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How COVID-19 has disproportionately impacted black-owned businesses

H&R Block’s VP & General Manager of Small Business, Ian Hardman, joined Yahoo Finance Live to break down COVID-19's disproportionate impact on black-owned businesses and what corporate America is doing to tackle the issue

Video Transcript

[MUSIC PLAYING]

SEANA SMITH: A new study by H&R Block found that Black-owned businesses have been disproportionately impacted by the pandemic. We want to talk more about this with Ian Hardman. He's H&R Block's VP and general manager of small business. Ian, it's great to have you on the program. I was going through the study that you just released.

One stat really jumped out to me, and that was the fact that more than half of Black-owned businesses have seen their revenues drop by over 50% since the pandemic started. I guess, first, just big picture, why is this the case when we talk about the fact that Black-owned businesses have been disproportionately impacted by the pandemic, compared to other businesses?

IAN HARDMAN: Well-- and thanks so much for having me. We know that small businesses are really driving the economy. They drove economic recovery in 2008, 2009. They're going to lead the recovery again. And when we think about the pandemic and the additional complexity, we certainly want small businesses to be in a place where they can not only survive, but thrive. So this is-- you called it. This is absolutely a pain point for the economy to make sure that we're able to position those businesses for success.

ADAM SHAPIRO: Did the study actually dive deep into, for instance, the majority of Black businesses, how they break down. Are they law firms? Are they different kinds of businesses, when compared to businesses from people of other races and colors? Did it look at that? Because I know you pointed out that Black business owners are having more difficulty establishing a digital presence.

IAN HARDMAN: Yeah, that's absolutely right. We found through our small business recovery research that those businesses run the gamut. They're real estate developers. They're restaurants. They're dog groomers. These are really the businesses that make up the fabric of our communities. And we found not only that there's a disproportionate impact on these businesses, but I think most alarming was between April and-- or between January and April, during the pandemic, approximately 40% of those businesses closed their doors.

So when you look at that and you look at the exponential impact to the community and the communities that they serve and the individuals that they hire, this really cried out as a problem to be addressed.

SEANA SMITH: So Ian, in talking about addressing that problem, I guess your advice to these business owners, what should they do right now if they're in a very tough spot, and they don't know whether or not they're going to make it another month or another couple of weeks?

IAN HARDMAN: Yeah, I mean, you're certainly highlighting the key pain point for many of these businesses. And certainly, it's across all small businesses in the United States, but we saw this particularly at a high level for Black-owned and Latinx businesses. And we recognize that with the added complexity of the pandemic and really starting to account for things like stimulus payments and how to account for loan forgiveness in particular, we recognize that there was an even more critical need to prepare these businesses for readiness, financial readiness.

You cannot be bankable until you have a relatively comprehensive financial package. And we want to make sure that these businesses, that they're not left in the lurch there. And when you're focused on making the next payroll in two weeks, you're not necessarily thinking about your long-term financial statements.

So at Block Advisors, which is a specialty unit that we have within H&R Block that focuses on the needs and managing the complexities of our small business clients, we thought that how do we take the 2 million-- the data from the 2 million businesses that we've served, and how do we take that and really put resources on the doorstep of every small business in America. And that's what we were able to do with Block Advisors model-- take that complexity, distill it down.

ADAM SHAPIRO: It's interesting because, big or small, businesses need that kind of advisors, those consultants. I'm curious. The IRS, we always think of them about tax time. But over the year, do you find the IRS cooperating with firms like yours and the small businesses, which are struggling to stay in business through this period?

IAN HARDMAN: Well, it certainly can highlight that we work very closely with the IRS. And while we certainly take input, just as everyone does from the IRS and their guidance, we really are spending our time focusing on the controllable. We know that we can take the cadre of our resources, the bulk of our resources, begin to think about those very specific problems around payroll, taxes, bookkeeping, as well as, again, managing through the complexity of managing and accounting for stimulus payments or unemployment.

We have taken our resources, and we've been able to package that through Block Advisors in a way that we absolutely can help every single small business. One of the things that we've been levering to grow that effort, that's our affiliate relationship with the Urban League of Kansas City, which is a fantastic pilot program that takes, again, that knowledge, and it puts it right on the doorstep, embeds it within the community. And we leverage the power and insights of our tax pros to do it, which is really great.

SEANA SMITH: Ian Hardman, H&R Block's vice president and general manager of small business, thanks for taking the time.