• Racial inequities in business revenue tend to be more severe among firms with paid employees than nonemployer firms.
• Among firms with paid employees in 2022, white-owned businesses had significantly higher average annual revenue per firm compared to businesses owned by all other racial/ethnic groups.
• Among nonemployer firms, the average annual revenue per firm grew the most for Black-owned firms from 2019-2021.
• Among firms with paid employees in 2022, the utilities industry had the highest average annual revenue per firm overall, and for white, Asian American, and Native American-owned firms. For Black-owned firms, average annual revenue per firm was highest in the wholesale trade and manufacturing industries. Latinx-owned firms saw their highest average revenue in the agriculture, forestry, fishing, and hunting industry, while for Pacific Islander-owned firms, it was in manufacturing.
• Among firms with paid employees, the average annual revenue per firm increased for women-owned firms and male-owned firms from 2007-2022. However, male-owned firms still earned more than 2.4 times the average annual revenue of women-owned firms in 2022.

People of color are less likely than white people to have access to capital and contracts to start and grow a business, due in part to historical policies such as redlining that denied home loans and wealth-building opportunities to people of color. Today, business loan denial rates for firms owned by people of color are more than twice as high compared to white-owned businesses Business owners of color also pay higher interest rates and receive lower loan and equity investments. During the shelter-in-place phase of the Covid-19 pandemic, racial discrimination among lenders prevented many entrepreneurs of color from accessing paycheck protection program loans. Underrepresented groups also often face barriers to accessing important networks and training programs for maintaining a successful business.

• Create dedicated technical assistance and business supports for underrepresented entrepreneurs in high-growth, innovation sectors.

• Direct economic development efforts to support the growth of existing businesses that provide jobs for low-income residents.

• Help growing companies owned by underrepresented entrepreneurs access affordable office and commercial space.

• Ensure underrepresented entrepreneurs have access to business opportunities created through public sector spending, anchor institution spending, and the supply chains of major corporations.

• Implement workforce development strategies that train youth and low-wage workers for jobs in growing companies and business sectors.

• At the federal level, target small and very small businesses in federal investment programs and set aside a share of public contracts for businesses owned by people of color to mirror area demographics.

• Ensure that Covid-19 pandemic recovery efforts center racial equity as a core concern in supporting local economic growth.

• Reports: The Future of Banking: Overcoming Barriers to Financial Inclusion for Communities of Color; The Color of Entrepreneurship; Getting Entrepreneurs of Color Access to the Tools of Success
• Data: Prosperity Now Scorecard; Federal Financial Institutions Examination Council: Census & Demographic Data