Funding Resources for Empowering Black-Owned Businesses
Funding Resouces for Empowering Black-Owned Businesses
by Rhonda Jones, Business Coach
August is National Black Business Month, and we recognize Black-owned businesses and their challenges with funding their businesses.
Nearly 10 percent of U.S. businesses are black-owned, and the numbers are increasing more than ever. According to the U.S. Census Bureau, that amounts to approximately two million companies owned by African Americans. Nearly 40 percent of black-owned businesses are in health care and social assistance, repair and maintenance, and personal and laundry services. Other categories include advertising firms, auto dealerships, consulting services, restaurants, barbershops, beauty salons, and more.
In recent years, there has been a growing awareness of the challenges faced by Black entrepreneurs in accessing financial resources to start, grow, or sustain their businesses. Discrimination, lack of capital, and limited access to traditional lending sources have historically hindered the growth of Black-owned businesses. However, the landscape is gradually changing, with various lending institutions and initiatives emerging to address these disparities and empower Black entrepreneurs. Let’s explore some of the most prominent lending sources tailored to support Black businesses.
Community Development Financial Institutions (CDFIs)
Community Development Financial Institutions (CDFIs) are specialized financial institutions committed to providing affordable and accessible financial services to underserved communities, including Black businesses. These institutions offer loans, grants, and other financial products with more flexible terms than traditional banks, allowing Black entrepreneurs to access capital for their ventures. CDFIs also focus on fostering economic growth and development in marginalized communities, making them a valuable resource for aspiring Black business owners. Community Ventures, Metro Bank, and Louisville Development Bancorp, Inc. are right here in Louisville.
Minority Depository Institutions (MDIs)
Minority Depository Institutions (MDIs) are banks or credit unions that are majority-owned by minority individuals or serve predominantly minority communities. These institutions play a crucial role in providing financial services to underserved populations, including Black businesses. MDIs understand the unique challenges faced by minority entrepreneurs and are more attuned to their needs, making them a preferred choice for accessing loans and other financial assistance. Main Source Bank, Liberty Bank, River City Bank, and many more are in Louisville.
Small Business Administration (SBA) Loans
The U.S. Small Business Administration (SBA) offers various loan programs aimed at supporting small businesses, including those owned by minorities. The SBA's 8(a) Business Development Program, for instance, helps socially and economically disadvantaged entrepreneurs, including Black business owners, gain access to government contracts, technical assistance, and mentorship. The SBA's 7(a) Loan Program and Microloan Program also provide funding opportunities to qualifying businesses. To learn more, go to https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility
Minority Business Development Agency (MBDA) Grants
The Minority Business Development Agency (MBDA) is an agency of the U.S. Department of Commerce that promotes the growth and competitiveness of minority-owned businesses. MBDA offers grants and other financial assistance to support minority entrepreneurs' efforts to expand their businesses and enter new markets. Black business owners can benefit from these resources to access capital and gain a competitive edge. New Business Grant Application – Minority Business https://www.newusafunding.com and Minority Business Development Agency (MBDA) http://www.mbda.gov
Impact Investment Funds
Impact investment funds are private funds that focus on providing capital to businesses that aim to create positive social or environmental impact alongside financial returns. Some impact investors specifically target minority-owned businesses, including Black enterprises, to help address economic disparities and foster social equity. Connecting with impact investment funds can offer Black entrepreneurs the funding they need while aligning with their commitment to social responsibility. Impact Investing Community Foundation of Louisville is having a positive economic impact on black businesses in our community. Check out their website at https://www.cflouisville.org
Online Lending Platforms
Online lending platforms have gained popularity as alternative sources of financing for small businesses, including those owned by Black entrepreneurs. These platforms use technology to connect borrowers with investors, facilitating quick and efficient loan processing. Some online lenders have dedicated programs to support minority-owned businesses, providing them with accessible funding options.
Empowering Black businesses through access to capital is not only a matter of economic growth but also an essential step toward promoting diversity and inclusion in the business world. The lending sources represent just a fraction of the available resources. It is crucial for Black entrepreneurs to explore these and other options to find the best fit for their specific needs and aspirations. With continued efforts from various financial institutions and government agencies, we can collectively create a more inclusive and supportive environment for Black-owned businesses to thrive and contribute to the broader economy.
Support and encourage African American-owned businesses in your community. Learn more about business opportunities for the African American community. Use #NationalBlackBusinessMonth in social media correspondence. Discover more on the Black Business Month website.
For additional information, please contact me via email rhonda.jones@uky.edu or schedule a meeting at www.calendly.com/rhondajones.