Black business owners, frustrated by high interest rates, are looking forward to the election

Kimberly Jolasun, a 32-year-old entrepreneur from Atlanta, has never voted for the Republican presidential candidate. This could change soon.

Her company, Villie, is an online platform that allows new parents to share photos and updates about their babies with friends and family and register for gifts like strollers and playpens. Your business is not yet profitable and needs financing to grow. But venture capitalists struggle with her unconventional profile, she said. Technology is dominated by white men in places like Silicon Valley and Austin, Texas. She is a black woman in Georgia.

Banks want to charge her interest of up to 14 percent for business loans. The interest rate on the credit card debt with which she started the business has risen to 25 percent, tripling her monthly payments.

Ms. Jolasun knows that borrowing costs are determined by the Federal Reserve. She doesn't blame President Biden. But she assumes that his Republican opponent, former President Donald J. Trump, will be more responsive to the needs of entrepreneurs. That's why she's seriously considering giving him her vote.

“For the first time in my life, the ball is in the air,” she said. “I haven’t made my decision yet.”

Despite signs of a strong economy, higher borrowing costs are a source of financial anxiety that could be crucial in the 2024 presidential election – particularly in Georgia, one of six battleground states expected to decide the outcome.

Black voters are a crucial bloc in Georgia; Four years ago they made up 27 percent of the electorate. Ample evidence suggests that Black Americans are disproportionately affected by higher interest rates on mortgages, credit cards, student loans and business debt. According to a Federal Reserve survey of minority-owned small businesses, startup companies owned by people of color — particularly Black Americans — face significant barriers to fundraising, making them more vulnerable to increased borrowing costs. Although their businesses tend to be smaller and less profitable, Black and Hispanic entrepreneurs are often rejected for financing applications, even when different credit scores are taken into account, suggesting that racial profiling is a problem.

“It's hard for people like me to raise capital,” said Veronica Woodruff, the founder of Travelsist, an Atlanta company that connects travelers who need help navigating airports with the assistance of companions. “I am an African-Latina woman living in the South. It just makes it difficult to get in front of the people writing checks.”

Ms. Woodruff, 40, has already raised $1.1 million, including a $250,000 grant from the Fearless Fund, a nonprofit that aims to address the lack of capital for businesses owned by women of color. The organization has been crippled by a lawsuit from an activist group that claims funneling funds to minority women is racial discrimination.

Ms. Woodruff is seeking $8 million in additional investment to expand her business. Rising costs forced them to increase the hourly wage from $15 to $20. Venture capitalists demand more favorable conditions for their investments.

She grew up in California and considers herself a liberal who values ​​civil rights. But as the head of a company, she finds it difficult to decide how to vote.

“I’m taking a big risk here,” Ms. Woodruff said. “It applies to everyone, to all of my employees, to everyone who has a stake in this company and the communities in which we operate.”

The importance of the Black vote in Georgia can hardly be overstated. According to a Pew Research Center analysis, the number of eligible voters in the state increased by 1.9 million from 2000 to 2019, with Black people making up nearly half of that number.

Mr. Biden received 88 percent of the black vote in Georgia in 2020 and is expected to win that bloc again by a wide margin in this year's election. But in a state that was decided by fewer than 12,000 votes four years ago, even a small drop in support could be crucial.

Vice President Kamala Harris visited Atlanta on Monday at the start of an economic tour of battleground states to underscore the administration's efforts to support Black business owners and entrepreneurs and narrow the racial wealth gap.

In a recent poll conducted by The New York Times and Siena College, Mr. Trump was chosen as the chosen candidate by 16 percent of black voters nationwide. The same poll found that 81 percent of black voters rated the economy as “fair” or “poor.”

According to the headline indicators, Georgia appears to be in robust economic health. In March, the unemployment rate was 3.1 percent, below the national level of 3.8 percent. Inflation has fallen from its highs. Atlanta has created jobs by becoming a Hollywood film location and attracting multinational companies that have set up headquarters there.

