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6 Funding Resources For Black-owned Businesses and Entrepreneurs

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Black-owned businesses

Numerous organizations and government agencies offer funding, guidance and assistance to minorities. Here are 6 that focus on Black-owned businesses and entrepreneurs.

The U.S Census Bureau and other reputable sources have reported a steady growth in the number of businesses owned by Black Americans in the last 20 years. Although such progress is commendable, it is important to be aware of the context. According to the 2020 Annual Business Survey, Black Americans represent 13.5% of the population, yet they account for only 2.2% of the businesses that operate in the United States. Despite the reported growth, obviously there is still more work to be done to ensure Black Americans get a fair chance at starting and operating successful businesses.

Limited financial capital is the top barrier for most Black American entrepreneurs and business owners, along with the weakened human capital as a result of prolonged socio-economic exclusion. Racial bias in both lending and equity sectors is the most overriding factor responsible for Black entrepreneurs’ struggles to obtain business funding.  Fewer African-American small businesses are approved for financing, often at lower amounts of money with higher interest rates, according to a report in The Washington Post. Guidant reports that “wealth gap also contributes to financing challenges…making it harder to [get] financing. Without the funds to invest in as many resources as other businesses, such as hiring talent or marketing and advertising, competing for contracts or attracting clients becomes exponentially more difficult.” According to Fundera, 37.9% of Black business owners say they are “discouraged” from applying for loans and just 1% of Black business owners obtain business loans in their first year.

In light of that, one way to address opportunity gaps is to ensure Black entrepreneurs and business owners have access to funding opportunities and guidance. While there are many resources targeted at helping minority-owned businesses, let us look at those that are focused on Black-owned companies and entrepreneurs.

1. Venture Capital For Black Entrepreneurs

For Black startups, access to venture capital is extremely limited. “Too often, Black founders are locked out of Silicon Valley before they even have a chance to get started.”, says Marceau Michel, founder of venture capital firm Black Founders Matter. Only 1% of VC-backed founders are black, according to a study by RateMyInvestor and DiversityVC, and 81% of VC funds have no black investors, according BLCK VC.

According to Forbes, structural racism and power imbalance is fuelling discriminatory financial practices and crippling the growth efforts, especially during early-stage financing. Part of the problem is a glaring lack of representation. That is why it is important for more inclusion of Black Americans in decision-making positions at more venture capital firms. Here are few examples of Black owned or operated VCs, incubators, and mentoring focusing on Black entrepreneurs and founders:

  1. Harlem Capital
  2. Black Founders Matter
  3. Black Angel Tech Fund
  4. Base Ventures
  5. Backstage Capital
  6. Serena Ventures
  7. Dev Color
  8. Collab Capital
  9. PS27 Ventures
  10. Impact America Fund

2. Loans and Grants For Black Businesses

Black Enterprise Elevator Pitch Competition

This competition allows 4 semi-finalists to pitch their idea to a panel of judges and a live audience, for a chance to win a $10,000 business grant! Entrants can be one person or a team. There is no limit to the number of team members allowed; however, those who pitch must have an equity stake in the business.

National Black MBA Association (NBMBAA) Scale-Up Pitch Challenge

This annual pitch competition designed to “Make Big Ideas Bigger” by encouraging Black MBA members to create startups that are scalable. They provide startups the unique opportunity to connect with early stage investors and venture capitalists who are ready to invest. The competition is hosted by the National Black MBA Association (NBMBAA), a non-profit, 501(c)(3) professional member-based organization which leads in the creation of educational and career opportunities for black professionals.

Balboa

Provides loans for African-American owned small business loans.

3. Coalition to Back Black Businesses

The Coalition to Back Black Businesses — spearheaded by American Express, the U.S. Chamber of Commerce Foundation, the National Black Chamber of Commerce, National Business League, U.S. Black Chambers and Walker’s Legacy — aims to provide $10 million in grants, training and resources to Black-owned businesses through 2023. The Coalition will award $5,000 grants to more than 280 Black-owned businesses every fall between 2020 and 2023. Eligible businesses must employ between 3 and 20 people, be located in an “economically vulnerable community” and have been financially hurt by COVID-19 disruptions. On top of the initial grants, the Coalition will also offer opportunities for mentorship, disperse more funding to “promising grantees” and create an online hub of resources for Black-owned business owners.

4. U.S. Black Chambers

The U.S. Black Chambers (USBC) acts as an umbrella organization that works to support more than 130 African American chambers of commerce and business organizations in the U.S. Local African American chambers promote and advocate for Black-owned businesses, while the USBC works at a national level to highlight Black-owned companies with a business directory, education webinars, and informative original content like podcasts.

5. The Organization of Black Founders

The organization Black Founders, established in 2011, aims to “empower entrepreneurs and provide founders with access to advice, mentorship, and funding.” Black Founders differentiates itself from other organizations with its emphasis on technology entrepreneurship, as Black entrepreneurs have historically been underrepresented in the VC-backed tech startup landscape. During the past few years, Black Founders has also worked on community building by hosting networking events and hackathons.

6. Black Business Association

The Los Angeles-based Black Business Association (BBA), which was founded in 1970, advocates for policies to “improve access to contracting and procurement opportunities” in both the public and private sectors. This non-profit has offered networking, training and more to its members over the years.

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