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Concurrent to efforts in the nonprofit and private sectors that focus broadly on the racial wealth gap, the City ofBoston began developing new supports for the city’s small businesses, releasing the first Small Business Plan in2016,8 and later undertaking a comprehensive review of its procurement practices. In early 2021, it released thealarming results of the multi-year procurement study, initiated in 2018. Based on analysis of procurement contractsbetween 2014 and 2019, and interviews with hundreds of small business owners, it revealed that just 2.5 percentof city contracts had gone to minority-owned businesses.9Alongside these important and long-awaited efforts and changes, the region, nation, and world grapples with aglobal pandemic that continues both to be economically damaging and socially devastating, and a nationwide racialreckoning following the murder of George Floyd. Boston also underwent an unprecedented political transition, withthree different mayors at the helm in 2021.10In the wake of the pandemic, small business owners of color across the country were particularly challenged andhad greater difficulty accessing federal funding resources meant to forestall closures and economic hardship.11 InBoston, still more coalitions formed during the pandemic to support small businesses, including the MassachusettsEquitable PPP Access Initiative and Small Business Strong.Most recently, the Coalition for an Equitable Economy was created, an outgrowth of some of the networks andpartnerships forged during and prior to the pandemic, to better coordinate services and supports for BIPOCentrepreneurs and small business owners in Massachusetts.P R OJ E C T S CO P EIn recent years, multiple reports have laid out specific opportunities for the City of Boston and the broaderecosystem of regional and state partners devoted to closing racial wealth gaps and, more particularly, improvingaccess to capital, contracts, and technical assistance for BIPOC small business owners. [See Appendix for RelatedReports.] This report will not repeat those lessons, but instead focus on knowledge gaps that have not been fullyaddressed elsewhere, including:1. The state of the ecosystem:What do members of Boston’s ecosystem view as its own strengths and weaknesses?2. Present and future challenges confronting small businesses:What do these same resource providers perceive as causes of racial inequity, particular in accessing capital?What challenges do they believe lie ahead for Boston’s small business owners and entrepreneurs, particularlythose of color? How do these perceptions compare to those of mayors across the country?3. Remedies:What should the city government and the broader ecosystem be doing differently to address the imbalance incapital access? Which partners will be most critical in addressing it? Which groups, if any, warrant even greaterattention? What changes and lessons have emerged during the pandemic?8 The City of Boston. “City of Boston Small Business Plan.” March 2016: https://www.cityofboston.gov/images l%20Report%20-%20Web%20(144dpi) tcm3-53060.pdf.9 BBC Research & Consulting. “2020 City of Boston Disparity Study: A Tool Towards Equitable Procurement.” Executive Summary (February2021): 21/02/Disparity%20Study%20Executive%20Summary 0.pdf.10 Boston Mayor Martin Walsh, elected to a second term in 2017, was appointed by the Biden Administration in 2021 to serve as Secretary ofLabor. Upon his departure, City Council President Kim Janey became Acting Mayor. Councilor Michelle Wu won the 2021 mayoral election andtook office shortly thereafter.11 Office of Evaluation Sciences. “Building Evidence About How to Support Small Business Growth and Success.” U.S. General ServicesAdministration: https://oes.gsa.gov/small-business/.4Boston University Initiative on CitiesSupporting BIPOC-Owned Small Businesses in Bostonbu.edu/ioc

