Report Shows 22.2% Year-Over-Year Increase In Black Businesses, But Room For Improvement Remains

The number of Black-owned businesses has increased. However, there is still much room for improvement.

According to a research study released by the online loan marketplace LendingTree, the data reveals a 22.2% year-over-year increase since 2019. Looking back to 2022, just 3.3% of businesses were Black-owned, and 40% were women-owned.

Other trends highlighted in the report show that Atlanta, GA, remains the primary hub for Black-owned businesses. The city has held this distinction for the past three years, with 11.3% of Black-owned businesses traced back to it. Other key cities identified in the report include Fayetteville, NC, Virginia Beach, VA, and Memphis, TN.

Conversely, California cities such as San Jose, Oxnard, and San Diego ranked lowest in the number of Black-owned businesses.

“When I initially started my entrepreneur journey, there weren’t very many Black founders,” Tiffany Ricks, chief executive of the cybersecurity platform HacWarhe, told Inc. “Now it’s exciting because I’ve seen the growth in the events that I’m going to; there are more Black entrepreneurs. And the reason I think that is, is [they’re] wanting to take control over their growth, and seeing from the economic standpoint that there isn’t much stability in corporate America.”

She also attributes the increase to the surge of support from companies, particularly evident in 2020 during the racial awakening that followed George Floyd’s murder.

She added, “There was an ecosystem saying, ‘We are looking forward to doing business with people who identify as Black.’ Many Black founders answered the call, opened up organizations… I think that is why we saw an uptick in the Census data.”

While the statistic is promising, there is still room for improvement, as the number of Black-owned businesses remains below the proportion of the Black population.

“Certainly, any growth is welcome and important, but there’s such a long way to go,” Matt Schulz, LendingTree chief credit analyst, explained to Inc. He also mentions the increase “is almost more indicative of just how low a place it started, as opposed to how high it actually went.”

Amid the rising focus on diversity, equity, and inclusion (DEI) and the resulting divisions—including corporate rollbacks from companies like Target, Walmart, and Amazon on their DEI commitments and the removal of DEI-related terms from company and school websites—Ricks acknowledges that there may be a shift in Black business ownership.

Only time will tell whether this shift will be positive or negative.

“It’s going to cause a shift,” Ricks explained, per Inc. “The narrowing of focus could cause the Black businesses to not be able to compete for some of those contracts. Although there’s some chaos and delays and things changing, I’m optimistic that this is going to create a new wave of more growth for business entrepreneurship. We just have to figure out how to do it now, in this climate.”