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The Best and Worst States for Black Entrepreneurs In 2022

Following a rash of Black business closings at the start of the COVID-19 pandemic, Black businesses have bounced back. There has been a surge nationwide in new Black-owned ventures. 

Photo by Pavel Danilyuk from Pexels

According to the Kauffman Foundation, “more Black Americans started businesses during COVID-riddled 2020 than in any of the previous 25 years.” Black-owned businesses grew 38 percent between February 2020 and August 2021, according to UC Santa Cruz research, even while white and Asian businesses decreased by 3 percent and 2 percent, respectively. 

Despite the increase, Black-owned businesses make up just 2.3 percent of the employer businesses in the U.S.

Jared Beilby, Merchant Maverick special projects editor, told GOBankingRates that 2.3 percent is a shockingly low number. 

Black businesses are thriving in certain states. States in the Mid-Atlantic pocket of Virginia, Maryland and Delaware offer the best environment for Black businesses, according to Merchant Maverick’s recently released report the Best States For Black Entrepreneurs In 2022, 

“We found that this region has a healthy mix of local government and private initiatives to help foster Black-owned business, as well as a sizable Black population,” Beilby told GOBankingRates. “These states have also performed well in some of our other data reports, indicating that the Mid-Atlantic is great for small business in general, and not just Black entrepreneurs.”

Virginia was solid across all metrics in the study and ranks high regarding the number of Black-owned businesses per capita and the percentage of the state’s workforce employed by Black-run companies, according to Beilby. 

“We were also impressed with how the state government runs a minority-focused directory of small businesses. When compared to other states, it’s difficult to knock Virginia. The state just posts solid numbers across the board, and its initiatives can help encourage even more growth,” he said. 

As for Maryland, Beilby said it “runs basically neck-and-neck with Virginia.” 

He added, “Beyond the metrics, Maryland’s state government offers tools and resources to help minority entrepreneurs grow their business. When you look at all the factors that make Maryland an excellent place for Black businesses, it’s hard to pick just one.”

Then there’s Delaware. “Delaware is the weakest of the three in the region, but it’s still no slouch,” Beilby told GOBankingRates. “It’s got similarly high metrics to both Virginia and Maryland, but it’s just not quite on the same level.”

Delaware ranks fourth for its share of the workforce employed by Black-run businesses and sixth when looking at Black business owners per capita.

“But compared to the rest of the country, Delaware is one of the best states for Black entrepreneurs. And the state’s Black Chamber of Business began in 2020, which could further foster Black entrepreneurs in the state,” Beilby noted. 

The report found that the worst states for Black entrepreneurs include Alaska, Utah, South Dakota, Montana and Vermont. 

Overall, indicators point to Black entrepreneurship continuing to grow throughout 2022. 

“While the Omicron variant has left a negative note over the past couple of months, if we, as a country, can learn to live with the virus, this will undoubtedly contribute to a boost in business across all demographics,” Beilby said. “If that happens during 2022, an across-the-board uptick in the economy will certainly help out Black-owned businesses, too.”

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