Growth of Minority-Owned Businesses in Rhode Island

Categories: Rhode Island Business NewsRhode Island News

A lively scene of minority-owned businesses thriving in Rhode Island.

News Summary

Rhode Island is witnessing a significant rise in minority-owned businesses, with a 62% increase in Black-owned enterprises and a 42% increase in Hispanic or racial minority businesses since 2021. The Rhode Island Black Business Association reports resilience among these businesses despite funding challenges. Their job training programs are achieving a 98% completion rate, and state initiatives aim to boost support for these entrepreneurs. While there’s a slight decline in state contract awards for minority-owned businesses, their total contract value has increased, reflecting ongoing efforts to enhance their success.

Rhode Island is witnessing significant growth in its minority-owned businesses, an encouraging trend amid various economic challenges faced by the state. According to data from the U.S. Small Business Administration, the number of Black-owned small businesses surged by 62% from 2021 to 2024, reaching a total of 7,095. Additionally, businesses identifying as “Hispanic or a racial minority” also grew by 42%, totaling 23,794.

The increased visibility and success of these businesses are partly showcased through a monthly feature initiated in 2020 that highlights minority-owned enterprises. Out of the first 50 businesses featured in this series, only two have closed, far outperforming the Small Business Administration’s average survival rate of approximately 50% within a five-year period. These numbers reflect not only the growth in minority businesses but also their resilience amidst social and economic challenges.

Despite these positive developments, there is ongoing debate about whether Rhode Island provides a nurturing environment for minority entrepreneurs. The Rhode Island Black Business Association (RIBBA), which supports over 1,000 individuals, has an ambitious goal of closing the “racial wealth gap” to ensure all residents can succeed. The president of RIBBA has articulated the organization’s focus on fostering economic prosperity through holistic programming and measurable growth opportunities for its clients.

In recent years, RIBBA has noted significant challenges, particularly due to funding cuts influenced by changing federal priorities surrounding diversity, equity, and inclusion. These cuts hinder the organization’s ability to support small businesses and entrepreneurs effectively, limiting their growth potential. The turmoil caused by such cuts could potentially lead to job losses and increased insecurity for struggling families, particularly among low- to moderate-income individuals.

RIBBA has reported a remarkable 98% completion rate in its job training programs, with all participants indicating either increased wages or new job responsibilities after completing the program. In 2024, the organization aided clients in acquiring $1.2 million in lending capital along with $80,000 in grants, demonstrating its continuing commitment to fostering minority entrepreneurship.

The Rhode Island government has also taken conscious steps to support minority, women, and veteran-owned businesses through initiatives like the “Rhode Map To Success” pilot program. This program, funded with $500,000 from the state budget, aims to provide procurement training and technical assistance designed to improve the success of these businesses in government contracting. The pilot program is a part of new legislation that raises the required participation rate for minority business enterprises in state contracts from 10% to 15%.

As of 2024, minority- and women-owned businesses have secured 10.4% of the total state contract value, amounting to around $73 million. However, there has been a slight decline in the percentage of contracts awarded to minority- and women-owned businesses, down from the previous year’s 12.3%. Despite these fluctuations, the Rhode Island Department of Administration evidenced a 66% increase in the dollar value of contracts for minority- and women-owned businesses, rising from approximately $43.9 million in FY 2023 to $73 million in FY 2024.

The pilot program is set to provide crucial services such as acquisition planning, proposal development, and networking opportunities to enhance the chances of success for these businesses in securing government contracts. Certified businesses will be able to apply for the program via the state’s website, with selections to be finalized in early 2025.

These recent developments illustrate the dynamic landscape for minority-owned businesses in Rhode Island, characterized by steady growth and concerted efforts to ensure their long-term success while tackling the barriers posed by funding challenges and changing policies. The upcoming event to celebrate honorees in the minority business community and the announcement of winners on July 7th will serve to further highlight the achievements of these entrepreneurial ventures.