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Places With the Most Black-Owned Businesses

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Fayetteville, N.C., has the highest percentage of Black-owned businesses in the U.S., according to a new LendingTree study for Black History Month. 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% of U.S. businesses have Black owners, even though Black people represent 12.8% of the U.S. population. Meanwhile, 86.5% of U.S. businesses have white owners, despite white people accounting for a lower percentage — 72.0% — of the U.S. population.
  • Fayetteville, N.C., has the highest percentage of Black-owned businesses. 11.2% of businesses in Fayetteville — which has the seventh-highest Black population among the 50 metros examined — are Black-owned. Washington, D.C. (7.7%), Richmond, Va., and Atlanta (both 6.7%) follow.
  • Pittsburgh has the lowest percentage of Black-owned businesses. Just 1.0% of businesses in Pittsburgh — which has a bottom-10 Black population — are Black-owned. San Diego (1.1%) and Providence, R.I., and Seattle (both 1.2%) follow.
  • Black-owned businesses are more heavily concentrated in the health care and social assistance and transportation and warehousing industries. 36% 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%. Overall, 14.7% 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% of Black-owned businesses are woman-owned, compared with 20.9% overall woman-owned businesses.
The U.S. Census Bureau defines business ownership as having more than 50% of the stock or equity in the business.

Underrepresentation of Black-owned businesses

Although Black people account for 12.8% of the total U.S. population, only 2.4% 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% 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% of all businesses are white-owned, despite white people making up only 72.0% 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% of the metro’s population is Black.

Metros with the highest percentage of Black-owned businesses

RankMetroTotal businessesBlack-owned businessesPercentage of Black-owned businessesPercentage of population that is Black
1Fayetteville, NC5,21058511.2%33%
2Washington, DC111,8728,6497.7%25%
3Richmond, VA25,6171,7216.7%30%
3Atlanta, GA113,1107,5396.7%35%
5Memphis, TN17,1321,1236.6%48%
6St. Louis, MO51,8523,1126.0%18%
7Augusta, GA8,1974805.9%36%
8Baltimore, MD51,4612,7555.4%30%
9Jackson, MS8,8894465.0%50%
10Virginia Beach, VA26,7411,2604.7%31%

Source: LendingTree analysis of U.S. Census Bureau data.

Fayetteville, N.C., has the highest percentage of Black-owned businesses among the 50 metros examined at 11.2%. Within the metro, Black people make up 33% 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%.

Washington, D.C., ranks second, with 7.7% of the metro’s businesses Black-owned. One-quarter (25%) 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%.

The Richmond, Va., and Atlanta metros follow closely behind, with Black-owned businesses comprising 6.7% of the totals in both regions. Three in 10 Richmond residents are Black, versus 35% 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%. 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%. As mentioned earlier, Black people comprise 12.8% 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

RankMetroTotal businessesBlack-owned businessesPercentage of Black-owned businessesPercentage of population that is Black
1Pittsburgh, PA41,3794281.0%8%
2San Diego, CA70,7897961.1%5%
3Providence, RI33,1993911.2%7%
3Seattle, WA85,5921,0651.2%6%
5Phoenix, AZ78,0401,0191.3%6%
6Boston, MA101,6241,4531.4%9%
6Denver, CO69,8499991.4%6%
8San Antonio, TX35,5316251.8%7%
8Riverside, CA60,4281,0791.8%7%
8Milwaukee, WI28,6685241.8%16%

Source: LendingTree analysis of U.S. Census Bureau data.

Pittsburgh’s Black population, for example, is 8%. As the bottom-ranking metro, just 1% of its businesses are Black-owned.

The San Diego metro, which has the lowest percentage of Black residents among the 50 examined at 5%, ranks 49th for its percentage of Black-owned businesses at 1.1%.

Percentage of Black population isn’t predictive of percentage of Black-owned businesses

The greater the percentage of Black residents in a metro doesn’t necessarily mean it’ll have a higher percentage of Black-owned businesses.

