UMass Donahue Institute Report Highlights Wealth-Building Opportunities for Boston’s Diverse Small Businesses

The UMass Donahue Institute today is releasing “Supporting Diverse Small Business Owners in Boston,” a new research paper examining the significant barriers that Black and Brown entrepreneurs in Boston face in accessing the critical support needed to launch, grow and sustain their ventures. The research provides forward-looking recommendations that build on the success of existing citywide and statewide public and private programs and offers more data and insights on how to unlock more wealth-building opportunities for small business owners in Dorchester, Roxbury, Mattapan and East Boston.

Boston and the nation are at a unique point in time with the COVID crisis disproportionately impacting diverse-led small businesses and while the economy is recovering, new challenges are emerging for Boston’s small business community. Using a year of quantitative research, UMass Donahue’s Economic & Public Policy Research team conducted interviews with City of Boston leaders, local Main Street organizations, chambers of commerce, community development finance institutions and small business owners in the four neighborhoods. JPMorgan Chase invested $225,000 for the partnership with UMass Donahue Institute to measure and understand the opportunities and challenges of Boston’s small business ecosystem and develop place-based, recommendations to support business owners in Dorchester, East Boston, Mattapan and Roxbury.

“Our research highlights that the businesses in these neighborhoods are committed to providing essential services to the community and are overwhelmingly looking to expand or grow in the near future,” said UMass Donahue Institute Senior Research Manager Kerry Spitzer. “The majority of these businesses are owned by people of color and women. We hope that these recommendations will encourage stakeholders and policymakers to collaborate and find ways to ensure that business owners have an opportunity to realize their potential.”

The research report organizes around four key themes: access to capital; neighborhood gentrification and displacement; technical assistance; and neighborhood conditions. The themes emerged through the research and interviews, with all stakeholders citing the continued critical need for diverse small business owners to have access to capital given the systemic exclusion they have and continue to face to traditional pathways of wealth generation, such as homeownership. Business owners, especially those with brick-and-mortar stores, were interested in ensuring neighborhoods’ commercial corridors were welcoming to residents and customers.

“A recent JPMorgan Chase Institute report found that few small businesses reach $1 million in revenues in the first five years. Further, Black-, Hispanic-, and/or female-owned firms were least likely to earn $1 million in revenue within five years of starting business,” said Rafia Zahir-Uddin, vice president of Global Philanthropy for Massachusetts, JPMorgan Chase. “The findings from the UMass Donahue Institute report provide greater understanding for the Massachusetts region around small business growth and in particular, equitable access to growth opportunities and resources for these diverse entrepreneurs.”

Key recommendations from the report include:

• Access to Capital – Expand access to microloans and support the development of loans that do not require traditional forms of collateral.
• Gentrification and Displacement – Explore the potential of community land trusts and community investment trusts to meet the needs of small business owners.
• Technical Assistance – Support efforts to increase procurement opportunities for neighborhood-based businesses with anchor institutions to help sustain and grow businesses that have moved beyond the initial start-up phase.
• Neighborhood Conditions – Support the preservation, maintenance, and renovation of neighborhood sites and main streets.