H&R Block to help Black-owned businesses hit hard by the pandemic
H&R Block will offer free coaching to Black-owned businesses across the country through a new program. Block Advisors, an arm of the company that specializes in small business services, will partner with the Urban League to provide free counseling to Black-owned businesses, which have been hit disproportionately hard by the coronavirus pandemic.
"The impact of hundreds of years of systemic racism continues to be felt today and especially through the lens of economic prosperity," Gwendolyn Grant, president and CEO of The Urban League of Greater Kansas City, said in a news release. "We look forward to working together to break down prosperity barriers and providing financial help where it's urgently needed."
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The program will start with Kansas City businesses later this month, said Ian Hardman, vice president and general manager of small business at H&R Block. Then, the company plans to expand by working with Urban League affiliates across the country.
"There is no cap on the number of businesses we'll work with here in Kansas City," he said. "But we're working with a relatively small number so that we can provide insight to those businesses, provide insight to the Urban League and then very aggressively scale nationally."
Aside from tax advice, Block Advisors will provide help with preparing financial statements, planning for large purchases, managing payroll and accessing capital. H&R Block will also offer some micro grants to individual businesses. And the Urban League will provide free credit-building services.
Data from the U.S. Census Bureau shows that Black-owned businesses in Kansas City tend to have lower payroll and sales than their white-owned counterparts. And the pandemic has only exacerbated the divide.
H&R Block research found that more than half of Black business owners reported a revenue decrease of 50% or more compared to only 37% of white business owners since March 2020. The company also found that Black business owners were more likely to report trouble establishing a strong digital presence and more likely to experience late or delinquent payments from customers.
"It really is a much bigger issue than Block or even the individual businesses," Hardman said. "We recognize that there have been barriers, some systemic, some barriers and challenges even self inflicted. But that's the case for every small business in America."
Even badly needed federal assistance was not evenly distributed: One analysis found that fewer than 2% of the first round of Paycheck Protection loans aided Black-owned firms. In Kansas City, a local researcher found that of the thousands of first round PPP loans awarded in the metro area, only 24 helped Black-owned businesses.
"Black communities revolve around Black-owned businesses," National Urban League President Marc Morial said in a news release. "When they thrive, Black communities thrive. By offering coaching and financial counseling to Black business owners, Block Advisors are helping to create an economy that is equitable, robust and resilient for all Americans."
While H&R Block is best known for its consumer tax preparation services, its Block Advisors arm has long specialized in offering a wider variety of services to small businesses like restaurants, salons and childcare centers. Those services include tax planning, bookkeeping, payroll and financial reporting.
Many entrepreneurs and small businesses struggled with those things before the pandemic, Hardman said. But the need is now greater than ever as businesses battle declining sales and complex federal assistance programs.
The number of active Black business owners plummeted by 41% at the outset of the pandemic, according to the National Bureau of Economic Research.
"This is really about how do we ensure that never, ever again happens?" he said. "To do that, we're making sure that we bring the best of our experience to manage the worst complexities and worst challenges that they have. And we're doing that on a one-on-one basis when businesses desperately need it most."
H&R Block's new program is a piece of its wider Make Every Block Better effort, which aims at building connections in communities and helping small businesses coast to coast. In November, the company announced a goal of supporting 500,000 U.S. small businesses by 2025. In 2019, CEO Jeff Jones announced the company would invest at least $6.5 million to help tackle what he viewed as a growing problem of social isolation and loneliness.
The company, headquartered in downtown Kansas City, has also been working to diversify beyond its traditional tax services and expand its reach into small businesses.
In 2018, H&R Block spent more than $400 million to acquire Canadian financial software company Wave Financial. That standalone firm offers bookkeeping, accounting, invoicing, payroll and payments processing services to hundreds of thousands of small businesses.