Small Businesses Have Surged in Black Communities. Was It the Stimulus?

The share of businesses born out of necessity more than doubled, he said, to 30 percent in 2020 from 13 percent in 2019.

Last summer, Pilar Donnelly started making playhouses in Houston for her two 6-year-old boys. She had been laid off from her job in sports marketing and wanted to give them something for their birthday. With no background in woodworking, she started off with a design she liked online and watched YouTube to learn woodworking techniques. After making a number of playhouses for her friends and family, she realized it could be a business. That business, which she registered in June, is called Wish You Wood Custom Creations.

She said it was her personal savings and the unemployment benefits that really helped give her peace of mind last summer; the stimulus check wasn’t enough by itself to make a huge difference in her decision to start a business.

“I did buy a saw with some of that money,” she said. “That did help a little bit.”

Ms. Fazio says it’s telling that entrepreneurship is on the rise in Black communities at precisely a moment when economic support is at its most universal.

“It feels significant that we saw this big response in neighborhoods where it doesn’t typically happen,” she said. “When you remove those gateways that have worked in some ways to limit access for certain communities, then you really do unleash potential.”

It’s uncertain how these new registrations will translate into businesses that will continue to operate after the pandemic. If many of them are born out of necessity, it’s natural to expect them to wind down as workers return to their old jobs.

But given how drastically the pandemic has disrupted the economy, and how businesses operate more broadly, there may be opportunities in the post-pandemic economy for entrepreneurs to take advantage of what didn’t exist before.

Article source: https://www.nytimes.com/2021/05/24/upshot/stimulus-covid-startups-increase.html