Cities with the most and least Black-owned businesses, study reveals

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Comparing 50 cities from around the nation, a recent study from Lending Tree revealed Fayetteville, North Carolina contains the highest percentage of Black-owned businesses while Milwaukee, Wisconsin contains the least.

It may be unsurprising to learn that the South contains the most cities with high rates of Black business ownership, considering the majority of Black residents live in Southern states. Yet, according to the data, it’s not that simple.

For instance, St. Louis and Milwaukee both have a similar percentage of Black residents, at 18% and 16% respectively. Yet, 6% of businesses in St. Louis are Black-owned while only 1.8% are Black-owned in Milwaukee. 

Despite the similar percentages of Black residents, the study revealed Milwaukee scored among the bottom for rate of Black-owned businesses while St. Louis had the 6th highest rate, indicating factors other than population size are at play.

The data highlights the task cities face in determining how they can better create an atmosphere that supports more Black-owned businesses.

Matt Schulz is chief credit analyst at Lending Tree. He and his team conduct surveys on public perceptions as it relates to money, using data from government sources.

“Factors like average income and that sort of thing would certainly play into the percentage of Black-owned businesses in an area,” Schulz told The Black Wall Street Times.

“When you consider the disparity in median income, median net worth and that sort of thing in the Black community compared to the White community, it really creates a challenge in terms of being able to have that kind of capital to try and start a business,” Schulz added.

Report reveals wide disparities for Black-owned businesses

Fayetteville, N.C. and D.C. topped the list with the highest percentages of Black-owned businesses, while Atlanta, known as “chocolate city,” tied with Richmond, Virginia for the third-highest rates.

Meanwhile, despite wide disparities among cities and regions, Black-owned businesses are incredibly underrepresented on a national scale. For instance, they make up just 2% of all businesses nationwide, despite making up nearly 13% of the U.S. population.

“The short answer is in all of these cities the percentage of Black owned businesses could be higher. That tells you that there is a lot of room to grow in any city that you wanna point to,” Schulz said.

Navigating through a debilitating pandemic and national uprisings against police brutality, Black-owned businesses have faced both the brunt of neglect and a wave of support over the last couple years.

On one hand, during the first few months of the pandemic, roughly 40% of Black-owned businesses closed, according to as study by the Federal Reserve Bank of New York.  On the other hand, more Black entrepreneurs started businesses in 2020 than any time in the last 25 years.

Spurring the creation of more business

The fluctuating uncertainties have forced entrepreneurs like Darrel Dugger to create online business groups to support each other.

“With having ownership, not only does that bring a sense of pride, it also plants the seed for generational wealth, and that’s something I think our communities need more of,” Dugger told The Black Wall Street Times in 2021.

Beyond showing the disparities in Black ownership among cities—Pittsburgh sits at the bottom of the list with just one percent of businesses Black-owned—the Lending Tree study also revealed that Black-owned businesses are more likely to be woman-owned. These businesses are also more likely to be concentrated in the health care, social assistance, transportation and warehouse industries.

“The takeaway is that we would hope something like this might spur more creation of business and maybe help people who may have not known how to get that first business started or maybe feel nervous about doing it,” Schulz said.

To see the full report, click here.