Empowering Black Entrepreneurs during Black History Month
As Black History Month comes to a close, it’s important to take some time to focus on the contributions and potential of African-American entrepreneurs. Businesses owned by people of color are crucial to growing the American economy, adding more than $300 billion in sales in 2012 alone. Between 2007 and 2012, the number of African-American-owned firms rose 34.5%, from 1.9 million to 2.6 million, accounting for roughly half (49.9%) of all small businesses owned by people of color. Yet, while minority entrepreneurship is on the rise, these founders still face significant challenges to their growth and profitability. For example, research by the Kauffman Foundation found that minority-owned businesses often have higher borrowing costs, receive smaller loans and are more likely to have their loan application rejected than white-owned firms.
This is why it’s imperative that all business owners have access to the resources and funding that will help them to jumpstart their businesses. There are many specific resources out there targeted at helping African-American entrepreneurs grow their businesses and reach their full potential, including:
- Minority Business Development Agency (MBDA) Business Centers: Business development centers offer a variety of resources, and the MBDA operates centers specifically focused on helping minority-owned firms penetrate new markets. These business centers can help you find local resources on securing capital, applying for government contracts, finding mentors or planning for expansion.
- Business associations such as the U.S. Black Chamber or the Minority Chamber of Business, along with their local affiliates: Like business development centers, these business associations can help Black small business owners access training materials, business development resources and information about funding that can help their businesses succeed.
- Online lending platforms: There are a number of online resources to help minority small business owners safely navigate the lending landscape. Online lending and lending resource platforms such as Venturize, SimpleGrowth or SmartBiz Loans are not specific to minority borrowers, but they help small business owners safely navigate the online lending landscape, which often offer loans with better approval odds than traditional banks.
- Loan funds targeting minority entrepreneurs: Several community development financial institutions (CDFIs) work specifically to help fund businesses that have traditionally been underserved, including Accion. To find a CDFI in your community, visit our locator map.
- Minority-focused investment funds: Several funds exist that primarily focus on investing in or funding minority-owned businesses, including Magic Johnson Enterprises, 500 Startups, Macro Ventures and Backstage Capital. There are also a number of business grant programs available to entrepreneurs of color.
- SBA government contracting programs: The Small Business Administration administers several programs that help small businesses operating in underserved communities get certified for programs that give them the opportunity to better compete for government contracts.
Black entrepreneurs are dynamic and resilient, representing immense economic potential. Black entrepreneurship in America has a rich history and strong ties to the overall economic empowerment of African-American communities, reaching $150 billion in annual revenue and supporting 3.56 million jobs as of the latest census. Black business owners typically have more wealth than their peers, and support more jobs within the African-American community. Supporting African-American economic empowerment through entrepreneurship promises to unleash significant growth and opportunity for their communities and for the American economy as a whole. While these entrepreneurs may still face significant barriers compared to the average small business, expanding education and access to resources is critical to helping black business owners grow and thrive.