The economy has come roaring back. Or has it? Unemployment rates are again hovering at record lows, 3.8% in the St. Louis region. Wages are even inching up. That is all good news for working men and women. But don’t mistake the jobs report for a sign that our regional work is done. This is not the time to think that we have arrived at the destination: a post-pandemic return to “normal.” Frankly, the old normal was not working for a lot of people anyway.
Our journey ahead must be framed in economic prosperity—the creation of wealth for the many, not the few.
Wealth creation is about the ability to own a home, to start or scale a business, to educate our children, and to live a healthy self-determined life. We all play a role in creating a future where everyone has a place at the starting line. Together we can create conditions in our region to move more workers who have curiosity and capacity and skill into ownership.
Most people don’t know how diverse and important this group of small businesses is to our economy and local communities. Many people are surprised to find out that small businesses on Main Street represent 99.9% of all businesses and employ 47% of all workers. Of the 30 million businesses in the U.S. roughly 8 million are minority-owned small businesses who collectively employ nearly 8.7 million workers and annually generate more than $1 trillion in economic output.
The pandemic hit Black businesses especially hard. According to the National Bureau of Economic Research, 440,000 Black-owned businesses shuttered in the US, or 41 per cent of the total 1.1 million, between February and April of 2020. In comparison, only 17 percent of white-owned businesses closed in the same time frame. Many of these businesses won’t make it back, and this has a negative ripple effect in the local communities these businesses served.
Part of the job of imaging a more prosperous and equitable future is to acknowledge the barriers that have traditionally stood in the way. Let’s ask ourselves: “What would it take for everybody in the St. Louis area to have a fair shot at participating in the region’s economic activity?” Spoiler alert: We are going to have to grow comfortable with collectively feeling uncomfortable.
We know that a small business loan can be the difference between a dream and an opportunity. But too many Black and brown small business owners face barriers when it comes to accessing traditional financing. Minority owned businesses often bootstrap themselves to even exist, lacking access to capital. Statistics show that Black entrepreneurs receive only 1 per cent of venture capital. And, according to the Federal Reserve, Black-owned businesses are less likely to be approved for bank loans, with an approval rate of 46.5 per cent compared to 75.3 per cent for white-owned businesses.
Midwest BankCentre is a values-based bank committed to the belief that the only way to create a sustainable future is to ensure all members of the community can rise together. As an economic engine for our region, our policies and practices ensure that those in underserved communities have a place at the starting line by providing access to capital to buy a home, educate their families and start or scale a business.
We recognize that people of color are affected disproportionately by systems that make it harder to own and grow businesses. Further, our team believes that minority-owned businesses can only thrive if the communities they employ and serve also thrive. As a result, we focus on both individual banking access and access for Black and brown-owned businesses by supporting multiple initiatives in the St. Louis region.
In early 2021, we set a new goal of $200 million for Community & Economic Development lending over the next five years, aiming to lend to not-for-profits, faith-based institutions, community development projects and small businesses in or benefitting historically disinvested communities. Creating the conditions for transformation of neighborhoods requires community partners, capital investment and time. We believe this investment will help more diverse businesses exist and thrive; help more diverse people in low-income communities thrive through home ownership and small business startup and expansions and expand our reach in community development by enabling other individuals and organizations to participate.
I ask you to imagine the richness thriving Main Street businesses would bring to our local communities. Imagine the job opportunities these businesses would provide for our neighborhood kids. Imagine how safe the streets would be because they were bustling with life instead of with boarded up buildings. Imagine the ripple effect when we invest in our communities.
I believe where you bank matters. How banks reinvest deposits matter. With a common vision of shared prosperity, I ask you to pause and evaluate where you bank.
Orvin T. Kimbrough is chair and CEO of Midwest BankCentre and provided this commentary to the St. Louis American