by Kurt Adams
For New Pittsburgh Courier
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According to a new LendingTree study for Black History Month Fayetteville, N.C., has the highest percentage of Black-owned businesses in the U.S.,. Other metros in the South—including Washington, D.C.—join Fayetteville at the top of the list.
To reach this conclusion, analysts first found the 50 U.S. metros with the most Black-owned businesses. Then, they compared those figures to the total number of businesses within each metro to get the percentage of Black-owned businesses.
Researchers also looked at industries to see where Black-owned small businesses are most prominent. Here’s what we learned.
Key findings
- Just 2.4 percent of U.S. businesses have Black owners, even though Black people represent 12.8 percent of the U.S. population. Meanwhile, 86.5 percent of U.S. businesses have White owners, despite White people accounting for a lower percentage—72.0 percent—of the U.S. population.
- Fayetteville, N.C., has the highest percentage of Black-owned businesses. 11.2 percent of businesses in Fayetteville— which has the seventh-highest Black population among the 50 metros examined —are Black-owned. Washington, D.C. (7.7 percent), Richmond, Va., and Atlanta (both 6.7 percent) follow.
- Pittsburgh has the lowest percentage of Black-owned businesses. Just 1.0 percent of businesses in Pittsburgh—which has a bottom-10 Black population—are Black-owned. San Diego (1.1 percent) and Providence, R.I., and Seattle (both 1.2 percent) follow.
- Black-owned businesses are more heavily concentrated in the health care and social assistance and transportation and warehousing industries. 36 percent of Black-owned businesses are in one of these two industries, with health care and social assistance making up the vast majority at 29.5 percent. Overall, 14.7 percent of businesses—regardless of race— are in one of those two industries.
- Black-owned businesses are significantly more likely to be woman-owned than the national average. 35.4 percent of Black-owned businesses are woman-owned, compared with 20.9 percent overall woman-owned businesses.
The U.S. Census Bureau defines business ownership as having more than 50 percent of the stock or equity in the business.
Underrepresentation of Black-owned businesses
Although Black people account for 12.8 percent of the total U.S. population, only 2.4 percent of businesses are Black-owned. This shows that Black-owned businesses are underrepresented relative to their share of the U.S. population.
Going further, a 2021 analysis from the Brookings Institution estimates that roughly 96 percent of Black-owned businesses are sole proprietorships—unincorporated businesses with a single owner. It can be hard for sole proprietors to raise capital, and that’s especially true for Black business owners.
A New York University study published in October 2021 found that during the pandemic, racial disparities impacted the type of lenders from which Black-owned business owners could borrow Paycheck Protection Program (PPP) loans. Black business owners, according to the study, were far more likely to get funds from online lenders than small banks because of automated systems without racial biases.
In contrast to Black-owned businesses, 86.5 percent of all businesses are White-owned, despite White people making up only 72.0 percent of the U.S. population.
Look to the South for highest percentages of Black-owned businesses
Nine of the top 10 metros with the highest percentage of Black-owned businesses are in the South. In each of the nine metros, at least 25 percent of the metro’s population is Black.
Metros with the highest percentage of Black-owned businesses
Fayetteville, N.C., has the highest percentage of Black-owned businesses among the 50 metros examined at 11.2 percent. Within the metro, Black people make up 33 percent of the population—seventh-highest among the 50 metros. The metro’s percentage of Black-owned businesses is closest to parity with the percentage of Black Americans in the U.S. at 12.8 percent.
Washington, D.C., ranks second, with 7.7 percent of the metro’s businesses Black-owned. One-quarter (25 percent) of the population in D.C. is Black, lowest among any of the Southern metros within the top 10—only St. Louis, in the Midwest, is lower at 18 percent.
The Richmond, Va., and Atlanta metros follow closely behind, with Black-owned businesses comprising 6.7 percent of the totals in both regions. Three in 10 Richmond residents are Black, versus 35 percent in Atlanta— sometimes referenced as the “Black Mecca.”
Where there are fewer Black-owned businesses
The 10 metros with the lowest percentage of Black-owned businesses are all below 2 percent. And they aren’t concentrated in a particular geographic region, ranging from Pittsburgh to San Diego to Seattle to Milwaukee.
A common feature among the bottom 10 is a lower percentage of Black residents relative to the U.S. population. Except for Milwaukee, each of the metros had Black populations below 10 percent. As mentioned earlier, Black people comprise 12.8 percent of the U.S. population, so the places with the fewest Black-owned businesses also have fewer Black residents.
Metros with the lowest percentage of Black-owned businesses
Pittsburgh’s Black population, for example, is 8 percent. As the bottom-ranking metro, just 1 percent of its businesses are Black-owned.
The San Diego metro, which has the lowest percentage of Black residents among the 50 examined at 5 percent, ranks 49th for its percentage of Black-owned businesses at 1.1 percent.
(Edited by Dan Shepard Pearly Huang)
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