By Stacy M. Brown
Black Press USA Senior National Correspondent
Black-owned businesses have experienced historic growth in recent years, but that progress is now under threat. A sharp decline in small business optimism, coupled with sweeping anti-DEI executive orders from the Trump administration, is creating new hurdles—particularly for African American entrepreneurs who remain vastly underrepresented in the U.S. economy. According to Pew Research Center, the number of U.S. firms with majority Black ownership surged from 124,004 in 2017 to 194,585 in 2022. Revenues also soared by 66%, reaching $211.8 billion. Yet Black-owned businesses still accounted for just 3% of all classifiable firms and only 1% of gross revenues that year, despite Black Americans making up 14% of the population. More than one in five Black adults say owning a business is essential to their definition of financial success, and most of those who own businesses depend on them as their primary income source. The vast majority—71%—have fewer than 10 employees, and they are disproportionately concentrated in sectors like health care and social assistance (26%), professional and technical services (14%), and transportation (9%).
However, as the Pew report shows gains, the National Federation of Independent Business (NFIB) paints a far more troubling picture of the broader small business climate. The NFIB Small Business Optimism Index dropped to 95.8 in April, marking the second month in a row below its 51-year average. Small business owners reported declining expectations for real sales, fewer capital investment plans, and significant difficulties finding qualified labor. Only 18% of owners said they plan to make capital outlays in the next six months—down from previous months and the lowest level since April 2020. The policy environment compounds the problem for Black-owned firms. In January, President Trump signed executive orders EO 14151 and EO 14173, effectively dismantling many federal Diversity, Equity, and Inclusion (DEI) initiatives. These orders direct agency heads to align all federal programs—including contracts and grants—with so-called “merit-based opportunity,” opening the door to deprioritizing race-conscious support programs. While the administration cannot eliminate statutory set-aside programs like the SBA’s 8(a) Small Disadvantaged Business designation without congressional approval, it is already moving to gut enforcement and reducing goals. SBA Administrator Kelly Loeffler issued a memo in February announcing her intent to reduce the 8(a) contracting goal from 15% to the statutory minimum of 5%, citing alleged disadvantages to veteran-owned businesses. The administration is also expected to cease auditing compliance with subcontracting goals for minority-owned firms, which could severely impact opportunities for small and large companies that depend on federal contracts.
These moves are especially worrisome for Black business owners, who are already navigating disproportionate barriers to access to capital and markets. While White-owned businesses make up 84% of all classifiable firms and account for 92% of total revenue, Black-owned businesses remain a small sliver despite their rapid growth. With small business optimism waning and federal support shifting away from equity initiatives, many Black entrepreneurs now face a chilling reality: a promising rise in business creation and growth may be undermined by policy changes designed to erase the very programs that helped level the playing field. “Uncertainty continues to be a major impediment for small business owners,” NFIB Chief Economist Bill Dunkelberg said, noting that labor shortages, declining sales expectations, and inflation remain pressing concerns.
