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Economy & Business

Black Business Owners In St. Louis Worry They May Not Survive The Coronavirus Crisis

Drake's Place restaurant's sous-chef, Deundrake Lewis Jr. May 27, 2020
David Kovaluk | St. Louis Public Radio
Drake's Place sous-chef Deundrake Lewis Jr. prepares a to-go meal. Before the coronavirus pandemic hit, he would barely have time to take a break in between meal preparations. Now, Lewis has time to spare.

After years of ups and downs, Drake's Place in Ferguson was beginning to turn a profit in recent months, thanks to the many customers who kept coming back for its savory shrimp, potatoes and green beans. But when St. Louis County issued stay-at-home orders to stop the coronavirus from spreading, owner Bridgett Lewis had to cease dine-in services. 

That brought back bitter memories for Lewis. Six years ago, she had to limit the restaurant's hours after a police officer killed Michael Brown Jr., sparking chaos. But even that didn't prepare her for the hit her business has taken during the coronavirus pandemic.

“Some days are pretty sad, very sad,” Lewis said recently. “Like yesterday we made $300. You can’t live off [that] and run a restaurant.” 

Bridgett Lewis, co-owner of the Ferguson restaurant said her customers thought of the casual-dining spot as a place of comfort. She fears what will happen to the restaurant if business does not pick up.
David Kovaluk | St. Louis Public Radio

While many business owners in the St. Louis region face a myriad of challenges during the economic downturn, some black business owners aren't sure their businesses will survive. 

Historic challenges 

African American business owners historically have been left behind because of their limited access to capital and bank loans, predatory credit policies and the lack of banking relationships. 

Black owners often do not have the same access to financing that their white counterparts do, and COVID-19 highlighted these inequities, said St. Louis Regional Chamber’s St. Louis Business Diversity executive Valerie Patton.

“In many cases they can go to the bank and get those loans because they have the credit scores,” Patton said of white business owners. “We made some bad decisions that have affected our credit for the long term.”

Historically, African Americans who wanted to open a business but did not already have a relationship established with a lender often were asked by bankers to put up their homes as collateral or take out high-interest rate loans because lenders viewed them as high-risk clients. 

Decades ago, many black communities had black-owned banks that catered to black businesses. The Gateway Bank of St. Louis was a lifeline for the region’s black-owned companies until about 20 years ago. For years, such banks provided loans to black business owners who were twice as likely to be denied business loans as whites. They offered financial education courses and gave black owners the opportunity to bank with lenders who understood how valuable their businesses were to the community. 

Drake's Place restaurant co-owner Bridgett Lewis strings lights around the restaurant's patio to attract customers to eat outside.  may 27, 2020
David Kovaluk | St. Louis Public Radio

When Lewis opened Drake’s Place restaurant at 701 South Florissant Road, she and her business partner both had great credit scores but decided not to take out a business loan because they were afraid to do so. Instead, Lewis used her retirement funds, the equity in her home and a small family loan to start the company.

With all of her assets tied up in her business, Lewis said her company cannot fail. 

Days after county officials issued the stay-at-home order, she began offering carryout and delivery service only. After business declined so swiftly, Lewis knew she would have to ask for some sort of financial assistance from her banker or the government. Lewis applied and received a $20,000 loan from the federal funding Paycheck Protection Program to keep Drake's Place going.

Lewis is worried about what will happen when the money runs out in July. She received a commercial bank loan but is worried about her ability to repay the loan if business does not pick up through the end of the year. 

“[For black businesses] it is a concern, because we put everything into this,” Lewis said. “You put your life savings, your retirement, you borrow money and everything, and for it not to succeed, that's just something you don't anticipate when you get into business. You are looking for it to succeed, not to fail.”

What black businesses need 

Some black business owners often have a hard time connecting with white lenders because some bankers have biases against black borrowers. That often forces black owners to find other ways to raise capital. 

Financial institutions that have diverse staff and executives are in a better position to help black applicants apply for bank loans and federal programs, said Midwest BankCentre’s CEO Orvin Kimbrough. 

“We processed over $200 million in PPP loans, and these loans are tied to roughly 18,000 workers,” Kimbrough said. “We’re really proud of the fact that 85% of these loans went to companies with 25 or less employees, which directly correlates to the size of black business.”

The St. Louis region needs to ensure that black-owned businesses survive, said Kimbrough, one of the small number of black CEO’s in the banking industry. 

“We need better federal investment in this area. We also need to unleash the creativity we the people have,” Kimbrough said. “We've got to have all sorts of black businesses, whether they are service or they are technology enabled. And I think that corporate St. Louis could organize in slightly different ways to give a hand up to this group.”

Finding other solutions

One business owner that is worried about her company’s survival is Sheila Little-Forrest, who owns Afro World in north St. Louis County. Her father founded the store 50 years ago. 

Before the crisis, Afro World shipped hair, books, jewelry, apparel and other products to consumers nationwide. Since the county issued its shutdown order, Little-Forrest has focused on online sales. But she mostly depends on selling masks online to help protect her community. 

Now that businesses are allowed to reopen, Afro World's president, Sheila Little-Forrest, said she will not open her doors but will continue selling her masks and other products through pick-up or shipping services.
File Photo | Andrea Henderson | St. Louis Public Radio

She applied for a PPP loan, and as she waits to hear back from the government she has maxed out her credit cards to buy supplies and has furloughed her three employees. 

Little-Forrest hopes she will survive, but she knows her company and other black-owned businesses in the area are in jeopardy.

“When I drive down Natural Bridge and see those businesses closed, my heart just cries every time,” she said.

Follow Andrea on Twitter: @drebjournalist

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