‘Black businesses are hurting now.’ Racism, inequality, COVID-19 shatter Fresno business dreams
This is the second in a series of stories for the Fresno Voices project.
What happens to a dream deferred?
Does it dry up?
Fester?
Stink?
Sag, or just explode, as Langston Hughes suggests in “Harlem”?
Ask James Hannah, 60, who has tried to secure a business loan for an auto repair shop since he graduated from Fresno City College’s auto mechanic program in 1986.
Before entering the program, Hannah was unable to get a job and had sought help from the Fresno Economic Opportunities Commission, which paid for his training at Fresno City College. He was assured that the certificate in the automotive program would be as good as money in the bank, and he would qualify for small business loans to set up his own shop.
The Fresno EOC counselors helped Hannah write a business plan and loan applications for between $50,000 and $100,000 to cover six months of rent, needed equipment and wages for an assistant until the business stabilized. Everyone told him his business plan and loan applications were perfect. But what he got was one rejection after another.
“I was told every time, ‘Your credit isn’t up to par,’” Hannah said. “I never had credit before that. I thought, ‘They’ll give you an opportunity to build your credit up.’”
He tried other things, including applying for a loan program sponsored by the Fresno EOC, and was denied. He heard other applicants from outside the community were funded.
“It seemed,” Hannah said, “like they were willing to take a chance on others, but not on me.”
Still, he didn’t give up. He went through the Small Business Administration’s mentoring program and in 2003, registered for the six-month entrepreneurs program at Fresno State’s Craig School of Business. His teachers and peers praised his work; still, he had no luck with funding when he graduated.
Thirty-four years later, his business has still not gotten funding, and he can’t figure out why.
“You’re hoping it is not the color of your skin,” Hannah said, “but you wonder.”
What is certain — according to data from the U.S. Census, Brookings Institute, U.S. Bureau of Statistics and more than 20 men and women interviewed for this story — is that Hannah is not an outlier. For Blacks seeking business opportunities in Fresno, the pattern is familiar: Black entrepreneurs are starved of funding, guidance, logistical support and mentoring, all of which are critical to starting and sustaining a business.
Tara Lynn Gray, CEO of the Fresno Metro Black Chamber of Commerce, sums up the problems confronting Black-owned businesses as consisting of size, access, knowledge gaps and trust.
“There are trust and access issues,” she said.
Racial disparities in business opportunities and lack of access continue to plague Fresno. Those inequities become painfully apparent every time another Black person dares to dream big.
Nature of Black businesses
According to the Brookings Institute, Black-owned businesses suffer from historic and persistent underinvestment, even in booming economies. At 12.7% of the U.S. population, Blacks own only 4.3% of the nation’s 22.2 million businesses. Black Americans are disproportionately underrepresented as business owners. Black-owned businesses are usually micro enterprises — grossing less than $1 million in revenue annually and with five or fewer employees.
At about 7.5% of the Fresno population, Blacks own fewer than 2,000 of the 58,000 small businesses, according to Tate Hill, executive director of Access Plus Capital, a Fresno-based community development financial institution. Only a very small number — about 200 out of the 2,000 businesses — have employees, said Hill.
Blacks are almost twice as likely as whites to start a business, but their businesses continuously fall behind their white counterparts and fail at higher rates. Research by Gallup psychologists show that there are no significant differences between white and Black people on traits that predict success as an entrepreneur.
Most of the people interviewed for this story insist that the lack of success of Black-owned businesses is the result of an ugly history of persistent racial inequality in Fresno that is compounded by racist policies in lending, districting and the government’s procurement processes — all of which add to long suffering and dreams denied.
COVID-19 fallout
Now, amidst the cornavirus pandemic, Black Americans, already victimized by generations of systemic racism, are suffering catastrophic economic losses. Nationally, 440,000 black businesses, representing 41% of the pre-pandemic level, crumbled between February and April 2020.
“If our business cannot get back to commerce, they cannot continue to survive,” Gray said. “Black businesses are hurting now.”
Until the pandemic, James O’Donnell and his partner operated Kocky’s Bar and Grill on Van Ness Avenue in downtown Fresno, which grossed half a million dollars in 2019. Now the business is in a tailspin, and O’Donnell is struggling to survive.
Adrian Harris, an entertainer who earned $40,000-$50,000 a year organizing festivals and events throughout Fresno, grapples with how to reinvent his business.
So does Clinay Wills, owner of Seasoned Trends Studio in downtown Fresno, a one-stop beauty shop that provides hair, nails and threading services. The shop has been closed since the shelter-in-place order. Wills’ wait-and-see attitude is the norm among business owners. No one is sure what comes next.
