Rafia Zahir-Uddin

Small businesses are the backbone of the U.S. economy, providing income for millions of families and contributing to the commercial vibrancy of communities large and small. Despite their role as engines of economic opportunity, the ability for minority entrepreneurs to succeed remains challenging.

A recent study by UMass Donahue Institute and JPMorgan Chase found this situation to hold true for small business owners in Boston and in particular, Dorchester, Mattapan, Roxbury and East Boston. The report examined the significant barriers these minority entrepreneurs face, leveraging insights from city of Boston leaders, local “Main Street” organizations, chambers of commerce, community development finance institutions (CDFIs) and small-business owners.

As the urgency for providing inclusive economic growth for all commonwealth residents grows, there are a number of opportunities to build on the many existing statewide and citywide programs, private/public partnerships and intermediary organizations focused on achieving this goal and focusing on the biggest challenges facing the state’s diverse entrepreneurial ecosystem.

Access to Capital

In order for small business owners to start, grow and sustain their business they need access to capital. What we cannot overlook are the different types of capital needs that a small business may require including microloans, targeted grants, patient capital, equity investments and targeted efforts to help business owners build credit and reduce personal debt.

An opportunity area that is prime for investment includes increased collaboration and referral systems amongst CDFIs and mission-based lenders to create a one-stop hub model. Small businesses should be able to easily access the relevant information on the types of small businesses capital providers support, average loan size, lending criteria and application requirements.

Organizations like Coalition for an Equitable Economy and Massachusetts Growth Capital Corporation can play key roles in coordinating the ecosystem while leveraging different funding sources from state, local government, and public and private funders committed to advancing the small business development ecosystem for diverse-led small businesses.

Expanding Technical Assistance Needs

The commonwealth has many technical assistance providers supporting small businesses with key advisory services including business planning, financial planning and new technology adoption to name a few. Matching small business owners with the appropriate resources that takes into account the stage of their development, industry, size of business and cultural background has proven to be a challenge not only in Boston but across the state.

Surveys, focus groups and informational interviews conducted with small businesses for the UMass study indicated that navigating the technical assistance ecosystem and finding the appropriate resources was challenging – sometimes business owners just gave up.

Opportunities to better align technical assistance needs should include access to sector/industry-specific resources whether in culinary arts and commercial kitchens, construction or professional services. Expanding culturally relevant technical assistance is essential particularly in neighborhoods where English is a second language and there are a majority of immigrant-owned small businesses.

Policymakers and funders can play a key role in advocating for and supporting capacity-building efforts to ensure technical assistance providers collaborate, share resources and direct small businesses to the appropriate services.

Gentrification and Displacement

Businessowners, especially those with brick-and-mortar stores, are facing increased pressures with neighborhood gentrification and displacement. Boston has one of the highest real estate costs in the country. New developments being built and higher-income newcomers have increased the costs of commercial rent making it challenging for existing and new small businesses to find a physical location.

In partnership with Dorchester Bay Economic Development Corp., JPMorgan Chase has funded commercial space subsidies and space build-outs for businesses in Dorchester, Roxbury and Mattapan. The subsidies provide business owners with the runway to stabilize their business and invest in other areas including revenue and business growth so that they are on stronger financial footing.

Innovative programs like these increase the pathway to commercial ownership and keep small businesses in place in local neighborhoods. However, scalability of these programs can only be done with significant public and private investments and policy changes that safeguard small businesses with brick-and-mortar locations as commercial real estate costs increase.

The findings in the UMass Donahue Institute report provide greater understanding for the Massachusetts region around small business growth, and in particular, equitable access to growth opportunities and resources for diverse small business owners.

In April, the JPMorgan Chase Institute released new research examining how smaller businesses scale into larger ones. The analysis finds only a small share of small businesses reach $1 million in revenues in the first five years, with Black-, Hispanic- and/or female-owned firms least likely to achieve this milestone. These findings have important implications for decisionmakers in Boston and beyond, as they look to address the differential opportunities and barriers to growth entrepreneurs may face.

JPMorgan Chase remains committed to investing in research and data informed solutions that support small business owners. Data, research and collaboration are essential to ensure that all business owners have the opportunity to navigate economic risk, build and grow their businesses, and unlock wealth building opportunities for themselves, their families and their neighborhoods.

Rafia Zahir-Uddin is vice president of global philanthropy for Massachusetts at JPMorgan Chase.