The Boston Ecosystem: Research DesignTo study the Boston ecosystem of resource providers — including funders, technical assistance service providers,and advocates — and their views, we conducted conversational survey-interviews with leaders from organizationsthat compose it. Each conversation lasted between 30-45 minutes. Participants were promised that they and theirresponses would be anonymous, but that the names of the participating organizations would be made public. Ourunit of analysis was the organization — that is, we generated a list of organizations and reached out to a seniorrepresentative of each with a request to participate.We defined the universe of organizations as those that exist to support minority-owned small businesses in Boston.We included organizations whose primary geography is the city of Boston, organizations that focus their work inparticular neighborhoods or parts of the city, and organizations that work on a wider scope (e.g., Massachusetts),but for whom Boston is a central area of interest and activity. We did not include those that just happened to havesome activity in Boston. This ensured the small business environment was consistent across subjects, and thatthey were operating under the same local government and institutions. We sought organizations that support smallbusiness in a variety of ways ranging from organizing and advocacy to providing capital and technical assistance.The list was generated by triangulating several techniques: 1) We consulted with an external expert who hasdone considerable consulting, policy, and research work in this space to generate an initial list; 2) Our teamindependently generated and cross-referenced lists of candidate organizations based on secondary research,sourcing lists from other sources (e.g., the MAPC), lists of Community Development Corporations, and thosethat were included in related research reports. This process resulted in a set of 47 organizations; 3) We alsosupplemented this list with additional snowball sampling by asking participants if they had suggestions,particularly any organizations likely to slip under the radar. All in all, we reached out to 54 organizations and30 (56%) participated between November 2021 and February 2022. [See Appendix for names of participatingorganizations.] Importantly, our recruitment invitation promised a broad study focused on the ecosystem,challenges, and public and private sector interventions. While it mentioned access to capital, we are confident thatthe general framing of the project did not lead to organizations choosing whether or not to participate based on aparticular viewpoint.Interviews were guided by a questionnaire containing a mix of closed- and open-ended questions, and participantswere asked to elaborate wherever they chose. The survey included some questions that were also posed to U.S.mayors in summer 2021 as part of the Menino Survey of Mayors.12 Some responses from the Boston ecosystemstudy are compared to those from the mayors’ study. These comparisons may reveal how Boston perspectivesalign with, or differ from, national perspectives or how perspectives on the ground align or do not align with thosein city hall. However, we caution against drawing strong inferences since it is a comparison of one city’s ecosystemwith the broader universe of mayors. This comparison cannot directly speak to how well Boston city government’sperspectives align with its ecosystem nor how well mayors’ views in general align with those doing this work intheir respective cities.12Menino Survey of Mayors: www.surveyofmayors.com.5Boston University Initiative on CitiesSupporting BIPOC-Owned Small Businesses in Bostonbu.edu/ioc

E X E C U T I V E S U M M A RYInter-organizational collaboration — across the public, nonprofit, and private sectors — is perceived asone major strength of Boston’s ecosystem of organizations working to support small business owners andclose gaps in capital access. Roughly two in five participants also noted as a key strength that those in Boston’secosystem truly understand and appreciate the disproportionate challenges confronting business owners of color.Awareness of systemic inequities, plus a desire to work together, afford a strong foundation on which to build.But members of the ecosystem also note there is not yet a corresponding coordination of services, nor enoughresources to begin with. Two-fifths of participants believe the ecosystem lacks capacity and funding to address thefull scope of business needs, noting this imbalance as a key weakness. As one participant commented, collaborationis sometimes a necessary consequence of insufficient funding. The sheer number of BIPOC small business supportorganizations with overlapping interests — at least 54 in total — suggests the scale of the coordination challenge.Ecosystem participants shared several misperceptions and knowledge gaps within the City of Boston, andthe ecosystem more generally. Participants believe local leaders do not appreciate the heterogeneity within theBIPOC small business community, noting the need for more cultural competency in relation to language, resourceimbalances, or predatory lending practices, but also debt hesitancy. Participants also believe not all organizations,businesses, and agencies fully appreciate the time scarcity and information imbalances facing small businessowners, as well as the systemically-biased systems business owners of color must navigate.Participants consistently pointed to the inaccessibility of capital as a key challenge in Boston, afflicting both newentrepreneurs and existing business owners. This challenge is most acute for BIPOC owners. Lack of personalassets, credit scores, limited “friend and family” resources, and lenders’ racial bias are perceived as the majorcontributors to this inequity. While many of these relate to owner attributes, participants noted these as deeperissues rooted in systemic inequities and historical discrimination. Participants believe the main consequences of thiscapital access gap are a failure of businesses to grow, as well as the likelihood that they take on riskier debt.CDFIs and community banks are frequently believed to be “essential” to tackling the imbalance in capitalaccess. But participants also point to large banks as key. The wide range of alternative financing options, fromcrowd funding to digital banks, while important, were ultimately perceived as complementary to — rather than areplacement for — more mainstream sources. This points to an opportunity for Boston to try to bring the big banks tothe table as allies in addressing the imbalance, similar to the collaborations well underway with community banks.As one of the most expensive real estate markets in the country, it is not surprising that half of participantsalso raised commercial real estate costs as a looming challenge for small businesses in Boston. Two-thirdsof participants believe commercial real estate costs are an even greater challenge for BIPOC owners, relative towhite owners. While few new solutions emerged during conversations, this challenge suggests the need for morescrutiny on rising rents and fresh attention to mitigate small business displacement in coming years.While all the players of Boston’s ecosystem are integral, there is widespread agreement that the City of Bostonis a crucial player, with considerable influence over small businesses generally and the state of BIPOC-ownedsmall businesses, in particular. However, participants believe that local government has historically been mostresponsive to “big businesses,” like local corporations, and least responsive to micro-businesses in Boston. Thissuggests an opportunity to expand the City’s sphere of concern, capitalize on relationships formed during thepandemic, and exercise influence in new ways. A number of participants also expressed optimism that the Citywas making progress, and that new leadership would bring fresh attention and perspective.Ecosystem members shared a range of changes they would welcome from the City of Boston. Top themes includeda desire for more equitable and transparent procurement practices, streamlined permitting, enhanced communication,and increased direct funding. They also expressed a desire for greater investment by the City with particular BIPOCentrepreneurs, including women, immigrants, and people with criminal records such as returning citizens.6Boston University Initiative on CitiesSupporting BIPOC-Owned Small Businesses in Bostonbu.edu/ioc