Northwest of the city, Hyundai, the South Korean auto giant, is teaming up with another company, SK On, to invest $5 billion to build an electric vehicle battery factory. A $2.3 billion solar panel factory is being built nearby, owned by Hanwha Qcells, another South Korean company. And the state has seen a surge in food processing plants.

“We landed a lot of new projects and set new records,” said Jeffrey M. Humphreys, an economist at the University of Georgia’s Terry College of Business. “They all kind of build on each other.”

Expansion of what is already the country's largest container shipping port is underway on the state's coast in Savannah. The docks are where cargo is being diverted from the Port of Baltimore after a container ship struck a large bridge there, causing the bridge to collapse and bringing freight traffic to a standstill.

However, the impact of higher borrowing costs is not directly captured in official inflation measures, and higher debt payments tend to undermine the benefits of economic growth.

A recent study by economists at Harvard University and the International Monetary Fund concluded that higher payments on mortgages, credit cards and other forms of debt largely explain the gap between rosy economic assessments from experts and dire predictions from ordinary people.

“Everyone feels like they're stagnating or struggling,” said John Lawson, who sells hip-hop-themed shoelaces online and serves small businesses in the Atlanta area. “The cost of living has skyrocketed. Everyone has a job and is still busy at the same time.”

Black Americans typically suffer from unemployment rates twice as high as white Americans. In Georgia, that gap has widened: unemployment among blacks reached 5.7 percent at the end of last year, while unemployment among whites was 2.2 percent, according to an analysis of federal data by the Economic Policy Institute.

Part of that increase appears to be due to how Black-owned businesses have responded to higher borrowing costs: by slowing hiring, reducing hours and cutting jobs, according to a report from the Georgia Budget and Policy Institute.

Many black entrepreneurs are flocking to Atlanta, a city where black Americans are prominent in the ranks of business, government and culture. But startups in Atlanta typically struggle to secure adequate funding, local entrepreneurs said.

“Silicon Valley guys have so much capital that they'll pour money into any absurd idea,” said Charles Wright, the chief executive of Mechanized AI, a startup that builds artificial intelligence robots. Venture capitalists in the Southeast are more conservative, he added. “They don’t believe in fairy tales.”

Mr. Wright has plenty of funding for his next venture, having sold his data management start-up for $22 million in 2018. He drives a red electric Porsche, one of four cars parked outside his home in Stone Mountain, a leafy, majority-black suburb next to a park that is a permanent monument to the Confederacy. He exudes certainty that mechanized AI will soon be worth billions.

“I’m sitting on what I know is going to be a unicorn,” he said. “There is no precedent for what we are doing.”

He is also confident that Black voters will dutifully, if not enthusiastically, turn out for Mr. Biden, whom he credits with bringing stability back to the economy after the turmoil of the Trump administration.

That could prove to be true. But conversations with black business owners in Atlanta revealed a pervasive sense of insecurity.

Immediately after pandemic restrictions were lifted, Omar Whilby saw a significant increase in business at his East Atlanta Village nightclub, a hive of bars and music venues.

“Everyone was tired of being at home,” Mr. Whilby said. Thanks to the pandemic relief programs put in place under President Trump, people had money in their pockets.

But last year, Mr. Whilby's club, the iLounge Atlanta, suffered a decline in business by a third due to rising interest rates and rising prices for gas, groceries and rising rents.

In response, he is slowing development of his technology company Sound Capsul, which streams music shows online and allows independent artists to upload and share their music.

“We had to downsize our growth strategy,” Mr Whilby said.

Ray Woods, 34, an Atlanta-area real estate entrepreneur, distills the election decision as one between a Republican Party that doesn't care about blacks and a Democratic Party that takes black voters for granted.

He voted for Barack Obama for president twice and admires Denmark, where high taxes fund a comprehensive and generous social safety net. He supported the candidacy of Senator Bernie Sanders, the self-described democratic socialist, in the 2016 Democratic presidential primary. He then voted for Mr. Trump in the general election.

Mr. Woods will vote for Mr. Trump again this time because he sees him as the best way to advance business interests.

“America was built on capitalism,” he said. “We need someone who understands the business.”

Anna Harden

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