Every small business owner came face-to-face with unprecedented challenges in 2020. COVID-19 forced many to pivot their strategies, reduce their operations, or worse, close their doors permanently.
While every entrepreneur felt the effects, Black-owned businesses were hit disproportionately hard. Between February and April 2020, more than 41% of U.S. Black-owned businesses shut down, compared to 17% of white-owned businesses.
That single statistic is just the tip of the iceberg when it comes to exposing the disproportionate challenges Black business owners face. While every entrepreneur encounters challenges when starting and growing their business, for Black-owned businesses, those challenges are compounded by institutional racial barriers. A Forbes study showed minority business owners "typically encounter higher borrowing costs, receive smaller loans, and see their loan applications rejected more often." Because of these and other barriers, only 4.3% of America's 22.2 million business owners are Black.
While understanding these statistics is vital to progress, it's equally important to see the positive headway we've made. As we enter into Black History Month, it's essential to recognize and focus on the contributions and vast potential of Black business owners. According to the most recent available Census data, there are more than two million Black-owned businesses in America. These two million businesses are responsible for generating more than $150 billion in gross revenue.
In short, Black-owned businesses are vital to growing the American economy. That's why now, more than ever, it's imperative all business owners have equal access to the resources and funding they need to help them jumpstart their business. Fortunately, tons of different resources are dedicated to assisting business owners of color with some of the most common challenges they're likely to face — like funding, business development, education, and more.
Here are the best small business resources for Black business owners, including ways to get the funding and guidance you need to help your business grow.
The Coalition to Back Black Businesses is a multi-year project launched with one goal in mind — to support Black small business owners and the communities they serve as they recover from the COVID-19 pandemic and chart a path forward. The Coalition to Back Black Businesses aims to do this by providing $10 million in grants to Black-owned businesses over the next three years. That $10 million will be awarded in $5,000 grants to more than 280 businesses every fall between 2020 and 2023.
To apply for the grant, businesses must employ between three and 20 people and be located in an "economically vulnerable community." The Coalition's website lets you enter your zip code to confirm if your community is eligible.
In addition to the initial grants, the Coalition will also offer mentorship opportunities and create an online hub of resources for Black business owners.
Accion is a global nonprofit microlending program that targets low- to moderate-income business owners who have trouble accessing capital through traditional channels. This can make Accion a great option for small businesses loans. Accion offers loans from $200 to $300,000 in all 50 states throughout the U.S. To apply, you can access the application for minority-owned business loans right on Accion's site.
Grants.gov offers entrepreneurs a single database to learn about and apply for federal grant opportunities from more than 20 agencies. These agencies award more than $500 billion annually to businesses of all shapes and sizes. This means that no matter the background or type of company you have, there's a good chance you'll find an opportunity available through this portal.
The Founders First Capital Partners offers a slightly different take on funding with "revenue-based investment" for service-based companies led by minority, veteran, or women founders. The organization offers entrepreneurs a flexible payback model, meaning payments are determined from cash flow instead of a set amount each month. This can be a huge advantage for entrepreneurs just starting out. On top of investments, the firm also has business accelerator programs and serves as a learning platform that can help business owners sharpen their skills.
This venture capital fund invests in underrepresented founders, like women, people of color, and the LGBTQ community. To date, Backstage Capital has invested in more than 150+ companies. Its Entrepreneur Investment applications are assessed on a rolling basis. Companies at any stage and from any industry are encouraged to apply, but the organization recommends that applicants be prepared to prove and defend their value proposition to gain a competitive edge.
This nonprofit organization aims to revitalize communities by supporting minority-owned businesses across the country through its Small Business Relief grant program. To date, LISC has provided over 4,000 entrepreneurs with grants totaling over $62 million during the COVID-19 pandemic alone. Businesses can learn more about how to qualify for the program by visiting LISC's website.
The Minority Business Development Agency (MBDA) is the only government agency solely dedicated to the growth of minority businesses. A part of the U.S. Department of Commerce, the MBDA supports Black-owned businesses by guiding them through their questions on funding, contracts, and more. MBDA Business Centers are located in U.S. cities with a large presence of minority-owned businesses.
The National Minority Supplier Development Council (NMSDC) connects business owners with the opportunities and partnerships they need to thrive. Today, the NMSDC helps more than 12,000 minority-owned businesses by matching them with large corporations that are looking to increase their supplier diversity. The NMSDC website has more information on how to begin the certification process to join.
The National Urban League is a civil rights and urban advocacy organization that currently services more than 300 communities across the country. While the organization offers a wide variety of services to help those in need, they also focus on helping entrepreneurs of color who run their businesses as a sole proprietor.
The National Urban League's centers, which are located across 12 major cities like Atlanta, Chicago, Houston, and Los Angeles, provide counseling, mentorship, and training services for entrepreneurs in need of an extra push to get their business up and running on the right foot. The National Urban League lists the contact information for their 12 centers on their website.
The U.S. Black Chambers (USBC) supports more than 130 African American chambers of commerce and business organizations throughout the U.S. At the local level, African American chambers promote and advocate for Black-owned businesses. Meanwhile, the USBC works at the national level to highlight and support Black-owned companies with a business directory, educational webinars, and informative content like podcasts to guide and inspire Black entrepreneurs through their business journey.
Black Founders is a nonprofit organization dedicated to growing the number of successful Black entrepreneurs in technology. Black Founders does this by developing programs that equip entrepreneurs with training, inspire innovation, and share resources and knowledge with like-minded entrepreneurs. Throughout the year, Black Founders also hosts networking events, workshops, conferences, and hackathons.
Getting started, and staying afloat, is a challenge for any business. But for Black-owned businesses, systemic racism amplifies those challenges.
Still, Black entrepreneurs continue to start small businesses at an ever-increasing rate, adding vitality to the national economy while empowering the communities they're in. While there undoubtedly remains room for improvement, tapping into the vast, nationwide-network of support and resources can help Black entrepreneurs turn their dreams, talents, and ideas into a thriving small business.
Whether you're just starting or looking to expand, Swyft Filings is here to help. In our learning center you can find more resources for small businesses, inspirational stories about entrepreneurs, and hundreds of articles filled with advice and tips for small business owners.
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