The untapped potential of Black entrepreneurship in Canada
Black entrepreneurs make important contributions to the Canadian economy and will continue to do so in the future. Unfortunately, they also face specific challenges that limit their true potential.
According to Statistics Canada, the Black population in Canada is increasing and should represent about 6% of the population by 2034. By that time, 2.6 million Canadians are expected to identify as Black, an increase of almost one million compared to 2024.
While many Black communities across the country have lived in Canada for several generations, most of their members come from immigration (53%) or are children of immigrants (32%).
How are Black people represented among entrepreneurs? And what challenges are these Black entrepreneurs likely to meet once they create their business? This blog aims to shed light on their important contribution to the Canadian economy while identifying the specific challenges they face and highlighting resources that can help them grow their businesses.
Black people are underrepresented among entrepreneurs in Canada
Overall, 1.3% of Black adults in Canada are entrepreneurs compared to 2.3% for all Canadian adults. Like the overall population, the entrepreneurship rate among Black men (1.9%) is higher than among Black women (0.7%).
Additionally, Black women are one of the most underrepresented groups among entrepreneurs (like Indigenous, Filipino and Latin American women).
Figure 1: Entrepreneurship rates for Black adults and the general population in 2023
| All | Women | Men | |
|---|---|---|---|
| Black adults | 1.3% | 0.7% | 1.9% |
| All adults | 2.3% | 1.2% | 3.4% |
Source: BDC calculations using special labour survey computations from Statistics Canada
Reading grid: 1.3% of Black people in Canada aged 15 and above are entrepreneurs. A group with an entrepreneurship rate below average (2.3%) is underrepresented.
The importance of Black entrepreneurship will grow over the next 10 years
The share of Black people among all Canadian entrepreneurs will increase over the next 10 years. They are expected to represent 3.2% of entrepreneurs by 2034, an increase of more than one percentage point compared to 2024 (where they represent 2.4% of the entrepreneurial population).
Figure 2: Projected share of Black people among entrepreneurs in Canada
Source: Statistics Canada, BDC’s projections.
Black entrepreneurship is even more critical in Greater Toronto and Greater Montreal, where over half of the Black population in Canada lives. Other urban areas such as Ottawa, Edmonton and Calgary also host a significant Black population.
Figure 3: Urban areas with the largest Black population, % of the total Canadian population
Reading grid: 31.5% of Black people in Canada live in Toronto CMA while 16.9% of the overall Canadian population live in Toronto CMA.
Unique characteristics of Black entrepreneurship
Black entrepreneurs are younger, with 75% being under 55 years old, compared to 56% of non-Black entrepreneurs. They also run newer and smaller enterprises. Seven out of ten Black entrepreneurs are men.
According to a study by the Black Entrepreneurship Knowledge Hub (BEKH), the top three reasons why Black entrepreneurs started their businesses (pull factors) are a deep passion for pursuing their own business, the desire for independence, and the opportunity to address an unmet market need. Some negative experiences, such as job security, unemployment and discrimination also influenced the decision to start a business (push factors).
While the propensity to export is comparable to that of white-owned businesses, Black immigrant entrepreneurs (57.1%) are more likely to export goods or services from Canada to their country of origin than other visible minorities who are immigrants (36.0%) or white immigrants (19.8%), according to Statistics Canada. Their businesses also help to diversify Canada’s export destinations.
Figure 4: Export of goods or services by immigrant entrepreneurs to their country of origin
Source: Statistics Canada, Black Business Owners in Canada, February 22, 2023
Black entrepreneurs operate in all industries, with the most significant being professional, scientific and technical services (20.6%), arts, entertainment and recreation (11.5%), retail trade (8.0%), health care and social assistance (7.7%) and finance and insurance (6.3%).
Black-owned businesses play a vital role in building resilient communities. The BEKH has found that while the general public primarily makes up the market base of Black businesses (68%), Black communities constitute an average of 27% of customers. They often serve their communities by providing products and services that cater to specific cultural preferences and needs. The success of Black-owned businesses can also inspire others in the community, especially the younger generation, fostering a culture of entrepreneurship.
