According to a CNBC Survey Monkey Small Business Survey, 15 percent of Black small-business owners had to temporarily shutter their business due to the pandemic. In comparison, 8 percent of White small-business owners reported taking the same action.
The Federal Reserve Bank of New York found that small businesses in the U.S. dropped 22 percent between February 2020 and April 2020, but Black ownership dropped 41 percent—the greatest decline among all racial groups during the depths of the pandemic.
The wealth gap causes Black families to suffer from economic hardship, which threatens financial security and shrinks their ability to fully participate in the economy. This disparity was only exacerbated by COVID-19. In banking, the legacy of systemic racism has impeded many Black families in their efforts to affordably save and invest, causing generations of Black families to struggle to build financial wellness.
Guava, a digital bank created to serve Black small-business owners, is working to close the racial wealth gap and provide resources for small Black-owned enterprises.
“The pandemic has been hard on everyone and Black-owned SMBs were impacted the most. They were closing at higher rates than other businesses during lockdowns and received less PPP funding,” Guava’s CEO Kelly Ifill tells ESSENCE. “Simply put, the pandemic exacerbated the structural inequities in the SMB sector. My goal with building Guava is to create a more level playing field for Black entrepreneurs to build businesses with the barriers historic systems of oppression have created.”
Guava is stepping in to not only provide commercial accounts to Black small-business owners, but also financial products that center these entrepreneurs and the challenges they face. As members of Guava, business owners will automatically have access to the network of other entrepreneurs. This networking access is the critical piece that allows founders to learn, grow and scale their businesses. And Black founders won’t have to wait long to tap Guava’s resources.
“We’re launching this summer with a business checking account and debit card,” says Ifill. “When members sign up with Guava they’ll automatically have access to the Guava community of other small businesses with whom they’ll build relationships, partnerships and ultimately grow their business. Access to a network is the secret weapon to growing your business and receiving funding.”