New Orleans is among the top 50 US metros for Black-owned businesses
11th March 2024 · 0 Comments
By Mason Harrison
Contributing Writer
A new report by one of the country’s largest lending platforms is declaring New Orleans among the “top 50 U.S. metros where Black-owned businesses are most prominent,” ranking the city 18th on the portion of ventures owned by Black entrepreneurs and 30th overall in total number of Black firms.
LendingTree, a North Carolina-based digital marketplace for a range of debt instruments, issued the report on February 5 against the backdrop of Black History Month to assess the state of Black enterprise in America. The company, known for the slogan, “When banks compete, you win,” found, however, that lenders do not compete to originate loans on behalf of Black proprietors and offer inferior loan products instead.
“A lot of it is really just racism,” says Matt Schulz, chief credit analyst at LendingTree, describing the obstacles many Black entrepreneurs face when seeking to secure capital for their businesses. “There is no question that discrimination is part of the reason why some banks are reluctant to lend to Black firms.”
The report also cites lacking “a solid business plan,” “starting a business with little to no money,” “succeeding in your first year” as an entrepreneur, “accessing startup business loans,” knowing how to “prevent small business failure,” and “navigating state-specific small business resources” as parts of the labyrinth of landmines many would-be Black business owners succumb to before achieving financial success.
It is within this context that the New Orleans Business Alliance, the city’s decade-old public-private economic development engine, is attempting to “strengthen Black-owned businesses across the city,” according to recently-minted president and CEO, Louis David. “NOLABA is dedicated to growing jobs and investment in the [local] economy through the lens of equity, and many of our programs [do just that].”
Two programs of particular importance to David are InvestNOLA, which helps scale small firms with high-growth potential owned by entrepreneurs of color, and the Resilient Corridor Initiative, a program that supports small businesses located along major thoroughfares in historically Black business districts.
NOLABA is also spearheading the supplier diversity program for the 2025 Super Bowl in New Orleans.
A recent federal court ruling, however, could put these programs at risk. In June, the U.S. Supreme Court rejected race-conscious admission to colleges and universities, leading to a cascading effect in the private sector and civil society in which businesses and charitable organizations, under threat of litigation, adopted race-blind policies and procedures or amended their operations to be less racially aware.
“It is on our radar,” David says, referring to the recent spate of legal challenges to race-based programs. “This is definitely something we have discussed at the office, but I have not heard anything to suggest that there will be an impact locally. Should such a challenge arise, I think it is extremely important that we support Black businesses, many of which are small businesses. We are, after all, a small business city.”
But if, in a post-affirmative action legal environment, programs like InvestNOLA and the Resilient Corridor Initiative are gutted or watered down, David says a potential funding source for Black business owners lies in the private sector.
“It will be interesting to see if all of the promises and pledges from large companies come through,” he says, referring to the nearly $50 billion in commitments made to racial justice following the death of George Floyd, with another almost $300 billion in pledges from other entities.
But such commitments have been made before. Corporations promised billions, in today’s dollars, to address racial disparities after the riots of the 1960s, most of which, however, never came into being.
“There is a history of Black capitalism being promoted as the solution to Black inequality,” says Jared Ball, professor of Africana and communications studies at Morgan State University and author of The Myth and Propaganda of Black Buying Power. “But we have at least 100 years of data to counter this notion.”
Ball recommends alternatives to Black entrepreneurialism that are focused on redistributive economics.
“If, for example, we were to allocate as little as one percent of the annual gross domestic product to public welfare we could mitigate many of the issues we experience in our communities and there would be no need to argue with one another over a perceived failure to support each other’s Black ventures.”
Ball notes that between 1992 and 2012, two million Black businesses were created in the United States. “But during that time,” Ball says, “their capture of national sales revenue fell from one percent to half a percentage point.” This data lies in stark contrast to reports like those produced by LendingTree which often tout the growth in the number of Black-owned firms in lieu of exploring their financial viability.
There are, according to LendingTree, 1,005 Black-owned businesses in New Orleans.
“Lack of revenue and an identity crisis are the two major factors impacting Black businesses,” according to Angele VanDerPool, CEO of the 500-member strong New Orleans Regional Black Chamber of Commerce. “We do what we can to assist our members, including connecting them to resources to help improve their marketing; determining whether an increase in revenue can replace the need for outside capital and, if so, how to secure that revenue; and helping them streamline services and product lines.”
A decade ago, PowerMoves NOLA promised to make New Orleans the number one hub for Black entrepreneurship in the country, a goal that never materialized. New Orleans was also, at the time, one of the fastest growing cities in the country and ranked No. 1 for entrepreneurship. Most new businesses formed during that time, however, were by white transients flocking to the city after Hurricane Katrina.
But a new bill signed into law last year by outgoing governor, John Bel Edwards, aims to help disadvantaged business enterprises seeking government contracts compete with prime contractors.
“The new law is called Act 230,” says Steven Kennedy, a local consultant specializing in urban planning. “The idea is to have DBEs compete against each other,” Kennedy adds, “instead of competing with prime contractors. This will help them grow and allow them to secure more revenue and expertise for their firms.”
Historically, DBEs have lamented the subcontractor process as one that pays what amounts to wages, but not profits.
The COVID-19 pandemic shuttered many New Orleans-area Black businesses, but also gave birth to a few. Peter Labat lost his job as a navigational watch officer when maritime traffic crawled to a standstill during COVID lockdowns. He turned what had been a personal passion into a business – woodworking. In 2020, he founded the Labat Wood Shop and sold premade and custom designed items.
Labat attributes his early success to a local business incubator for entrepreneurs of color.
“I really learned a lot from the courses at Launch NOLA,” he says. “I highly recommend that program to other entrepreneurs.” His wood shop closed after almost four years, however, because of slowing sales. “I wasn’t making enough money for the hours that I was putting in at the time. So, it was no longer worth it.”
Labat, however, remains an entrepreneur at heart, but is dubious about starting another effort locally. “I don’t think consumers in New
Orleans have the discretionary income to support the type [of] entrepreneurship I want to engage in. So, for that reason and quality of life reasons, I’ll definitely be leaving.”
This article originally published in the March 11, 2024 print edition of The Louisiana Weekly newspaper.
