Minority-operated businesses are at least 51% owned by either one or more American citizens of the following classifications: African American, Asian American, Hispanic American, and Native American. Research from the Annual Business Survey (ABS) in 2019 showed that around 1.0 million, representing 18% of all businesses in the United States, were minority-owned.
Statistics from the U.S. SBA reveal that around 99.9% of minority-owned enterprises are small businesses, while more than 8.7 million workers are gainfully employed. These statistics show the pivotal role that minority-owned businesses play in advancing America’s economy by creating millions of jobs in the country. However, there are some challenges that they face which “privileged” business owners do not encounter.
One of these major problems they face is accessing small business financing as a new company. There is a noticeable difference as regards access to entrepreneurial and capital development prospects for minority-owned startups.
If you are a minority business owner, here are some hacks to getting small business financing for your firm.
Creating a business plan is one of the fundamentals you need when considering small business financing for your brand. A business plan increases your prospects of getting either a loan, grants, or other financing types. It also enables you to streamline your search for financial aid.
There are some special grants for minorities with some strict requirements on how your firm will run, how you will spend the money, etc. If you notice that some conditions do not align with your business goals, you can eliminate the unfavorable ones.
Before you apply for financial aid, you should have some documents to attach to your business plan like legal documents, business licenses, tax returns, financial statements, etc. Having these documents prevents delays during the application phase. More so, some organizations prefer to review some documents before granting your requests. So, research the vital documents needed to process your funding application process.
One of the easiest ways to access grants for your company is by conducting extensive research. You can check for listings containing several grants from different government and private agencies. A good place to start is the official grants website for government agencies. On this website, it is advised to use search filters to narrow down your search to your preferred grant.
To get grant funding on the official website, register your enterprise with the U.S. government to get your DUNS number. Then, create an account on the website and search for the grant in your industry that meets your need. Some people shy away from federal grants because of the stiff competition. However, provided you have a great business plan and you meet the requirements, you have a chance at being selected.
Local funding options for minority business owners are not competitive because they are tailored to a particular state or city. Hence, do your due diligence to check in with your city or state to see if there are present funding options for minority firms. The internet is a great place to check for local business organizations that focus solely on minority-operated businesses.
Asides from seeking a grant or loan for your establishment, you can get other financing options. Some of them are microloans, lines of credit, invoice financing, merchant cash advances, etc. It is important to know if their requirements align with your business’ needs and see if you won’t be affected in the long run.
Before you choose a funding program for your firm, you need to be sure it’s the right option. If you are considering a grant, ensure you understand all the requirements and limitations. If you are going for loans, be sure that the interest rates are not too high. When you understand your business needs, it will be easy for you to know the right funding option.