Richard Anderson, 43, experienced Covid-19 not only physically, but also economically. Anderson, a trombone player and owner of Kinfolk Brass Band and Music Group based in New Orleans, tested positive for Covid-19 early in the pandemic. It took him nearly a month before he recovered and had the wind to play his horn again.

But that wasn’t the worst of his story.

Kinfolk Brass Band is one of the most requested bands in New Orleans, performing at more than 500 weddings each year and holding annual performance slots at the New Orleans Jazz and Heritage Music Festival. The band’s touring also stretches across the globe, with transatlantic shows, including the 2012 Summer Olympics in London and musical festivals in both Spain and France.

But then it all came to a screeching halt. Without gigs for his band, Anderson was hit hard, suffering a significant loss of income in 2020.

“With the city’s lockdown measures in place, we went from about 20 performances each weekend to zero for the first few months of the pandemic,” says Anderson.

And while research shows that the pandemic was especially gruesome for small businesses, Black-owned businesses were hit even harder. Anderson and his band felt it was hard. After all, for most of his band members, those gigs were their only source of income.

Black Businesses Faced Challenges Even Before the Pandemic

Between February and April of 2020, Black business ownership declined more than 40%, the largest drop across any ethnic group, according to a report by the House Committee on Small Business Committee. The report details the impact Covid-19 has had on Black-owned businesses in the United States. Black-owned businesses were less likely to handle mandated closures due to lack of access to financial relief.

Even before the Covid-19 pandemic outbreak, Black people faced many financial inequities and roadblocks. For starters, the persistence of the racial wealth gap continues to plague the Black community and particularly small business owners.

Wealth is determined by one’s assets accumulated over time, such as savings, retirement accounts and real estate minus debts (credit cards, mortgages, etc.). Institutionalized racism has put the Black community far behind its white counterparts when it comes to accumulating such wealth.

According to the Hamilton Project, for 2019, the median White household held $188,200 in wealth, more than 7.8 times that of Black households. Small progress has been made, but the gap remains significant; in 2016, white households had 10 times more wealth than Black households. During this time, the median wealth for a white household was $171,000, whereas for a Black household was just $17,100.

Another principal barrier is the chain of events that Black people faced that kept them from creating wealth opportunities compared to their White counterparts. The denial of wealth creation for Black people can be traced back to about 246 years.  Slavery, the 1921 race massacre in Tulsa’s “Black Wall Street” that left dozens dead and 10,000 homeless after more than 1,400 homes and businesses were burned and discriminatory policies in both housing and lending have all impeded the growth of Black wealth.

And the path to equality is a long and arduous one. A study by the Institute of Policy Studies found that it could take more than 200 years for Black families to accumulate the same amount of wealth as whites due to the structural racism in the U.S. housing market alone.

Access to Wealth Can Help Black Small Business Owners During the Covid-19 Pandemic

The success of a business thriving through a financially challenged pandemic depends on not only wealth but access to capital.

A study by McKinsey & Company found that while all small business owners faced challenges during Covid-19, those with limited financial assets were more at risk. For this reason, not having accumulated wealth meant Black small business owners were some of the most vulnerable.

According to the Federal Reserve Bank of New York, about 58 percent of Black-owned businesses were at risk of financial distress before the pandemic, compared with about 27 percent of white-owned businesses.

Since there is a significant wealth disparity amongst Black people, having access to capital can help bridge the gap for Black small business owners. However, research shows that Blacks are more likely to be denied capital compared to whites even with similar creditworthiness.

“Black small businesses already had lower access to capital and credit, and lower average revenues making them less prepared to face the financial hardship caused by the pandemic,” said Kristen Broady, a fellow in the Metropolitan Policy Program at the Brookings Institution.

Blacks even experience challenges with obtaining capital during Covid-19 from governmental programs, such as the Paycheck Protection Program, a program administered by the Small Business Administration to provide funding for  businesses that suffered pandemic-related revenue losses. “Due to the racial wealth gap, Black small business owners, particularly sole proprietors, would be unlikely to cover business expenses during the pandemic if they did not receive a PPP loan,” said Broady.

The Paycheck Protection Program loans reached only 2o% of eligible firms in states with the highest density of Black owned firms. Also, a study found that the PPP loan success rate of White applicants was 6o%, however only 29% for Black business owners.

Jamila Smith is the previous owner of Grace Academy, a daycare that provided services for children under the age of 6 in New Orleans. Smith started her business in 2017, but was forced to temporarily shut down during the Covid-19 pandemic due to the loss of customers and being denied federal assistance , such as a PPP loan.

“Without any income and the lack of approval for the PPP loan, my business remains closed. Without the capital needed to keep going, I am uncertain of my business’ future,” says Smith.  Smith applied for the first round of the PPP and was denied by her financial institution. She has reapplied, but remains uncertain if she will receive the funds needed to continue her business.

The PPP loan program stopped taking new applications in May but will continue to process any existing applications.

Work Ahead for Black Small Business Owners

Black business ownership matters not only to the Black community but can be the answer to closing the wealth gap and achieving a healthier economy overall. A study found that Black business owners have 12 times more wealth compared to Black people who did not own businesses. A 2012 survey found that Black businesses contributed up to $165 billion in revenue and created more than 1 million jobs.

But there is work to be done.

Unlike many Black businesses that were forced to shut down during the pandemic, Anderson’s band was able to persevere. New Orleans Mayor Latoya Cantrell recently lifted the Covid-19 restrictions and removed the ban on live music venues and second-line parades. This is good news not only for Anderson but his band members, too.

Kinfolk Brass Band has been a gateway for his wealth creation, generating opportunities for his band members to purchase homes and start business ventures.

“I am super excited to get back going. This business has been a lifeline. I can truly say that this business has made a financial difference for myself and my members,” says Anderson.