Despite Black Americans making up 14% of the country, they own only 3% of all firms. Still, in recent years, Black-owned businesses have experienced unprecedented growth: from 2017 to 2021, the number of Black businesses increased by 29.9%. The contrast between progress and disparity reflects the long history of barriers that shaped who could build and sustain a business in America, as well as the drive of Black Americans to overcome these barriers. These structural barriers are more deeply rooted — and more currently relevant — than many people realize.

While some businesses owned by African Americans existed during slavery, the initial surge of Black entrepreneurship occurred after emancipation. Formerly enslaved people, seeking economic independence and self-determination, established small businesses, including barbershops, salons, restaurants, and small farms. During reconstruction, these efforts developed into flourishing businesses and districts. The implementation of segregation policies during the Jim Crow era limited Black businesses to their own communities, but it did not restrict the growth of these businesses. In 1900, around 20,000 Black-owned businesses were established.

By 1914, the number had already doubled. Within segregated Black neighborhoods, successful districts of Black businesses emerged. Namely, the Greenwood District of Tulsa, Oklahoma — often referred to as the “Black Wall Street”. This district became a symbol of Black economic achievement, developing businesses, banks, and cultural institutions that were owned and maintained by Black residents.

The growth and success of Black businesses despite segregation policies drew attention from surrounding White communities, particularly those who viewed Black success as a threat to White supremacy. Hostility culminated with the Tulsa Race Massacre of 1921, in which hundreds of people were killed or injured as White mobs destroyed the Black businesses established in the Greenwood District of Tulsa, Oklahoma. Over 191 businesses were burned, destroying an estimated $200 million in assets accumulated by the Black community in the city.

The Tulsa Race Massacre was not an isolated incident. Rather, the massacre reflects the broader resistance against the economic development of Black Americans. By the 1930s, resistance had developed into formal policies that debilitated opportunities for economic growth in Black communities. Redlining, the most infamous of these policies, is the withholding of financial services from certain geographical areas. The government-backed policy divided many cities by perceived investment risk. Nearly all Black neighborhoods were labeled as “hazardous” areas, systematically denying access to mortgages, investment, and business loans. Segregation restricted Black Americans to certain areas; redlining prevented Black Americans from accumulating wealth from within these neighborhoods.

Between 1945 and 1959, African Americans received less than 2% of all federally insured home loans, illustrating the exclusion of African Americans from wealth-building opportunities. Recent studies show that residents of “green” neighborhoods have incomes that are twice those of residents in previously “hazardous” areas. These policies solidified the established racial wealth gap, allowing for the systematic inequalities that restrict social mobility in Black communities to persist across generations.

Knowledge of past policies and events is necessary to understand the challenges Black owners face today. Due to these historical barriers, these entrepreneurs often have few assets, such as capital, networks, and institutional opportunities, to start up a business. Black founders only raise approximately 1% of total venture capital, demonstrating how historical exclusion continues to shape modern access to investment. This lack of capital forces many Black entrepreneurs to launch businesses at a smaller scale, limiting growth potential and economic influence.

Additionally, the neighborhoods in which many Black-owned businesses are located face challenges such as food deserts, limited infrastructure, and corporate consolidation. Large corporations enter these often struggling communities and displace local business owners. In turn, these corporations both reduce opportunities for new businesses to arise and increase reliance on large companies, which rarely redistribute wealth into the communities from which they extract money.

Despite barriers, the resilience of Black entrepreneurs has enabled the recent growth of Black businesses. Statistics show that the number of Black-owned firms with at least one employee in the United States increased by 62% between 2017 and 2023. The growth of Black-owned firms significantly outpaces the national average, with the rate of growth being nearly eight times that of all U.S. businesses between 2017 and 2021. In fact, Black women are the group with the highest growth of entrepreneurs.

Black Girl Sunscreen, founded by Shontay Lundy in 2016, is a contemporary example of a successful Black-owned business. Lundy invested her own savings to develop a formula that absorbs into and protects melanated skin. Through social media strategy and community support, she grew the brand into a nationally recognized and distributed product. Black Girl Sunscreen is available in various stores such as Target, Ulta, and Walgreens. The company, now valued at $5 million, demonstrates the resilience of Black business owners despite historical barriers.

