a very small base, so although we have seen this very significant growth , that did not fill the gaps ”. Forman said when presenting the report at a virtual panel discussion.
The report presents strategies to address these gaps and help generate more equitable economic growth.
One idea the authors reported is to support entrepreneurs of color with additional technical assistance and to expand possibilities for networking within industry organizations that work with minority populations.
Another major issue raised by the authors and small business owners who participated in Tuesday’s discussion is access to capital. Entrepreneurs of color, they said, face greater obstacles in obtaining bank loans or finding other funding opportunities.
“In our communities, when we think about the diversity of capital resources, we talk about banking institutions, where we sometimes lack connections or even a history of credit building,” said Nia Grace, owner and operator of Darryl’s. Corner Bar & Kitchen in Boston and co-founder of the Boston Black Hospitality Coalition. “Then we think of venture capitalists. It could be a way to make money for investors, but if you’re not in the same educational or social circles, you might not have access to people who are the venture capitalists, then that becomes another obstacle or blockade. “
The third pillar that MassINC and the Coalition for a Fair Economy noted is access to markets and customers, writing in the report that government procurement programs aimed at channeling state or municipal dollars to owned companies. to minorities are often flawed and ineffective.
Housing and Economic Development Secretary Mike Kennealy said the Baker administration had shaped its response to the pandemic in part to mitigate the disproportionate economic impact entrepreneurs of color have felt.
The administration has provided more than $ 650 million to date in support for small businesses, of which about $ 213 million went to minority-owned businesses through the end of March, Kennealy said.
Kennealy said the administration would also soon announce matching grants for small businesses and technical assistance to help minority and women-owned businesses take the “digital leap”.
“We have done a lot in the past year, but there is still a lot to do,” said Kennealy.
In September, GBH News reported that the Baker administration, since 2016, had inflated its measure of state contracts awarded to minority-owned businesses by counting the “indirect spending” that public contractors made on behalf of state-owned businesses. minorities.
Two months after this report, Baker proposed a reorganization plan making the Supplier Diversity Office a separate agency reporting to the Executive Office of Administration and Finance. The change, which went into effect in January, gave the office new tools such as a state expenditure audit function and gave it a more active role in involving minority-owned businesses in public markets.
“We seek to equip this office with the tools and resources to work with executive agencies to develop comprehensive diversity spending plans, ensure accountability and adherence to diversity goals, oversee diversity spending, and audit and review spending data, ”Kennealy said.
Senator Eric Lesser, who co-chairs the Legislative Assembly’s Economic Development Committee, and Representative Antonio Cabral said a bill they had introduced (SD 2387 / HD 4004) answered some of the questions raised in the MassINC report.
Their legislation would require stronger data on state funding and procurement efforts involving minority-owned businesses, establish a new grant program to create or strengthen business districts in communities of color. and analyze loan data for minority borrowers, according to a summary. from Lesser’s office.
“The report that was presented today and the findings of that report give us a plan to move forward,” Lesser said. “We can close these gaps if we make intentional and ambitious policies and commitments to actually close them.”