Washington, D.C.— Today, the House Small Business Committee, led by Chairwoman Nydia M. Velázquez (D-NY), held a hearing examining the rapid rise in business startups that occurred during the pandemic. In 2020, Americans filed paperwork to start 4.3 million new businesses, by far the highest number on record over the past 15 years.
“The pandemic disrupted many areas of American life, not least of which being the nature of work. The challenges facing this new generation of entrepreneurs aren’t identical to the problems of the pre-pandemic economy,” said Chairwoman Velázquez. “We must work to understand these new challenges and find ways Congress can better support them in the post-pandemic world. It’s also vital that we grasp why entrepreneurship flourished during COVID and what we can do to sustain that increase in the future.”
Though COVID-19 ravaged existing small firms, the pandemic didn’t lower business startup rates as many experts predicted. Instead, entrepreneurship flourished in 2020. Many of these businesses didn’t look like traditional small firms, with the majority concentrated in the non-store online retail sector. The entrepreneurs starting these businesses were also diverse in their makeup, with Black, Hispanic, and young entrepreneurs leading the way in creating new enterprises.
The hearing gave members the chance to examine the factors that led to the jump in startups and the ways Congress can support these entrepreneurs moving forward. The witness panel was composed of new entrepreneurs and small business experts who gave firsthand accounts of the changing nature of the economy and its impact on entrepreneurs.
“I am a testament to the fact that Digital entrepreneurship has created unprecedented access to customers across the world,” said Ellie Diop, Chief Executive Officer of Eliza Revella Consulting Services in Los Angeles, CA. “It is providing access for people to start businesses and actually become first generation millionaires, build wealth for their families and more. At this moment, the barrier to entry for entrepreneurship is low and everyone has a chance to succeed.”
“Access to capital for small businesses, and especially startups, remains a challenge. In fact, if a business needs a small loan of 10 or 20 thousand dollars, I'm only aware of one bank in Chicago, CIBC, that actively markets programs to meet that need,” said Andrew Fogaty, Executive Director of 36Squared Business Incubator in Chicago, IL. “There are, of course, also some nonprofit lender options. However, these are typically at a higher interest rate and less desirable than a bank loan. I would like to see more banks offering micro lending and startup funding and I would like to see the reporting process for lenders streamlined to make small business lending more attractive.”
“Some minority-owned businesses have benefitted from the temporary surge in investments by the private sector and government, but this is not enough to ensure that Black entrepreneurs benefit equitably from the Nation’s economic recovery and to sustain their growth well-beyond the pandemic,” said Stephanie E. DeVane, Vice President of Entrepreneurship & Business Development at the National Urban League. “We urge Congress to enact civil rights protections that reduce longstanding racial disparities in access to capital, mentorship, and technical training to ensure a full economic return for minority-owned business.”