Opportunity Zones and Minority-Owned Business (Research Paper Sample)

Impact of opportunity zones
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Introduction
Since 2017, the Opportunity Zone tax incentive has become central to discussions regarding community development and revitalization. The tax incentive has guided millions in new real estate investments and small, minority-owned legacy businesses. It has created a possible system for the present and future for the low income and initially abandons communities to benefits (Hilary & Adam,2018). The investment trends from the last two years of Opportunity Zone activity present a case where there is persistent interest from municipalities and investors to use the tax incentive. This interest has potentially shifted small, minority-owned legacy businesses to move at a greater height.
Opportunity zones and minority-owned business
Opportunity Zones are economically-distressed communities where private investments, under certain conditions, may be eligible for capital gain tax incentives (Schreiber,2020). Opportunity Zones were created under the 2017 Tax Cuts and Jobs Act, signed into law by President Donald J. Trump on December 22, 2017, to stimulate economic development through commercial establishment and job creation by incentivizing long-term investments in low-income neighborhoods. The Opportunity Zone tax incentive was conceived as a tool to promote and support new businesses in areas of concentrated poverty (Jared & Kevin, 2015). There’s no easy fix or magic solution to strengthening the areas around the country whose communities are struggling before opportunity zones were created. A developed economy like the United States of America has achieved its status through business investments, commercial establishments, and entrepreneurship. Opportunity zones were created at an appropriate time where wealth inequality needed to be addressed (Rutgers,2019). But we do know that entrepreneurship is a powerful weapon in combating wealth inequality in America. With the assistance of opportunity zones, it becomes easier. Less than five years since opportunity zones were created, research reveals that opportunity zones' investments support small business stability and growth. It has achieved the stated goal of place-based economic development and job creation in distressed communities.
Most low-income communities consist of black American and Latin; the creation of opportunity zones helped the surrounding business environment flourish, such as the Black business community. The median net worth for Black business owners is twelve times higher than Black non-business owners. As of 2017, there were three million Black-owned businesses in the United States, generating $150 billion in annual revenue and supporting 3.56 million U.S. jobs (U.S. Census). According to the 2012 Survey of Business Owners, 27.7 percent of all businesses in Mississippi and 27.6 percent of businesses in Georgia are Black-owned more than one-fourth of the businesses in each of those states. Currently, there are one hundred designated opportunity zones in Mississippi and more than two-fifty in Georgia. That represents a significant opportunity for Black business owners to see an increase of much-needed capital into their businesses. Apart from Black-owned business, there is also microbusinesses that opportunity zones help to grow. More than two hundred and fifty thousand microbusinesses in Mississippi and more than nine hundred thousand in Georgia, many of whom may fall in the distressed areas that impact investors have been considering.
Small businesses in the United States and many other countries help create the kind of value that builds sustainable competitive advantages and enduring enterprises. This gives people jobs and, perhaps more importantly, it creates long-term wealth. Still, there are severe challenges for small businesses, especially those that are minority-owned and found in low economic communities due to limited access to capital, lack of investment in community infrastructure, the continued challenges of a globalizing economy, and now an unforeseen pandemic fueling a new economic crisis (Oren Cass et al., 2018). It is vital to determine that the opportunity zone's new incentive is helping to close the economic gap. Opportunity zones' primary objective is to transform the small businesses, minority workers, and low economic communities toward a more equitable and more resilient economy where everyone has the opportunity to prosper.
Opportunity zones and real estate
The tax incentive provided by opportunity zones permits capital to be invested in qualifying real estate opportunities and existing businesses (Rutgers,2019). However, the vast majority of projects seeking and receiving Opportunity Zone funding are real estate development projects. According to the Securities and Exchange Commission (SEC) data, it reveals the sectors of investment Opportunity Zone for a few states that are used as an example (Ryan Jana, & Shambaugh,2018). In total, forty-six percent of Opportunity Zone funds reported being investing in real estate. In comparison, forty-five percent reported operating as pooled investment funds and therefore have investments across different sectors.
In comparison, the remaining nine percent reported being investing in other industries such as healthcare, technology, construction, and business investments. The City of Atlanta has more than forty projects on its designated opportunity zones and nine other seeking Opportunity Zone funding. Of the forty-one projects on the Opportunity exchange, thirty projects sought funding for real estate project opportunities, over half of which were multi-family housing developments. The remaining ten projects listed were businesses, five seeking investment for real estate expansion or acquisition, and five seeking other business expansion efforts. The total investment sought by all projects was $409 million, with a minimum investment of $500,000 and an average of nearly $12 million. There were sixteen projects listed on the D.C. Opportunity Zone Marketplace in Washington DC, with investment equity sought totaling $38 million and an a