How The Wall Street Collapse Affects Black Businesses

Here are some main points from a recent article written by Cliff Hocke of Black Enterprise Magazine on how Black businesses are feeling the crunch of the Wall Street collapse:

With a $700 Wall Street bailout deal rejected in the House, one of the largest bank failures in the seizure of Washington Mutual, and an economic fate that is uncertain, African American entrepreneurs who were already feeling the squeeze are facing an even more stringent credit system.

"There is only a narrow vein of opportunity for blacks to obtain credit in even the most vigorous economic environment. This financial crisis worsens the plight of African American entrepreneurs as they seek to get credit," says Illinois Congressman Bobby L. Rush. Chairman of the House Energy and Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection, Rush believes a bailout of Wall Street banks is required to stop further blockage of black businesses' access to capital.

A wrecked financial services industry could conceivably be rebuilt in a way to benefit black businesses. "It might be the opportunity for us to really recalibrate our American economy to include not only minorities, but also more women-owned businesses, which get little attention, little reward and very little resources," says Congressman Rush. "That might be the silver lining in this cloud. But we have to have a president who is committed to expanding the minority business community and who understands that access to capital is the main culprit in the denial of minority entrepreneurs the opportunity to be successful."

So what survival strategies can black-owned businesses pursue now? "For small or minority business owners, everything must center on preserving and building working capital, i.e., cash and liquidity," Boston says. "Business owners should generate reports on their cash position several times a week and forecast it realistically into the future. It doesn't matter how much receivables you have or how much revenue you are currently generating. The only thing that matters is whether or not you can pay your current bills. In the current environment, it is unlikely that you will be extended credit unless you have a very stellar record. So the wise strategy is to build and preserve cash to weather the hard times ahead."

For the full article, visit:
www.blackenterprise.com/cms/exclusivesopen.aspx/id/5064