Hundreds of others — daycare providers, restaurant owners, housekeepers, shopkeepers, car detailers — are suffering the same fate.
“[The pandemic is] a real threat to our well-being,” Gray said of the devastation. “For our businesses, it is insurmountable.”
Altogether, more than 40% of Black-owned businesses in the Fresno metro area have closed as a result of the pandemic, and that number could grow exponentially in the coming weeks and months because of the prohibitive cost of reopening businesses successfully, Gray said.
Gray said that because Black-owned businesses are more likely to be in the service industries, they are usually the first to be shut down and the last to reopen. Additionally, they are further handicapped by the digital gap and lack of knowledge on how to navigate government programs for bailouts, stimulus and loans.
“There was a crisis already, long before the pandemic,” said Gray. “We now have a crisis upon a crisis.”
Impact of government policies
But the problems faced by Black-owned businesses predate the pandemic, and is, according to Hill, directly related to government policies and indifference.
“In Fresno and everywhere, leaders should admit that part of the problem we have is a lack of racial economic inclusion,” Hill said. “Just give us an equal chance; don’t put barriers in my way, artificial or real.”
African American businesses in Fresno have been adversely impacted by government initiatives and infrastructure projects, such as Highway 99, Highway 41, and the redevelopment of California Avenue. Twenty to thirty years ago, Black businesses were thriving in the 93706 ZIP code area, better known as southwest Fresno. A slew of businesses — the community on D Street, parts of Fresno Street, California Avenue to Edison High School, Martin Luther King to Fruit Avenue — were removed because of construction.
“A large number of those were African American businesses” — barber shops, hair salons, auto repair shops, alterations shops, mom and pop shops — “all lost because of bad government decisions,” Hill said. In the name of redevelopment and government initiatives, businesses and community lifelines were destroyed.
“Now, all that’s left is such a vacuum . . . because of government construction,” Hill said. Now, there isn’t a single Black-owned business in the redeveloped areas of southwest Fresno.
Pervasive racism
“When it comes down to business, when you’re Black, you must assume there are going to be obstacles to business and you have to do things differently,” said Myrick Wilson, CEO of Mad illustrators. “You have to do more.”
Monisha Edwards, owner of two businesses — Truth Branding and Scent and Fire candle company — said she has always known she must be self-reliant in all her business pursuits. The only funds she has ever been awarded were $2,500 for winning a pitch competition from the Fresno Metro Black Chamber of Commerce and $2,000 from the Central Valley Spark Tank.
“I heard a lot about how hard it is for Blacks to get loans, so I just worked to save my money and do it myself,” Edwards said.
While she was aware of racism, she had not realized how pervasive it was five years ago when she launched Truth Branding, a company that helps companies with branding and marketing.
“When I first started,” she said, “I had my face plastered everywhere.” She was very young and believed that was an effective marketing strategy for her company. “I wanted people to know who I am; I am a great strategist. It is what I am.”
Then, she would lose contracts inexplicably. Someone advised her to rethink her strategy.
“I took my photos off,” Edwards said. “My face is not on business cards, not on the website, not anywhere.” Edwards said she has even considered hiring a white person to front for her business and be the face that potential clients would see.
“In my branding business, I have experienced a lot of racism,” she said “I have been shot down many, many times because I am a black woman and they would give the contract to someone else — a male, predominantly white male because, in that industry, it is white-male dominated.”
She said she has no doubts about why she failed on occasion.
“You kind of know when it is racism,” she said. “I would have great work, have a great portfolio, and I would go in, very professional and present them a strategy that would work for their project and would still lose the bid, so what is the problem?”
Invariably, she said, she would discover that the work of the person who got the contract is inferior to hers. “I had better work, better experience. You just know.”
With Scent and Fire, she has not had negative experiences. The company has been featured on NBC’s Today Show and on “America This Week” with Eric Bolling.
“With the candle business, it is different,” she said. “People approach me; they love the product.”
Laneesha Senegal, executive director of HOPE, agrees there are huge gaps in access between Black and white entrepreneurs. Regardless of age or success, Black-owned businesses are consistently denied loans.
“They [whites] are in the good old boy system; they have access to infrastructure; they have access to banks, lenders, and they have the bank’s ear,” Senegal said. “They restrict the amount of money that comes to us.”
Disadvantaged Business Enterprises program
Tate Hill and many people interviewed for this story accuse the city of Fresno of doing very little to alleviate the economic stagnation of Black-owned businesses. They point to the city’s procurement process and how it often excludes Black-owned businesses.
