Looking for an opportunity to get your small business idea off the ground? Read on to learn about funding opportunities for minority small business owners.
There are over 11 million minority-owned businesses in the United States, a 50 percent increase from a decade ago. Combined, they employ six million people and generate $1.8 trillion in annual revenues.
From the surface, these numbers look rosy.
In truth, though, starting a successful small business as a minority is easier said than done. For every successful minority small business owner, there are tens who don’t make it, largely because they’re unable to access funding opportunities.
A recent study uncovered disturbing facts. Of all venture-backed business founders, only 1 percent were black while women-founded startups received only 9 percent of the total venture investments.
The landscape is changing, though. Today, minorities have good access to funding opportunities.
Continue reading to learn more about these opportunities.
Governmental and Non-Governmental Grants
One of the primary reasons minority-owned businesses don’t get funding is low net-worth. If your business doesn’t have enough assets, your loan application will likely be rejected.
This is why grants are such an ideal funding opportunity for minority groups.
A grant isn’t credit. It’s essentially “free capital.” Once you get it, you won’t repay it.
However, some granters might keep a close eye on your operations to ensure the money is put into sound business use. Ensure you’re using a good small business accounting software to manage your finances.
There are lots of governmental and non-governmental organizations offering grants, some specifically designed for minority groups. The National Minority Supplier Development Council, for instance, offers financing programs to minority entrepreneurs.
Do your research to find more grant opportunities.
Since the Financial Crisis of 2008, business loans have been a hard catch for most small business owners. But as the economy makes big recovery strides, it’s now getting easier to secure a small business loan, even for entrepreneurs who belong to minority groups.
In fact, commercial banks are no longer the only option. The Small Business Administration, for example, offers microloan programs that target small business owners, including minority owners. The same goes for the USDA, but its loan programs are meant for entrepreneurs in rural areas.
That being said, don’t assume that you’ll qualify for a business loan just because it’s designed for minority groups. At the end of the day, a business loan is a business loan. You must meet the set qualification requirements.
If the loan program wants applicants who are already business owners, you need to be a business owner, not someone looking for funds to start a business.
If your quest to find funding from mainstream sources hit a snag, don’t shy away from turn to alternative lenders. These are typically online companies that specialize in making loans to entrepreneurs. Their loans are easier to qualify for, but they charge higher interest rates and term lengths are shorter.
Minority Small Business Owners Can Secure Adequate Funding
Your entrepreneurship path as a minority small business owner can be rocky, especially as far as getting funding is concerned. But as we’ve demonstrated, times are changing, things are getting better.
There are several funding opportunities for minority people like you. You just need to know how to find them.
Good luck and keep reading our blog for more small business tips and insights.