The spirit of entrepreneurship is inextricably woven into Atlanta’s culture.
In W.E.B. Dubois’s 1899 study the Negro In Business, 61 Black businesses were operating in Atlanta. The businesses represented a combined investment of $64,260, or $2,350,373, when adjusted for inflation and represented in 2023 figures. Among the most common lines of business were grocery stores, general merchandise stores, and barbershops.92
Atlanta’s Black business community enjoyed unparalleled success in the late 19th and early 20th century. The district known today as Sweet Auburn, situated east of downtown along Auburn Avenue, is considered a success story that demonstrates the vibrancy and resiliency of Black entrepreneurs in the segregated South. At the turn of the 20th century, the district contained ten Black businesses and two Black medical practitioners.93 As Sweet Auburn grew, it became the center of the city’s Black community, replete with commercial offices, bustling retail, places of worship, Black-owned financial institutions, and more. Fortune Magazine coined the district “the richest Negro street in the world” in a 1956 issue.94
Unfortunately, the vitality of the community began to diminish shortly after the donning of this title. City leaders and developers erected what is known today as the I-75/I-85 downtown connector, which eliminated a sizable portion of the commercial corridor and divided the remaining businesses on either side of the interstate. Coupled with the desegregation of the country and subsequent migration of Black businesses to other parts of the city, the once vibrant Sweet Auburn district suffered from disinvestment and became another community subject to racist urban renewal policies and investments.95
Former Atlanta Mayor Maynard Jackson, the city’s first Black mayor, catalyzed reinvestment in the city’s Black business ecosystem by adopting a policy agenda during his tenure from 1974-1982 that put affirmative action and Black businesses at the forefront.96 One of his most successful and well-known accomplishments as mayor was his diversification of the procurement process at the Atlanta airport. A champion for equity and a son of the Civil Rights Movement, Jackson recognized the importance of Black businesses in the city. He earmarked 25 percent (approximately $450 million) of all procurement contracts for the construction of Hartsfield-Jackson Atlanta International Airport to be awarded to minority firms. The airport was the largest construction project in the South during that time, and Jackson had successfully positioned Black businesses to benefit from the influx of capital. His efforts increased minority contracts from 0.13 percent in 1973 to 23 percent in 1982.97 A 2021 audit revealed that the city of Atlanta did not meet its airport procurement target goals for minority-owned or female-owned business enterprises, a goal that is still set at approximately 25 percent.98
In a city like Atlanta, where the population is over 48 percent Black, one might expect that the business landscape would tell a triumphant story of a thriving Black business landscape. Unfortunately, the data contradicts this notion, showing that Black businesses only constitute 34 percent of all firms in the Atlanta area.
But when broken down by employer-firm or non-employer firm (i.e. sole proprietorships), there is a large difference in business ownership. Just 3 percent of the Atlanta area’s Black-owned businesses are employer-firms, while the vast majority of Black-owned businesses – 97 percent – operate as non-employer firms with no employees.99
Businesses are an even greater asset and community wealth building tool when they have at least one paid employee. Although Black women make up the majority of Black-owned businesses in the Atlanta area, they are least likely to have employees.
The key method of ensuring a business can build Black wealth is to ensure structural barriers are removed that prevent Black-owned businesses from increasing their revenues. Currently, annual revenues for Black-owned employer firms are lower than the revenues of others in the Atlanta area. It is important to keep in mind that when we are discussing the revenues of Black-owned businesses, we are not discussing income, but rather the profits generated by a business.
Among non-employer firms, the disparities in revenues that Black businesses face are more apparent, driven largely by the industry that the businesses are operating in. For instance, Black-owned businesses in Atlanta are more concentrated in lower-revenue industries.
Black entrepreneurs are underrepresented in employer firms of all types, but in Atlanta, they are overrepresented in the transportation and warehousing sector. In order for business ownership, especially among sole proprietors, to serve as a vehicle to build Black wealth, structural barriers blocking growth in high-revenue industries must be removed. High-revenue industries command larger amounts of capital,100 suggesting that the structural barriers in accessing capital are an impediment to greater representation in high-growth, high-revenue industries for Black-owned businesses.
Although most entrepreneurs use personal or family wealth to start their businesses, Black entrepreneurs in Atlanta have fewer resources to do so. Instead, Black entrepreneurs are more likely to rely on personal credit cards to fund their businesses.101 Barriers to bank loans and other sources of capital stemming from centuries of systemic racism and ongoing discrimination in financial markets continue to erect barriers to business financing. Even after controlling for creditworthiness, Black entrepreneurs experience higher rates of loan denial and pay higher interest rates than white-owned businesses.
Nationally, only 20 percent of Black business owners are approved for loans, lines of credit, and cash advances, compared to 33 percent or more for all other racial-ethnic groups.102 In Atlanta, majority Black neighborhoods receive lower business amounts compared to other neighborhoods. Looking at government business funding provided by the Small Business Administration, the median loan amount shrinks as the proportion of Black residents increase in Atlanta’s neighborhoods, thus replicating an inequity that has lasted for generations.
The outlier represents the 30318 zip code. The number of small business establishments with more than 5 employees (range is 6-499 employees) is highest in 30318. We speculate the quantity of loans in 30318 is greater because larger small businesses may be better equipped to apply for loans. This explains the higher number of loans but doesn’t necessarily explain the large bubble size/larger avg. loan amount.
As Atlanta continues its current trajectory of large-scale growth, it will be critical that financial institutions prioritize outreach to Black businesses in Black neighborhoods. The rate at which business loans are approved for Black Atlantans will be a critical metric for measuring equitable and inclusive progress in the city’s larger economic development agenda.
Our conversations with Atlanta residents illuminated how business ownership served as a vital part of their wealth building journey. We found that the theme of business longevity arose across all our conversations. Children of business owners recalled how their parents kept their businesses afloat and provided for their families. Previous business owners shared their passions and reasons for investing in themselves.
Within the stories of joy and entrepreneurial success were pervasive obstacles that caused the lifespan of the business to be cut short. Increasing rent, the deterioration of the surrounding community by developers, low-value business investments from outside investors, and lack of capital were the top contributors to the closure of Black businesses. The implications of such lie in the inability to create intergenerational wealth.
My family had businesses in Alabama…and I found that it’s not generational like one generation does something, and we’re always starting over. I owned a store in New York. My son had a business in Atlanta, and it's just never is enough money in our businesses, or there’s never enough cohesiveness with all our businesses, that we work together and grow.