UK businesses run by ethnic minorities are “particularly exposed” to Covid-19’s impact

 Coronavirus is disproportionately impacting black, Asian and minority ethnic services – and their customers.

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Before the pandemic, 250 young people took dance classes at Tina Rehana’s studio in Manchester. That is no longer the case. When lockdown began in March, she closed the studio and cancelled subscriptions so parents wouldn’t have to shoulder the cost.

After lockdown, Rehana went back into her studio to see if she could reopen in a socially distanced way, but it was “practically impossible”. The studio is on the second floor of a building with narrow corridors, staircases and rooms that were not designed to mitigate a pandemic. The situation was even more challenging for Rehana because she lives at home with her mother, who has severe asthma. “I can’t risk bringing Covid home to her,” she says.

Just 5.4 per cent of small and medium-sized enterprises are run by a majority black and minority ethnic leadership, according to government statistics published in 2018. This proportion is higher in sectors including health and social care, education, retail and accommodation, and food service.

With research suggesting people from ethnic minority backgrounds are two to three times more likely to die from Covid-19, BAME business owners with a significant client base in those communities face additional pressures and responsibilities during the pandemic going forward – and the economic downturn it brings with it.

“A lot of black businesses suffered during this pandemic,” says Ismael Lea South, who runs a project called Black Business 4 Black Youth, which recruits black-owned businesses in London, Manchester and Birmingham to provide placements for young black men.

The scheme was meant to start in May but is now on hold, and many of the businesses are struggling. Shops in particular have been badly hit, according to South. Anecdotally, he believes few black businesses applied for government support schemes in part due to a lack of trust in the system and concerns about the “red tape” of applying.

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Research from 2006 by the London Development Agency found a quarter of black-owned businesses faced “significant problems” accessing business loans and overdrafts, compared with 11 per cent of Asian-owned and 10 per cent of white-owned businesses.

2012 report by Warwick Business School found that even when black-owned businesses had an overdraft, the interest rate was 2.12 percentage points higher than for white-owned businesses, and that black-owned businesses were 14.4 per cent more likely to be rejected for a long-term loan.

Similarly, a lot of people South speaks to are concerned about reopening because of the impact of coronavirus on people of African and Caribbean origin. “Some of us are roughing it out, going through their Universal Credit until they feel it’s safe to come out,” he says.

“The profile of BAME businesses leaves them particularly exposed,” says Professor Monder Ram, Director of the Centre for Research in Ethnic Minority Entrepreneurship at Aston University. A high proportion of these businesses are concentrated in sectors that have been badly hit, such as the catering sector, transport (such as taxi drivers), and, to a lesser extent, retail.

Regarding the impact of a predicted economic crisis, Ram warns that minority-owned businesses are largely in “brutally competitive markets” and have always been at the sharp end of recessions. One reason is that black and minority ethnic people face discrimination in employment, cannot get jobs that reflect their skills and therefore are forced into tougher sectors.

Business support services by national and local government have traditionally failed to reach black and minority ethnic-owned businesses, or entrepreneurs, he says. "There really does need to be this effort to engage… and that needs to be very evident." Having long since lobbied for “better data”, he is unsurprised that the government is not collecting equality data on businesses.

Ram hopes that the renewed attention on racial inequality following the Black Lives Matter protests and disproportionate Covid-19 deaths could lead to change. Black and minority ethnic businesses have shown incredible resilience in the past, he says. "Now is a great opportunity really to think about perhaps more ambitious programmes of business support… largely because minority businesses may not have any other choice," he adds.

The issue of whether black and minority ethnic-led businesses were applying for and receiving support was raised in June in the London Assembly by Caroline Russell, a Green Party assembly member. She asked whether the schemes run by the Mayor of London through the capital’s Growth Hub collected equalities data and if it would be published.

In response, London Mayor Sadiq Khan said: “Of the businesses supported through the London Growth Hub’s core business support programme since the start of the pandemic (mid-March), 38 per cent were BAME-owned businesses.”

[See also: We can’t breathe​]

Some black and minority ethnic-owned businesses have been able to navigate the uncertainty and are even growing their business. “The first two weeks our sales dropped by just over 90 per cent,” says Lina Gadi, who runs a male grooming brand, Aaron Wallace. She looked into the government support schemes but found the process “unnecessarily complex and, given the urgency, too lengthy”.

Instead, the size of her company allowed her to weather the storm. Eventually, online sales started to boom. “More and more of our customers are spending their time online, making them easier to reach and therefore easier to communicate with.”

But moving online is not a solution for all businesses. After Rehana closed her dance studio for lockdown, online classes had a slow take-up, even with a heavy discount. A government grant of £10,000 has helped keep the business going, and she has a talent agency that has diversified into influencer management. Yet the problem, she says, is that grant money will run out long before the studio is likely to return to pre-pandemic business.

Business Secretary Alok Sharma said: “We will continue to do everything we can to ensure our ongoing business support schemes reach those who need it the most.”

He highlighted that throughout this crisis, his department has hosted a series of roundtables on the support schemes to “ensure BAME business owners get the finance they need to thrive”. He added that supporting entrepreneurs “from all walks of life not only makes sound business sense, it is essential to rebuilding an economy that reflects our country’s diversity”.

Samir Jeraj is a Special Projects Writer at the New Statesman

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