The passage of Proposition 209 in 1996 eliminated race as a consideration in awarding contracts in California. Because it receives federal funding, only the California Department of Transportation requires that state and local governments follow its Disadvantaged Business Enterprises program guidelines to ensure that businesses owned by minority and women are considered and awarded “not less than 10% of the amounts made available.”
On paper, the City of Fresno participates in the DBE program. The program’s policy statement identifies the city’s goals as creating “a level playing field on which DBEs can compete fairly for contracts and subcontracts...”
To achieve its goals, the city created the position of a DBE program coordinator, a position that has remained unfilled for almost a year, according to Mark Standriff, director of communications and public affairs for the city of Fresno.
“They [Fresno City Hall] have a $1 billion budget every year, and they have federal mandates regarding minority businesses,” Hill said. “The city has a goal of 10-12% for DBEs, but when we looked at the information the city provided, they awarded no more than 2% or 3%” of contracts to minority businesses.
Standriff insists that the city “has conducted multiple meetings with the various chambers as well as the Small Business Administration” and that projects are advertised in the FMBCC newsletter as well as in other cultural chambers’ publications.
Standriff also pointed to the Transformative Climate Communities program that “awarded $66.5 million in cap-and-trade funding to be used in a project area that covers downtown Fresno, Chinatown and southwest Fresno” as evidence of the city’s interest in the economic well-being of minority businesses and communities.
“Through an unprecedented series of community meetings,” Standriff said, “Mayor Brand put the power to decide how to spend the money from the TCC grant in the residents’ hands.”
Intentional neglect, or ignorance?
The reason for the persistent distress among Fresno’s Blacks is as complex as the causes and has its roots in the history of Fresno.
“It is about what the city has done in the past; the black community has resided in southwest Fresno which has not seen the kind of investments for economic developments that occurred in the northern part of the city,” said Esmeralda Soria, representative for District 1 on the Fresno City Council. “We talk about the Tale of Two Cities. I recognize that that [investment] hasn’t been good enough.”
Tania Pacheco, sociologist at Fresno State, said Black residents have been held down deliberately. “Sometimes, certain people get appointed white and are given an entry into the white culture; it is about who was eventually given ‘white status’,” she said. “In Fresno, that happened to Armenians, Asians and some Latinos. Black people have never been given even a temporary white status.”
Also, Pacheco said, Fresno operates on a basis that if we can help some, all will benefit. “But when north Fresno gets helped over and over again, it was supposedly going to help the economy for everyone. Time and time again, people of color living in the south were left out of that benefit.”
“We must do intentional investments,” Soria said. “The city’s proposed budgets have been inadequate to address social programming” to close the racial disparity.
Righting wrongs
How do Black businesses move forward from the present desperation?
“By bootstrapping, reinventing and recreating ourselves,” Tara Lynn Gray said. “We must figure out a way to keep going,” despite obstacles, despite the pandemic.
She said efforts must shift from finger pointing and blame to figuring out ways to improve lives.
Windell Pascascio, 31, owner of Imperial Electric Service, which employs 18 people full-time, knows a little about bootstrapping. His five-year-old business grossed more than $3 million last year, but not without his share of struggle and racial discrimination in contruction bids.
“In the construction industry, there are not a lot of African American contractors. I’m probably the only Black electrical contractor in Fresno,” Pascascio said. “I am hoping I’m able to break the barriers and open doors for others coming after me.”
Hill said his organization, Access Plus Capital, provides funding to minority-owned business and is focused on “those businesses that can’t get a traditional bank loan.” He said that about a third of those who seek funding from his organization are referred by their banks. “So these are their [banks’] customers that they can’t provide capital to because of their restriction,” Hill said. “So we’re able to lend to startups; we have access to various federal programs like SBA.”
Gray said that one way to change lives is the recently funded DRIVE Initiative (Developing the Region’s Inclusive and Vibrant Economy) — a 10-year plan to sustain and support an inclusive economy in Fresno. Gray is co-author and sponsor of the ”Betting Big Initiative” — a part of DRIVE that focuses on businesses owned by women and people of color.
This initiative “is designed to improve representation and success of businesses owned by women and people of color and could affect 1,000 small businesses and create 1,000 to 3,000 jobs over a three-year period,” Gray said. “It is a concerted effort; we want everybody to participate.”
Gray said the FMBCC works to ensure that Black-owned businesses “receive economic opportunity” and benefit from “the civil rights legislation that we have in this country.”
And even when everything seems bleak, “remember,” Gray said, “we’ve endured worse. Don’t give up.”
This story was originally published August 17, 2020 at 5:47 AM.