For example, Milwaukee and St. Louis have a roughly comparable percentage of Black residents — 16% and 18%, respectively. However, with just 1.8% of its businesses Black-owned, Milwaukee ranks 41st for its percentage of Black-owned businesses, while St. Louis is No. 6 with 6.0%. Though each metro has a similar percentage of Black residents, a greater percentage of businesses in St. Louis are Black-owned.

Birmingham, Ala., is another significant exception to the correlation between a higher percentage of Black residents and Black-owned businesses. Here, 31% of its residents are Black, making it the eighth-highest metro in terms of the Black population. Yet only 3.5% of its businesses are Black-owned, placing the metro area at No. 20 on the list.

This suggests that a large share of Black residents is not the only or primary indicator of Black-owned business success. Other factors, such as access to credit and capital, are likely at play.

Full rankings by percentage of Black-owned businesses

RankMetroTotal businessesBlack-owned businessesPercentage of Black-owned businessesPercentage of population that is Black
1Fayetteville, NC5,21058511.2%33%
2Washington, DC111,8728,6497.7%25%
3Richmond, VA25,6171,7216.7%30%
3Atlanta, GA113,1107,5396.7%35%
5Memphis, TN17,1321,1236.6%48%
6St. Louis, MO51,8523,1126.0%18%
7Augusta, GA8,1974805.9%36%
8Baltimore, MD51,4612,7555.4%30%
9Jackson, MS8,8894465.0%50%
10Virginia Beach, VA26,7411,2604.7%31%
11Greensboro, NC14,1296434.6%27%
12Columbia, SC13,5976094.5%34%
13Baton Rouge, LA13,9556164.4%36%
14Columbus, OH30,6391,2544.1%16%
15Raleigh, NC27,0551,0613.9%20%
16Orlando, FL54,5172,0963.8%17%
16Charlotte, NC47,4481,7883.8%23%
18Miami, FL171,8326,2043.6%21%
18Houston, TX111,0413,9813.6%17%
20Birmingham, AL19,6836933.5%31%
20Greenville, SC15,0105273.5%16%
22Jacksonville, FL29,5689933.4%22%
23Little Rock, AR14,3284403.1%24%
24Cleveland, OH37,80711493.0%20%
24New York, NY488,45614,4243.0%18%
26Rochester, NY19,3735562.9%12%
27Nashville, TN32,7709012.7%15%
27Indianapolis, IN33,5059152.7%16%
27Philadelphia, PA114,3913,0522.7%21%
27Detroit, MI77,8212,0662.7%22%
31Dallas, TX126,5353,1912.5%16%
31Tampa, FL64,4591,5902.5%12%
33Las Vegas, NV37,3288902.4%12%
33Cape Coral, FL17,2344072.4%9%
35Los Angeles, CA315,1907,2002.3%7%
35Cincinnati, OH32,0457322.3%12%
37Chicago, IL195,1864,1422.1%16%
38Minneapolis, MN73,3631,5032.0%9%
38San Francisco, CA105,8452,0872.0%7%
38Oklahoma City, OK29,1635692.0%10%
41Milwaukee, WI28,6685241.8%16%
41Riverside, CA60,4281,0791.8%7%
41San Antonio, TX35,5316251.8%7%
44Denver, CO69,8499991.4%6%
44Boston, MA101,6241,4531.4%9%
46Phoenix, AZ78,0401,0191.3%6%
47Seattle, WA85,5921,0651.2%6%
47Providence, RI33,1993911.2%7%
49San Diego, CA70,7897961.1%5%
50Pittsburgh, PA41,3794281.0%8%

Source: LendingTree analysis of U.S. Census Bureau data.