According to QuickBooks, nearly seven out of ten Black-owned small businesses say they are the only one or one of the few businesses in their city or town offering their product or services. Doing so, they help preserve and celebrate cultural diversity, contribute to community identity and strengthen social cohesion. They also contribute to the local economy, support local initiatives and often lead social change efforts. More than eight in ten (84%) Black entrepreneurs report they’re the first in their immediate or extended family to own a business—a rate of 75% compared to their non-Black peers. Fortunately, community support is strong: 95% of Black business owners have previously supported another Black-owned business.
Black entrepreneurs face challenges of their own
Because they own newer firms and are more likely to be immigrants, the financial situation of Black entrepreneurs is often more fragile, making them more vulnerable to economic shocks. Having no past credit history also limits their access to financing. Networks and support are therefore critical to the success of Black entrepreneurs. In fact, a significant portion of Black entrepreneurs (45%) consider that Black-led organizations have been either essential or very important to their business, according to Abacus Data.
- Racial discrimination is still a reality
Black entrepreneurs also face the burden of racial discrimination. Nearly three-quarters (73%) have turned away a customer due to racially charged statements in the last year, and 72% say the fear of racial stereotypes almost stopped them from starting their business. This is a significant hurdle to overcome.
- Access to financing can be difficult
When asked about their business challenges, access to capital is one of the top factors cited by Black entrepreneurs. The most significant obstacle reported when starting out in the business was the unavailability and high cost of loans or credit, which the BEKH found affected 46.8% of respondents. Most Black entrepreneurs (83%) have used personal financing to start their business, compared to 76% for all SMEs, and three-quarters of them say it would be difficult to find $10,000 to support their business. Black entrepreneurs are less likely to say that their business has the cash or liquid assets required to continue its operations.1 A lack of trust in financial institutions is often mentioned in consultations and surveys with Black entrepreneurs.
Figure 5: Sources of financing used to start a business (%)
Source: Statistics Canada, Survey on financing and growth of SMEs, 2020.
Black entrepreneurs remain confident
Despite facing several business challenges, Black entrepreneurs remain optimistic about the prospects for their businesses. According to a Statistics Canada survey conducted in the fourth quarter of 2024, 81% of them remain optimistic about the future of their business over the next year, compared to 70% of all businesses. A recent BDC survey shows that 57% of Black entrepreneurs plan to invest more in their businesses over the next 12 months than they did last year. This is a strong signal of confidence.
Support for Black-owned businesses must be tailored to their needs
The specificity of Black entrepreneurship justifies paying special attention to supporting Black entrepreneurs in their business endeavours. Initiatives to increase financial support and provide more flexible lending criteria for this group of entrepreneurs are important.
A recent Senate report found that credit ratings unfairly disadvantage Black entrepreneurs. Unlike long-established Canadians, many Black immigrants lack the credit history, support network (including family and friends) and generational wealth to support their loan applications. This can disadvantage Black entrepreneurs who may have a viable business plan but either lack credit history or have an unsatisfactory credit history. In addition, this approach to lending ignores real business risks and relies primarily on personal credit scores as the determining factor in loan approval.
The findings presented in this blog highlight the importance of targeted support and investment to strengthen the growing Black entrepreneurial ecosystem. While the business community can break down systemic barriers through training, much-needed mentorship programs and stronger networks for Black entrepreneurs, financial institutions and organizations can also adopt more equitable lending criteria.
Fortunately, several initiatives have recently been launched. For example, the Black Entrepreneurship Program mobilizes the Government of Canada, Black-owned businesses and financial institutions to help Black Canadian entrepreneurs grow their businesses and achieve success. It includes:
It is important to make sure that programs developed to support Black entrepreneurs are designed to meet their needs and that efforts are made to ensure administrative requirements are as light as possible. There is also a need to make extra efforts to reach out to Black entrepreneurs and ensure that they are aware of available support, as they may not be on their radar due to their heavy workload. Based on a recent survey undertaken by the BEKH, when asked about their access to any government funding initiatives and programs that support Black entrepreneurs, 54% responded that they were unaware of such initiatives, while 16% said they had received funding.
Next step
Learn more about BDC’s support for Black entrepreneurs.