FINDINGSState of the Ecosystem: Collaborators Not Yet CoordinatorsWhile racial inequality generally, and capital access more specifically, can seem like intractable challenges,participants we spoke with highlighted key strengths of Boston’s vast ecosystem of partners and provided somereasons for optimism. Roughly two in five noted the visibility and recognition of small business equity issues in andaround Boston as a key strength of this community. Many made reference to new or renewed awareness of thechallenges confronting BIPOC small businesses, specifically. As one participant shared, there is a new sense that localstakeholders now have “a clearer understanding of their needs,” while another talked about a “nascent awareness of theneed for more aggressive investment” in these businesses. A third interviewee said “finally, people are paying attention.”Collaboration and the breadth of organizations were also among the most commonly cited strengths. Participantsregularly discussed how Boston benefits from being a small, networked city where “everyone knows each other” andthat boasts a robust range of highly engaged and committed organizations that are increasingly working together.Multiple interviewees noted that collaboration had become more commonplace during the pandemic, with someexpressly pointing to the newly formed Coalition for an Equitable Economy13 as a key enabling mechanism.Figure 1. Strengths of Boston’s EcosystemWhat, if any, are the two most important strengths of Boston’s ecosystem of organizations and funders that support BIPOCsmall business owners and entrepreneurs? (Note: Coded from the open-ended question.)Visibility / recognition of issues43%Collaboration37%Breadth of organizations30%Funding / resources23%Advocacy / technical assistance17%Size of city13%Local government support7%Diversity of leaders3%None3%Other3%0%10%20%30%40%50%When asked about weaknesses of the ecosystem, interviewees clarified that collaboration should not or couldnot yet be conflated with effective coordination. Roughly one in four highlighted a lack of coordination as aweakness. As one said, “there is a disconnect between how the ecosystem is supposed to work in principle and the actualimplementation.” This lack of coordination was sometimes referenced by noting duplicative and overlapping services.13 The Coalition for an Equitable Economy: https://www.maequitableeconomy.org/.7Boston University Initiative on CitiesSupporting BIPOC-Owned Small Businesses in Bostonbu.edu/ioc