Health care, transportation industries are twice as likely to feature Black-owned businesses

Compared to national averages, Black-owned businesses are more likely to be within the health care and social assistance and transportation and warehousing industries. These two industries represent 36% of Black-owned businesses. Nationally, only about 14.7% of businesses — regardless of race — are in one of those two industries.

The health care and social assistance industry consists of four sectors. Here are the sectors and some examples of job roles:

  • Ambulatory health care services (licensed practical nurses and medical assistants)
  • Hospitals (radiologic technologists and technicians)
  • Nursing and residential care facilities (home health aides)
  • Social assistance (child care workers and social and community service managers)

The transportation and warehousing industry consists of 11 sectors, from air transportation to rail transportation to postal service to couriers and messengers.

Among Black-owned businesses, businesses in the health care industry again make up the largest percentage, comprising 29.5% of all Black businesses. At 13.3%, businesses in the professional, scientific and technical services industry account for the second-largest number of Black-owned businesses, while construction follows in third at 7.9%.

Black businesses are more likely to be women-owned than the national average

Though just a little more than 1 in 5 (or 20.9%) of all businesses in the U.S. are women-owned,  35.4% of Black-owned businesses are owned by Black women. This means that Black-owned businesses are more likely to be owned by women than the national average.

Women-owned businesses are growing at a faster rate than the national average, so this may be representative of a wider national trend of growing women entrepreneurship.

Tips to start a minority-owned business

Entrepreneurship can be a great way to build wealth while providing a valuable service for your community. But starting a business isn’t easy. Here are some tips you can follow if you want to start a minority-owned business:

  • Write a business plan: A strong business plan is the first step in starting a business because it outlines the good or service you plan to sell and the customers you want to serve. A business plan also provides market analysis, financial projections and staffing needs.
  • Decide on a business entity: A business entity is your company’s legal structure. Depending on which form you select, the decision will affect how you file taxes, the degree to which you’re personally liable for your business debts and whether you can sell stock in the company.
  • Keep clear records: Once your business is in operation and legally incorporated, you’ll need to be diligent about keeping clear and consistent records. This will include a balance sheet tracking assets and liabilities, cash flow analysis and reports of accounts payable and accounts receivable. Not only will these reports help you monitor your business’s profitability, but they may also be requirements to apply for a small business loan.
“It’s easy to get swept up in the excitement of a new business and get sloppy with record keeping or just forget about it altogether. That’s just going to make it harder on you in a few different ways, including at tax time. Do yourself a favor and be diligent about record keeping from the jump. It matters.” — Matt Schulz, LendingTree chief credit analyst
  • Build strong business credit: When you start a business, lenders will pay more attention to your personal credit score, but you’ll also want to build a strong business credit score over time. Similar to a personal credit score, a business credit score is a number that represents a business’s creditworthiness. To build yours, use your business’ employer identification number (EIN) or Data Universal Numbering System (DUNS) number to open a credit account with a vendor and pay your invoices in full when due.
  • Qualify as a minority-owned business with the Small Business Administration (SBA): Qualifying or certification as a minority-owned business opens opportunities to participate in the SBA’s 8(a) Business Development Program, which offers training, mentorship and the ability to compete for federal contracts. To qualify, you’ll need to be a for-profit business, meet the SBA’s size standards and income standards and be at least 51% owned and controlled by socially and economically disadvantaged U.S. citizens. You’ll apply at certify.sba.gov.
“Being certified can lead to partnerships with corporations or government agencies that specifically set aside parts of their budget exclusively for working with minority-owned businesses,” Schulz says. “​​Getting certified can also give you access to training programs, networking opportunities and other things that can help your business find its footing.”

Methodology

To rank the metros with the highest percentage of Black-owned businesses, researchers analyzed the 2020 U.S. Census Bureau Annual Business Survey for data year 2019.

Researchers first estimated the number of Black-owned businesses in each metro. Researchers then found the 50 metros with the most Black-owned businesses and estimated the percentages. The metros were ranked from highest to lowest.

 

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