Executive Summary
St. Louis – the Gateway to the West – maintains a legacy as a critical trade hub along the Mississippi River. Home to nine Fortune 500
companies, two major league sports teams, an economy driven by diversified industries, and one of the country’s fastest-growing foreignborn populations, St. Louis serves as an important economic and cultural hub. However, economic opportunity has not been shared
equitably among the St. Louis region’s 2.2 million residents. Addressing these disparities requires solutions that build wealth across all
communities and create equitable avenues to entrepreneurship and business ownership.
Across the country, communities of color face growing
segregation, income inequality, and systemic barriers that hinder
their ability to build wealth through business ownership. As a
result, Black and Latino(a) Americans possess less wealth and
fewer business and financial assets compared to their White
counterparts.1 These socioeconomic disparities in St. Louis
persist, as the St. Louis Federal Reserve Bank estimates that
White households in St. Louis have 10 times and 7.5 times the
level of wealth of Black and Latino(a) households, respectively.2
The St. Louis region has made strides to address these racial
disparities, but important work remains to make long-lasting
change. The history of the region and the state of Missouri is
rooted in systemic racism and slavery. This legacy manifests
today through lower employment, wealth, wellbeing, and
opportunity for Black communities and other communities of
color. Prompted by civil unrest following the killing of Michael
Brown in 2014, the St. Louis region began efforts to address
the deep inequities faced by Black communities and other
communities of color. The Forward Through Ferguson Initiative
was assembled among local leadership, and the Ferguson
Commission published a blueprint report and strategy to help
guide the region’s efforts to catalyze lasting change.3
1 Source: Aspen Institute, 2015
2 Source: Medium, 2020
3 Source: Forward Through Ferguson, 2020
4 Source: Washington University in St. Louis and St. Louis University, 2015
5 Note: In this report, ‘people of color’ refers to demographics outside of non-Latino(a), White populations, with a focus on Black, Latino(a), and Asian populations
6 Source: National Bureau of Economic Research, 2020
7 Source: JPMorgan Chase Institute, 2020
8 Source: Opportunity Insights, 2020
Washington University in St. Louis and St. Louis University
co-published a seminal 2015 For the Sake of All report that
documented the importance of social determinants of health
to Black Americans – which served as another call to action
to address upstream factors around education, income,
neighborhood quality, and community resources.4
 These efforts
went a long way in galvanizing the region and served as a
catalyst for the development of various local initiatives to build
entrepreneurship and stronger anchor procurement pipelines.
However, additional work remains to address racial inequities in
the region.
The advent of the COVID-19 pandemic has worsened these
existing inequities and magnified financial distress among small
businesses owned by people of color (POC).5 In the first few
months of the pandemic, Black-, Latino(a)-, and Asian-owned
businesses faced higher closure rates compared to White-owned
businesses nationwide.6 Over the same time period, POC-owned
firms have faced larger cash balance and revenue declines
than non-Latino(a), White-owned firms. The impact of the crisis
has been particularly severe among Black- and Asian-owned
businesses.7 In Missouri, total small business revenue and the
number of small businesses open decreased by 31% and 25%,
respectively, from January to mid-October.8
At this critical moment, this report examines St. Louis’ unique historical context and the current state of play of the region’s small business
communities and supporting ecosystem, with a specific lens on businesses owned by POC and the COVID-19 response and recovery.
This assessment culminates in a set of recommendations and a proposed path forward aimed at narrowing racial gaps across several
dimensions – including business ownership, revenue, and employment – throughout the St. Louis region in the next five years.
Executive Summary ST. LOUIS 4
This report highlights the barriers that entrepreneurs and small business owners of color in St. Louis face and the additional support they
and those serving these entrepreneurs need to succeed, as gathered from data analysis, interviews, and local stakeholder convenings.
MAJOR TAKEAWAYS INCLUDE:
There are disparities in small business ownership
and size in St. Louis that persist for Black
entrepreneurs. While Black residents make up 18%
of the population, they only own 12% of all employer
businesses. Black-owned businesses also employ fewer
employees and generate less revenue than Whiteowned businesses; on average, Black businesses in the
region generate about $200,000 in revenue annually,
compared to $2.5 million generated by White-owned
businesses. Black-business owners attribute their
challenges in growing their businesses to a lack of peer
mentorship and social networks, as well as lower trust
in traditional financial institutions. In addition to being
underrepresented in business ownership overall, Blackowned businesses in Missouri were disproportionately
affected by the COVID-19 pandemic, as they are
overrepresented in deeply and immediately impacted
industries such as food services and drink places.9
There has been a historic unmet demand of
$13 billion in capital for small businesses in St.
Louis annually, which disproportionately impacts
businesses owned by POC. Businesses owned
by POC face challenges getting the loans they need
(both by size and geography) and early-stage equity
capital. There are pronounced gaps of traditional and
alternative lending in neighborhoods in North City
and neighborhoods like Benton Park West – with high
concentrations of Black and Latino(a) residents. 10,11 Local
stakeholders also cited high unmet capital demand
for microloans under $50,000 that are generally more
costly for lenders to administer compared to larger
loans, as well as a gap in one-time “friends and family”
early-stage capital that would allow business owners
to build their early startups without putting their own
personal finances at risk.
9 Source: U.S. Census Survey of Business Owners and Self Employed Persons (2012)
10 Note: Unmet demand in 2017; detailed capital demand and supply methodology can be found in the appendix, p. 35-36
11 Sources: Freedom of Information Act (FOIA) to the Small Business Administration; CDFI Fund; PwC / CB Insights MoneyTree Report; U.S. Census County Business
 Patterns; U.S. Survey of Non-Employer Statistics; U.S. Annual Survey of Entrepreneurs; Federal Reserve Small Business Credit Survey
Capital and service provision in St. Louis is
focused narrowly on high-growth businesses
in select sectors, which overlooks Main Street
businesses owned by POC. While St. Louis is
recognized for its burgeoning startup ecosystem,
current offerings target high-growth firms in sectors with
little POC representation, such as financial services,
agriculture, biological and life sciences, and healthcare
technologies.
St. Louis’ small business ecosystem relies on
informal and relationship-driven connections,
which limits providers’ ability to effectively serve
business owners. Capital and service providers and
other ecosystem-level stakeholders rely heavily on their
personal connections in St. Louis. As a result, they have
trouble connecting small businesses to the services that
they need and supporting them over time as they access
multiple services. Small businesses also waste valuable
time trying to navigate the myriad of services available.
Many efforts to support the St. Louis small
business ecosystem are underway but have
been a challenge to execute due to ecosystem
fragmentation and lack of formal accountability.
A constellation of different initiatives and efforts across
the ecosystem to drive impact for small businesses
have faced challenges in coordination across a
fragmented municipality structure – there are nearly
90 municipalities located in St. Louis County alone
– and a lack of formal accountability and resourcing.
There is a strong base of commitment and momentum
in the region, which can be catalyzed with intentional
infrastructure and investment.         Please, give me 3 sentences related to St. Louis historical context