Many small businesses in Massachusetts are still making less revenue than before the pandemic, a recent poll shows. And businesses owned by people of color are more likely to report difficult business conditions.
The MassINC Polling Team conducted the survey for the Coalition for a Fair Economy and the Mass Development Corporation. The group contacted 3,243 Massachusetts businesses with 500 or fewer employees from June to August. Just over half of businesses – 53% – reported that they had less revenue than they were before the pandemic. About 26% reported having more money than before the pandemic.
Steve Koczela, president of MassINC, said one reason many businesses have yet to fully recover from the start of the pandemic is simply less traffic for places like restaurants, bars and dry cleaners.
The other, he said, is a lack of access to affordable capital. Many business owners have not been able to make the necessary investments over the past two years, especially entrepreneurs of color. Koczela said they are more likely than white entrepreneurs to report being turned down by banks when applying for business loans.
“These same entrepreneurs of color are the ones most likely to say, ‘If I had the capital I’m looking for, I’d do things like expand, I’d hire, I’d buy a new piece of equipment.’ Kozela said. “They’re more likely to be looking for capital to do these kinds of expansion projects than white-owned businesses.”
The survey also found that people of color are less likely to sell their business or retire from senior leadership positions. Koczela said this is a sign that small business ownership will likely become more racialized.
“That’s just the way it’s going,” he said. “But to really get there in the strongest possible way, there are barriers,” and the biggest one may be access to capital.
The survey found that 15% of businesses reported receiving some technical assistance or guidance in the past year. More Black, Latino, female and LGBTQ business owners said they sought help with tasks like applying for grants or learning to use new technologies. However, nearly half of small business owners said they had no information about this type of assistance.
One available resource is the Massachusetts Small Business Development Center Network, which provides free assistance to small business owners looking to expand or improve their businesses. The program is primarily funded by federal and state governments.
Cliff Robbins, senior business adviser for the network, said more small business owners have reached out for help since the start of the pandemic. His team was working around the clock helping businesses apply for federal grants at the height of COVID. Now the group is focused on helping business owners navigate a rapidly changing economy — one that’s more technology-driven and has intense competition for talent. But, Robbins said, the biggest challenge facing small business owners right now is inflation.
“They’re caught between a rock and a hard place,” Robbins said. “They have to raise their prices. At the same time, they don’t want to lose customers.”
According to the MassINC survey, 74% of small business owners said their biggest concern is rising costs due to inflation.
The Federal Reserve raised interest rates again this week as part of a strategy to combat rising prices. But higher interest rates will also make it more expensive for businesses to borrow money.
Modernize: This post has been updated with a new graphic from MassINC Polling Group showing that 60% of all survey respondents, 85% of black small business owners and 88% of Latino small business owners reported concerns about access to capital.