To make these factors worse, low-income households greatly suffer structural disparities such as access to medical insurance, low-wealth levels and income volatility.^[16] People of color not only are more likely to live in low-income households, but also multigenerational households. Multiple family members of various ages intermingle in a household; adults may be caretakers of not only their children, but also grandparents. With multiple generations living together and also working in essential businesses, the likelihood of a household contracting COVID-19 is worsened.^[17]

Structural inequalities with long standing, historical roots have impacted the health conditions of Black and Brown communities at large, now making them more susceptible to COVID-19’s deadly nature. Douglas Massey’s (2004) article, “Segregation and Stratification: A Biosocial Perspective,” discusses how the residential segregation and socioeconomic inequality of Black communities are directly associated with increased risk for coronary heart disease, chronic inflammation and cognitive development. The chronic and acute daily stressors faced in Black communities, in which is disproportionately a concentration of poverty and violence, as well as a lack of sufficient resources to cope with such stressors, invokes a biological response similar to fight/flight response. The constant stress of being in such environments increases levels of cortisol and other glucocorticoid hormones, which can eventually lead to diseases such as inflammatory disorders or heart disease.^[18]

As now seen in the disparate rates of COVID-19 illness and death in African Americans, structural inequalities have direct impacts on the physical wellbeing and safety of marginalized communities. The United States’ history of segregation and redlining has had economic and health impacts that still persist to this day. NCRC’s report, “Redlining and Neighborhood Health,” found historically redlined neighborhoods to be related to: increased minority presence, higher prevalence of poverty, greater overall social vulnerability, poor mental health, and a life expectancy 3.6 years lower than non-redlined neighborhoods. In relation to COVID-19, the report also found statistically significant associations between historically redlined neighborhoods and pre-existing conditions for heightened risk of morbidity in COVID-19 patients like asthma, COPD, diabetes, hypertension, high cholesterol, kidney disease, obesity and stroke.^[19] Historic discrimination and disenfranchisement of majority-minority communities resulted in not only socioeconomic impacts, but also public health issues, all of which have been worsened under the COVID pandemic.

Entrepreneurship Disparities Worsened by COVID-19

Small businesses owned by people of color have been irreparably harmed by COVID-19. The U.S. Census Bureau’s 2018 Annual Business Survey estimated that African Americans owned 124,004 firms, with 32% of these firms in the healthcare and social services industry. These industries have been among those hardest hit by COVID-19. To further exemplify the intersection of race and industry, McKinsey & Company found that the five sectors most impacted by COVID-19 closures represent almost 40% of revenues for Black-owned businesses. These five sectors are leisure and hospitality, retail trade, transportation and utilities, constructions and “other services,” such as drycleaning and laundry, personal care, pet care or photo finishing services.^[20] Color of Change and UnidosUS conducted a national survey of Black and Latino Small-Business Owners in light of COVID-19, finding that among Black and Latino small businesses that are still open and operating, nearly half expect to close within the next 6 months if current conditions remain the same. Furthermore, although 51% of Black and Latino small business owners requested less than $20,000 in funding, only 12% received full assistance requested.^[21]

In an attempt to relieve small business owners’ burdens during COVID-19 and to save firms across the country, the Paycheck Protection Program was established under the CARES Act. Designed to cover payroll costs, interest on mortgages, rent and utilities, the PPP loans can be fully forgiven if business owners use the funds as intended and if employee headcount remains the same.^[22] However, just like many other loan structures, the design and availability of PPP loans were not as equitable as was necessary. The PPP fee structure heavily discourages small loans to smaller businesses and, in particular, non-employer firms. Additionally, although the loans can be fully forgiven, the documentation requirements necessary to ensure loan forgiveness are much more difficult to execute for small businesses lacking a lawyer, accountant or other compliance staff. Minority-owned firms have a greater lack of access to capital and resources necessary to prevent the PPP loans from converting to long-term debt, further exacerbating pre-existing racial wealth gaps, and driving minority entrepreneurs further into debt.^[23]

Businesses owned by people of color are likely to have fewer employees and less revenue than White-owned businesses. Non-employer businesses are far more likely to be owned by people of color. Nearly 96% of Black-owned firms were non-employers, and 91% of Latino-owned firms were non-employers. In comparison, 78% of White firms are non-employer businesses. As a result, they were less likely to qualify for larger [PPP] loans that would yield the higher fees that would make them a priority for lenders at the outset of the program. Businesses owned by people of color are even more likely to have no employees, putting them at an even greater disadvantage to larger businesses that could garner higher fees.^[24]

Similar to NCRC’s matched-pair testing of lending discrimination, the Fed’s study found Black business owners are also more likely than White owners to report being discouraged from applying or not applying for financing, because they believe they will be turned down. Among Black employer firms, 37.9% reported being discouraged, compared to 12.7% of White-owned firms. In addition to being actively discouraged from traditional financial avenues, Black-owned firms are more likely to lack an existing and healthy banking relationship. Although 28% of Black nonemployer firms and 54% of Black employer firms applied for financing in the last 12 months, only 1 in 10 Black nonemployer firms, and 1 in 4 Black employer firms had a recent borrowing relationship with a bank. In comparison, 25% of White nonemployer firms and 45% of White employer firms had applied for financing in the past 12 months, and 1 in 4 White-owned nonemployer firms had a recent borrowing relationship with a bank.

This disparity illustrates not only that Black entrepreneurs are applying for financing at equal or higher rates than their White counterparts, but also that they are being denied at higher rates.^[25] A lack of an existing banking relationship makes it difficult to secure lending and financing, especially when applications are met with frequent denials. Perceiving a higher probability of funding success from online lenders, Black-owned employer and nonemployer firms are relatively more likely to turn to online fintech providers for funding. Online fintech lenders eliminates the interpersonal discrimination that may occur at a bank branch with a loan officer, and more widely use alternative credit data sources that may be beneficial to minority borrowers. Minority firm owners sought PPP funds through Fintech providers; however, Fintech providers were not initially authorized to lend PPP funds though they collectively dispersed $4.7 billion in funds through June 30^th.^[26] Considering that African American business owners were systematically barred from PPP funding due to its design, Fintech’s unauthorized ability to lend PPP funds further contributed to African American entrepreneurs’ lack of access to capital during COVID-19.

The Federal Reserve Bank of New York also notes that “Black business activity is geographically concentrated in the U.S. and is correlated with Black population density. Research shows that Black populations are typically clustered in metropolitan hubs and the number of cities that are majority-Black has grown over the past decade. Forty percent of receipts from Black-owned businesses are concentrated in just 30 counties, roughly 1% of all counties in the country.” The Federal Reserve Bank of New York found roughly two-thirds (19 of 30) of counties where Black-owned businesses are concentrated are areas with the highest numbers of COVID-19 cases. Given the high geographic concentration of firm activity and the Black population in general, business disruptions in these particular places can have outsized effects on African American well-being at large.”^[27] In comparison, the study found a negative correlation between White business density and COVID-19 incidence; meaning that areas with higher shares of White-owned firms tend to have lower shares of COVID-19 cases.^[28]

Throughout the COVID pandemic thus far, self-employed entrepreneurs in North Carolina experienced a total 12% decrease of those who were actively working. All races of self-employed entrepreneurs experienced great fluctuations in active employment rates, likely due to the back-and-forth business reopening and closures. White entrepreneurs, however, enjoyed a complete return to pre-COVID active entrepreneurship rates by August. On the other hand, rates of Black self-employed entrepreneurs that are actively working experienced a 62% decrease by August from pre-COVID rates of active employment.