Phoenix-area Black businesses face challenges with startup capital | Phoenix New Times
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Phoenix-area Black businesses face challenges with startup capital

Fewer than 1% of Phoenix businesses are owned by members of the Black community. A lack of funding is one reason why.
Jalissa Smith shows off a jacket at Sew Used, a secondhand clothing store in Tempe. Smith co-owns the shop with Justin Gonzalez.
Jalissa Smith shows off a jacket at Sew Used, a secondhand clothing store in Tempe. Smith co-owns the shop with Justin Gonzalez. Kayla Jackson/Cronkite News
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Editor's note: This story was updated on March 28 to correct the photo credit.

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There is a small but growing number of Black-owned businesses in Arizona. One of the challenges that they face is getting the money to start.

Brownstone Spa in Phoenix is owned by Stacy Best-Nervis. The spa has customized services for men and women of color, who often experience skin issues that are not easily identified due to the absence of training and expertise at other facilities and esthetic schools, according to the spa’s website. It says the business offers skin consultations, body treatments, customized facials and advanced treatments such as chemical peels, microdermabrasion and dermaplane treatments.

When asked about challenges in starting her business, Best-Nervis says, “gaining capital and getting your finances together” was tough. “As a Black-owned business, there are stats that show it is harder for us to get capital.”

She started her business five years ago and said she’s proud she can provide services in the skin care industry for those who haven’t been able to get proper care or treatment.

According to the State of Black Business 2022 report, there were 1,019 Black-owned businesses in greater Phoenix, or 1% of employer firms. The report said it would take almost 5,000 more Black-owned businesses in the area for the number to match population representation.

Black-owned businesses face challenges in getting the money to get started. That begins with applying for loans and getting investors. “Disparities in creditworthiness constrain Black entrepreneurs but perceptions of treatment by banks also hold them back,” the report says. “Black entrepreneurs apply for loans less often than white entrepreneurs largely because they expect to be denied credit, even when they have a good credit history and in settings where strong local banks favor new business development.”

The report went on to say that Black Americans are more likely to rely on personal savings to start their businesses. “Blacks and Hispanics are about twice as likely to start their businesses with less than $10,000 in financial capital, compared with whites and Asians,” it says.

The report’s recommendations to counteract these problems are to increase access to startup capital, generate new venture funding opportunities, expand terms of credit for Black-owned businesses and close the financial institution gap.

Sew Used is a secondhand clothing store that opened in October in Tempe and is part of the small percentage of Black-owned businesses in the greater Phoenix area. It sells a wide range of gently used clothes for men and women and hosts social events to sell clothes and connect with the community.

Sew Used co-owners Justin Gonzalez and Jalissa Smith wash and dry the thrifted clothes they get before putting them on the shelves. They also advertise their events and inventory on social media to get customers to the store.

Gonzalez says it's hard to run a business every day between him and Smith. They have to find ways to delegate tasks for each other to make sure everything goes smoothly.

“When people come through our store, we want to make sure they get a warm greeting, we invite everyone into our space and we love to assist anyone with any questions,” Gonzalez says.

For more stories from Cronkite News, visit cronkitenews.azpbs.org.
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