When Chelsey Montgomery-Gusta started dog-training company Knallhart Kennels and Training Academy in Iowa City as a 22-year-old, she didn’t have any relationships with banks to rely on.
She couldn’t ask close family or friends to help fund her endeavor, either.
“I didn’t have family or friends that had savings,” Montgomery-Gusta recalled. “I didn’t have a network with a bank.”
That made it “impossible” for her to find a bank to lend her money, she said. She had to take a loan with an extremely high interest rate — something she’s still feels as if she’s catching up from.
“I didn’t have that financial opportunity that I feel like a lot of my Caucasian colleagues might have had,” Montgomery-Gusta said. “That was definitely a difficult situation at the beginning.”
Black entrepreneurs in Eastern Iowa such as Montgomery-Gusta have faced myriad challenges — financial or otherwise — that have been amplified by the pandemic.
Financial difficulties are at the top of that list.
“The main struggle a lot of black businesses have is the financial part of it,” agreed Jerome Smallwood, owner of Vivian’s Soul Food in Cedar Rapids.
“A lot of us are the first generation to own businesses. … A lot of us are learning as we go.”
Nicia Leggins, owner of CCU Events in Cedar Rapids, picked up a cleaning job as customers have held off on wedding plans and has faced difficulties applying for unemployment insurance.
“I’m not going to just sit back and wait for unemployment,” Leggins said. “I’m a single momma. I have to take care of my kids.”
Devin Green, a logo and website designer in Cedar Rapids, has been in the industry for more than a decade, but he continued working part-time jobs to make ends meet — at places ranging from Hardee’s to Aldi’s — until two years ago.
Looking back, Green would’ve saved more before quitting his job at Aldi’s to do design work full time.
Maurice Davis, program coordinator for the Cedar Rapids-based Jane Boyd Community House’s Empower initiative, said many black business owners also might not necessarily have received the financial education and advice that others have.
“It’s access to capital, but also access to the information necessary in order to get that capital,” Davis said.
That includes guidance on such matters as when the best time is to hire or where to emphasize marketing. That recently included loans through the Payroll Protection Program.
Smallwood received enough PPP money to “keep the doors open.” But not every black business owner was as fortunate.
A report from the Center for Responsible Lending said many provisions of the PPP loans made it especially difficult for black business owners, who may be less likely to have existing relationships with banks.
“A lot of times, you don’t have the same relationship with a banker,” Davis said.
“As the PPP loans stuff is sort of rolling out, if you weren’t engaged in a relationship with your banker early on you missed out.”
He said that’s “not a knock against bankers.” Simply, if a banker knows someone already, they’re more likely to give the loan.
Montgomery-Gusta couldn’t put together the forms for the PPP loan program in time for the first wave of the U.S. Small Business Administration’s program. She obtained money in the second wave, but the time in between led to plenty of worrying.
“It had closed before I was even able to get my information from my accountant,” Montgomery-Gusta said. “That was a little bit scary for me. … Without that Payroll Protection Program, I don’t what we would’ve done.”
Monte Autry, owner of Cedar Rapids-based Autry’s Veterans BBQ and Catering, said he took his business plan to two financial institutions before someone from Dupaco Community Credit Union said yes, after seeing Autry’s “passion and drive.”
Drop in business a national trend
These obstacles are hardly exclusive to Eastern Iowa. Research from the National Bureau of Economic Research found a 41 percent decrease in black-owned businesses in the United States between February and April.
A May survey from UnidosUS and Colors of Change — two groups focused on racial equality — indicated 39 percent of black small-business owners in the country did not expect their business to survive more than six months under current pandemic conditions.
Many of Montgomery-Gusta’s customers postponed work with her until after the pandemic, when there’s more economic certainty.
Her high-end dog training often costs thousands of dollars. She immediately saw a 40 percent to 50 percent drop in business.
Meanwhile, she still has the same overhead costs as before the pandemic, including $4,000 rent in Iowa City.
Thirty-nine weeks pregnant, she’s on maternity leave and can’t have any bookings until August.
Leggins of CCU Events similarly saw a decrease in business as the pandemic forced many to postpone their weddings or other large-scale events.
‘I, right from the get-go, need to be really well-spoken’
Leggins said she lost about $3,500 in business after the George Floyd protests. Customers canceled event work with Leggins because they felt uncomfortable with the actions of “her people” in the protests.
“They really loved my work and everything, but obviously not enough continue business with me,” Leggins said. “Just because, I guess, the behavior of my race.”
Other business owners have noted the increased need to make a strong first impression because of their race.
“When people talk to me on the phone, they don’t expect when a trainer comes over — unless they’ve been on the website — an African American with a mohawk is a business owner,” Montgomery-Gusta said. “I, right from the get-go, need to be really well-spoken and really have my act together.”
Green, the web designer, also lives with the “constant fear that all of (his) work could be taken away” with a police officer pulling him over. Once, when his license plate registration was one day expired, a sheriff’s deputy searched his vehicle.
Montgomery-Gusta has had cops walk into her business at late hours and ask her what she’s doing.
Many of these business owners have entered predominantly white career fields, making it harder to find mentors with similar life experiences.
“Mentorship is a huge component,” Davis said. “The black community as a whole has had less opportunities than their white counterparts … so there are less mentors who have gone through what you’ve gone through.”
Someone can work hard to network, Davis said, but it might not have the same impact as connections from being the third generation in a particular industry.
When Montgomery-Gusta started Knallhart, she didn’t see anyone who looked like her in the industry. She went to Georgia to learn from her mentor, a white woman.
“I’m kind of an anomaly,” Montgomery-Gusta said. “There are not many African Americans who are in this (dog-training) industry. … It’s hard to find females, too.”
Green’s only mentor was an uncle who did photography and cinematography.
But Green said his business has been doing relatively well during the pandemic. As people out of work start new businesses, they need logos and websites.
And a weeklong vacation in mid-June finally gave him a break.
“When people have a lot of free time, they want to start a business,” Green said. “The first person that comes to mind is me because I make logos.”
Green has lost track of how many logos he’s created so far in June.
Support is a start
Autry, owner of Autry’s Veteran BBQ and Catering, is thankful for Cedar Rapids because he faced more difficult challenges while in North Carolina.
“Cedar Rapids has been wonderful for me,” Autry said.
And Montgomery-Gusta had many customers reach out to her in support in the weeks after the death of George Floyd.
A friend put Leggins’ story on a GoFundMe page, which already raised more than $1,400 as of Thursday morning. She initially didn’t want to share her story, but then a friend contacted her and created the page.
“Everybody came together to help me out,” Leggins said.
“I don’t ask for help. I’m usually always wanting to help other people out. … I didn’t know how to accept it.”
That still leaves plenty of work to do, though, to improve the business environment for black entrepreneurs.
“The fact that people are noticing and wanting there to be more opportunities is the start for a better climate,” the Empower program’s Davis said.
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