But more common, noted by two-fifths of participants, was the sense that there was not enough capacity — orfunding — to address the full scope of needs. One participant shared: “[there are] not a lot of resources. We can becollaborative, but not a lot to go around to start with,” while another offered “from a funding standpoint, the fact that wepool together is because there were gaps in funding. It wasn’t equitable [ ] Structural racism still exists.” The other mostcommonly cited weakness was a lack of cultural competency.Figure 2. Weaknesses of Boston’s EcosystemWhat about any major weaknesses [of Boston’s ecosystem of organizations and funders that support BIPOC smallbusiness owners and entrepreneurs]? (Note: Coded from the open-ended question.)Limited capacity / financial resources37%Lack of coordination / implementation27%Lack of cultural competancy / language barriers23%Lack of diversity13%Limited understanding / disconnect13%No accountability13%Racism10%Other7%Poor communication / transparency7%Regulatory environment / process barriers7%0%10%20%30%40%50%The lack of cultural competency was seen as a key weakness, both with regard to racial and ethnic understanding— such as language barriers — and to a lack of first-hand insight into the challenges of being a small businessowner in Boston. A number of participants shared the sense that some organizations were working at a distanceremoved from businesses themselves, or that they were funding organizations that did not have first-handinteraction, insight, and trust with businessowners. As one said, “during the pandemic, a lot“ Boston is still an ‘over the railroad tracks’ city, in terms of segregation.of programs popped up to support BIPOC smallbusiness owners, but a lot of the organizationsBoston still needs to have this conversation. [Yet], there’s truly so muchdidn’t have deep understanding of communitiesthat Boston has the ability to lead in. This city truly has the ability to beor cultures, or true need of communities.” Oneparticipant cited the city’s need to build ora leading compass for the rest of the nation, if it chooses to do so.”renew more direct relationships with smallbusiness owners, as it provided new servicesduring the pandemic: “at the end of the day, businesses see CDFIs, CBOs — they don’t see the City. When the City comesin to assist, the business owners say ‘we don’t know you.’ Building that social capital is an uphill battle going forward.” Ahandful of participants referenced the need to diversify leadership, calling for greater racial and ethnic diversity at“decision-making tables,” and the continued need to tackle systematic racism more explicitly.8Boston University Initiative on CitiesSupporting BIPOC-Owned Small Businesses in Bostonbu.edu/ioc

The other leaders in this space that participants referenced were major cities like New York City, Detroit,Philadelphia, Atlanta, Chicago, Housing, and Los Angeles. Some were specifically noted as having more diversityin leadership roles, relative to Boston, and, in a number of instances, were referenced for having larger Blackpopulations. A handful of participants referenced unique positives in Boston like a culture of philanthropy, a ‘cultureof sharing,’ being one of few pockets in the country with land trusts and co-ops, and an abundance of anchorinstitutions. One participant said, “Boston is still an ‘over the railroad tracks’ city, in terms of segregation. Boston stillneeds to have this conversation. [Yet], there’s truly so much that Boston has the ability to lead in. This city truly has theability to be a leading compass for the rest of the nation, if it chooses to do so.”City Policy and ProgramsThe City of Boston has a key role to play in the maintenance and growth of a thriving, diverse small business sector.Participants believe that municipal government in Boston, here referred to as the City of Boston, has a considerableamount of influence over the state of its small businesses. Two-thirds believe Boston’s municipal governmenthas “a great deal” or “a lot” of influence. An even larger share, three-quarters of participants, believe the City hasconsiderable control over differences in the state of white-owned vs. nonwhite-owned small businesses.Figure 4. City Government Influence Over Racial GapsBetween Small BusinessesHow much influence does city government have overdifferences in the state of white-owned and the state ofBIPOC-owned small businesses in Boston? Or are there nomeaningful differences between them?Figure 3. City Government Influence on SmallBusinessesHow much influence does city government have overthe state of small businesses in Boston in general?41%40%38%38%28%30%24%20%15%10%0%8%7%0%A greatdealA lotA moderate A littleamountNoneat allA greatdealA lotA moderate A littleamount0%0%Noneat allN/AThere was relatively little consensus on perceptions of the city’s top small business goal. A plurality, but fewer thanhalf of participants, believe the City of Boston’s priority is “helping fragile businesses survive”, and a third believe itis focused on “helping successful businesses grow.” It is unclear how permanent these top priorities are, as the9Boston University Initiative on CitiesSupporting BIPOC-Owned Small Businesses in Bostonbu.edu/ioc

Boston University Initiative on CitiesAMERICA’S MAYORS & LOCAL SMALL BUSINESS:BUILDINGPerceptions of City Hall’s InfluenceBoston University’s 2021 Menino Survey of Mayors, a nationallyrepresentative survey based on interviews with more than 100 mayorsfrom across the country, also included an array of questions related tosmall businesses generally, and BIPOC small businesses in particular.Some of these questions were identical or virtu

Boston University sfox@bu.edu Chenyue Lei PhD Candidate, Economics Boston University Initiative on Cities Boston University 75 Bay State Road Boston, MA 02215 bu.edu/ioc @BUonCities 617-358-8080 IOC@bu.edu Madeline Webster PhD Candidate, American & New England Studies Boston University Contributors Karilyn Crockett Professor, Urban History,