Black Businesses Hit Hard in New Orleans

Jennifer Liberto, CNN, August 20, 2009

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Less known and perhaps more devastating to the African-American business community was the destruction of many black middle-class neighborhoods. Doctors, lawyers, architects, teachers and business owners have yet to return to homes in New Orleans East and Gentilly.

Just as these neighborhoods have been the slowest to repopulate, black-owned companies have been slowest to return and restart.

Based on phone disconnection rates, nearly one in four black-owned companies in New Orleans and Biloxi had closed in 2008, a rate 52% higher than for white-owned businesses, according to the Political & Economic Research Council, a North Carolina think tank.

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Now, as cranes, backhoes and steamrollers become more commonplace in the city, New Orleans’ storied African-American business community could be left out of the rebuilding of the city.

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While there’s a new law on the books that encourages the city to spend 35% of all public financing on minority- and women-owned businesses, [Mayor Ray] Nagin said he’s worried the city can’t meet those goals due to the smaller pool of available companies.

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Under-represented

Black-owned businesses in New Orleans never reflected the city’s demographics. In 2002, African Americans made up two-thirds of the population in New Orleans. But less than a third of businesses were black owned.

Solid post-Katrina recovery numbers are scarce, but the Political & Economic Research Council has focused on small businesses in New Orleans and Biloxi, Miss., and in three surveys they found that African-American owned companies were hardest hit.

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Many black-owned small businesses were particularly ill-prepared for such devastation, because they tended to start out deeper in debt, with far less access to start-up investment funds.

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According to the Political & Economic Research Council, those black-owned companies that survived reported lower sales, higher debt and a tougher time getting access to affordable credit than companies owned by whites or Hispanics. Michael Turner, president of the think tank said that most of their reports have concluded that African-American owned companies were “sucking wind” compared to those owned by other ethnicities.

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