The story of Black Girl Sunscreen demonstrates a broader trend: Black entrepreneurs are increasingly leveraging creativity, community, and technology to overcome systemic obstacles that have historically limited business growth. Technology, especially, is aiding the surge in Black businesses. 85% of Black-owned businesses use digital tools, with 83% reporting a noticeable impact on growth and 80% citing them as critical to driving revenue. Platforms such as Etsy, Amazon, and social media channels allow Black business owners to reach customers beyond their neighborhoods, helping overcome some limitations caused by historical exclusion.

In addition to the rise of technology, the growth of Black entrepreneurs is supported by investment and education programs. Initiatives like Amazon’s Black Business Accelerator, the Black Economic Development Fund, and Seed at the Table provide a combination of funding and mentorship to Black-owned businesses. HBCU partnerships and grants further equip emerging entrepreneurs with the tools necessary to scale their ventures successfully.

Despite the progress seen in recent years, opportunities for Black entrepreneurs remain limited, especially due to the environments in which many of the businesses are founded. These patterns highlight the importance of supporting local and Black-owned businesses. Studies indicate that roughly 45% of every $100 spent at local businesses is reinvested in the local economy through wages, local purchases, and taxes. By comparison, only 13% of each $100 spent on chain retailers is reinvested. Beyond increasing local wealth, supporting Black-owned businesses fosters job creation and economic self-sufficiency within their communities.

Local businesses often hire employees from their neighborhoods and invest their profits in community programs. By contrast, large corporations usually move profits to distant headquarters, depleting local economies. Supporting Black entrepreneurs contributes to community development and strengthens economic resilience.

The future of Black business owners reflects both opportunity and uncertainty. While recent growth shows progress, disparities in funding and infrastructure continue to limit the long-term expansion of Black businesses. 8 in 10 Black-owned businesses fail within the first 18 months – not due to a lack of creativity or potential, but because of the ongoing impact of limited access to capital and resources.

At the same time, advances in technology, targeted investment programs, and increased visibility can all create new pathways to success. The future of Black entrepreneurship depends on whether inequalities are addressed. The rise in Black startups illustrates the ambition of many Black business owners. However, the rate at which these businesses are forced to close highlights the detrimental effects of discriminatory policies, which were replaced by systems that often overlook Black founders.

Entrepreneurship is not new to Black Americans. From the businesses established after emancipation to the thriving business districts built during segregation, Black entrepreneurs have long demonstrated innovation and determination in the face of institutionalized barriers. Still, violence and various policies have limited the ability to sustain and scale these efforts across generations. Addressing the effects of the past will play an important role in shaping a more equitable economy in which Black business owners can thrive. Awareness, however, will not resolve the institutional nature of the problem.

While visibility and attention for Black businesses can be helpful, placing responsibility on individuals rather than systems prevents the changes necessary for long-term success. Meaningful change will require targeted investments such as federally backed loan programs to improve access to capital and equitable investment strategies. Without policies that directly combat and challenge systemic barriers, progress will remain short-term for a group of entrepreneurs that are capable of achieving long-term success.

Notes

A look at Black-owned businesses in the U.S. at Pew Research Center.
How many Black-owned businesses are there in the US? at USA Facts.
Black Entrepreneurship Isn’t New; It’s Part of a Long Tradition at Jacquette M. Timmons.
Considering History: Black-Owned Businesses Reflect the Best of American History at The Saturday Evening Post.
The 1921 Tulsa Race Massacre and the financial fallout at The Harvard Gazette.
Redlining at (https://en.wikipedia.org/wiki/Redlining)[Wikipedia].
Impact of Federal, State, and Local Housing Policies on Disparities in Cardiovascular Disease in Black/African American Men and Women: From Policy to Pathways to Biology at National Library of Medicine.
The Roots of Structural Racism Project at Othering and Belonging Institute.
Black Entrepreneurship and Education, Training, and Workforce Development at Urban Institute.
Underestimated start-up founders: The untapped opportunity at McKinsey & Company.
What is Local Self-Reliance? at ILSR.
The LOCAL FIRST Movement at GoLocal.
Black employers are reaching new heights at Brookings.
Who We Are at Black Girl Sunscreen.
Black Girl Sunscreen is Now Valued at $5M Thanks to a Female Investor at AfroTech.
Black Business Owners Are Incorporating Digital Tools to Thrive in Retail at NetChoice.
Amazon’s Black Business Accelerator at Amazon.
HBCU Founders Initiative.
How To Back Local, On A Budget at Portland Buy Local.
The Local Multiplier Effect: How Independent Locally Owned Businesses Help Your Community Thrive at AMIBA.
Why Black-owned businesses are struggling to stay afloat at CNBC.