As Black History Month gets under way, online lending marketplace LendingTree Inc. offers new research on Black-owned businesses in the United States, notably where they are thriving and where they remain underrepresented across the country’s major metros.
In its fifth annual “Black-Owned Business Hubs” report, LendingTree finds that Black-owned businesses account for just 3.4 percent of all U.S. businesses, a share far below the 14.4 percent Black share of the U.S. population even as dozens of metros are showing strong Black business momentum. At the same time, white-owned businesses account for 80.6 percent of all U.S. businesses and Asian-owned businesses account for 11.5 percent.
LendingTree researchers analyzed 2023 data from the 2024 U.S. Census Bureau Annual Business Survey—the latest available data—to rank the metros with the highest percentage of Black-owned businesses. They first compiled the number of Black-owned businesses in the 100 metros with the most Black-owned businesses, and then compared that number to the total number of businesses in each metro. The metros with the highest percentage of Black-owned businesses were ranked from highest to lowest.
Reasons for the low share
The persistent low share of Black-owned businesses partly reflects ongoing structural barriers that many entrepreneurs of color face. Research indicates that access to funding remains a central challenge: Black founders are more likely to rely on personal savings or high-interest credit because of loan-denial disparities and lower intergenerational wealth than their white counterparts. This can limit both startup activity and long-term growth.
Still, the percentage of Black-owned businesses has increased in recent years. In 2020, only 2.4 percent of the country’s companies were Black-owned. That percentage rose to 2.7 percent in 2021 and 3.3 percent in 2022. LendingTree contends that the minimal growth between 2022 and 2023 (0.1 percentage point) is also likely a reflection of post-pandemic economic shifts.
“High prices and high interest rates don’t just cause challenges for consumers. They’re tough on businesses and can scare aspiring entrepreneurs away from taking that next step,” says Matt Schulz, LendingTree chief consumer finance analyst. “The growth that we saw in 2020 and the years immediately following happened, at least to some degree, because Americans had a lot more money in their pockets during that time. They spent less because of lockdowns and other restrictions. They also received government stimulus checks, which, along with the reduced spending, made it possible for them to pay down their debts, save more money and have more expendable income for things like starting a small business.
All that has “faded into memory, Schulz says, “and stubborn inflation and high interest rates are making things tough on most anyone. As much as people would love to start a small business or inject more funds into their current business, it just may not be possible.”
Where Black businesses thrive
According to the report, Atlanta leads the nation for the fourth year in a row, with 10.7 percent of businesses Black-owned, followed by Fayetteville, N.C., with 9.9 percent and Washington, D.C., with 9.4 percent.
Atlanta’s continued high ranking is likely tied to several structural and demographic factors, LendingTree notes. Roughly one-third (33.5 percent) of the metro’s population is Black, creating a larger base of potential business owners. The area also has a long history of Black economic activity, supported by strong community networks, local entrepreneurship programs and a high concentration of historically Black colleges and universities (HBCUs), all of which help foster business formation and growth.
For the second year in a row, Salt Lake City has the lowest share of Black-owned businesses with just 0.5 percent of its businesses Black-owned, followed by Honolulu (0.7 percent), and Boulder, Colo. (1.0 percent), ranking next closest.
Top industry categories
About 1 in 4 Black-owned businesses operate in health care and social assistance, a category that includes medical and dental services, child care and community relief, LendingTree reports. The category accounted for 25.6 percent of Black-owned businesses in 2022 and 28.0 percent in 2021. Professional, scientific and technical services (14.0 percent) and administrative and support and waste management and remediation services (8.1 percent) follow.
At the other end of the spectrum, the utilities sector had only 57 Black-owned businesses. Meanwhile, management of companies and enterprises had 176, accounting for just 0.1 percent of firms with Black owners, unchanged from the previous year.
Black women entrepreneurs
In LendingTree’s report, women lead nearly 40 percent of Black-owned businesses (39.3 percent) and their firms tend to be younger. The report shows 24.9 percent of all Black-owned businesses are less than two years old, rising to 26.8 percent among Black women-owned businesses.
The rate of business ownership among Black women has increased rapidly over the past decade, LendingTree found. From 2014 to 2019, the number of businesses owned by Black women grew by 50 percent, the highest growth rate of any female demographic, according to a J.P. Morgan report.
Despite the growth, Black women entrepreneurs face disproportionate challenges in both launching and growing their businesses. For instance, Black women are far more likely to self-fund their startups. Research from think tank Brookings Institution indicates that employer businesses (those with at least one employee) owned by Black women are more likely to serve as a secondary source of income, as opposed to their primary source, which limits potential business growth.
Tips for new Black entrepreneurs
While starting and sustaining a business is challenging, LendingTree’s experts say aspiring Black business owners can take steps to improve their odds of success, including:
Seeking out targeted funding and support programs. “There are loads of organizations that want to help,” Schulz says. Small Business grants, accelerators and loan programs designed for minority-owned businesses can provide both capital and mentorship, helping close access gaps. “Googling ‘small business resources near me’ can be a great place to start,” Schulz advises.
Building community and professional connections. Actively joining networking groups, industry associations, local chambers of commerce and entrepreneur meetups can open doors to clients, partnerships and mentorship—a strategy shown to benefit founders who might otherwise be excluded from broader business networks.
Building strong business credit early. Separating personal and business finances, opening a business bank account and paying vendors on time can help establish business credit, which is critical when applying for small business loans or lines of credit.
Shopping around for the best small business funding rates. “It’s simple advice, but it’s still good: Comparison shopping matters,” Schulz says. “If you’re looking for a small business credit card or a loan, make sure that you compare rates from multiple lenders. There can be significant differences among lenders, and when you’re starting a business, every penny matters.”
Developing a business plan to guide their journey. “A business plan is an absolute must. Not only should it provide a North Star for you to follow, but it can also give potential small business lenders a better sense of what your company is all about,” Schulz says. “Banks aren’t in the business of just giving money to anyone with a half-baked plan,” he cautions. “They want to see where you’re going and what your plans are. A well-thought-out business plan can give that lender more reason to believe in you, and that’s a big deal.”
