Bank of America | Access to Capital January 17, 2023 | 4 minute read
Over the past years, the number of Black-owned businesses has grown steadily, with more than 3.2 million Black-owned companies operating today across the United States.Footnote[1] However, when it comes to starting and growing a business, securing capital is often one of the greatest challenges cited by Black entrepreneurs. In fact, 46% of Black business owners say they’ve faced issues accessing capital.Footnote[2]
One way to address opportunity gaps is to ensure Black business owners have access to guidance and funding opportunities. While traditional lenders, such as Bank of America, offer a wide range of financial solutions and services that might meet the business needs of Black and other minority entrepreneurs, there are certainly other options to consider. With the rise of alternative lending, traditional bank business loans are no longer the only option for small businesses. The key is knowing where to look.
To get you started, below are agencies, programs and organizations that can help Black business owners find additional resources.
1. Minority Business Development Agency
The Minority Business Development Agency (MBDA) is a part of the U.S. Department of Commerce and is solely dedicated to helping minority-owned businesses to grow. The agency provides a variety of financing options for minorities, such as grants, and access to venture capital specifically geared towards minority-owned businesses.
The MBDA also has MBDA Business Centers across the country, which provide financial advice for businesses: How to secure loans, get contracts, and more. Click here to find a MBDA Business Center in your area.
2. Community Development Financial Institutions
The Community Development Financial Institutions Fund (CDFI) provides access to capital through grants and programs to historically underrepresented communities and organizations to foster minority entrepreneurship. They typically provide more tailored resources than traditional banks and can be a great option for startups as well as established businesses.
The biggest contributor to CDFIs in the United States is Bank of America, with more than $1.6 billion in loans and investments to more than 250 CDFIs. “Bank of America supports local economies by partnering with community development financial institutions across the U.S., and Puerto Rico and the District of Columbia.”
3. Small Business Administration (SBA) loans
Small Business Administration loans are available through SBA-approved lenders, which include many major banks (like Bank of America, an SBA Preferred Lender). Because the SBA guarantees them – meaning the agency promises to pay a certain percentage if the borrower defaults – these loans, ranging in loan amounts from $500 to more than $5 million, typically require less stringent credit standards, for longer periods of time and with lower down payments than conventional loans.
While most SBA loans are not intended specifically for minority entrepreneurs, the Community Advantage Loan Program offers loans up to $350,000 for businesses in historically under-served markets. In addition, the SBA also provides specific resources for minority-owned businesses with the 8(a) Business Development Program. This program offers minority-owned businesses opportunities to receive government contracts, as well as offers financial information and workshops to said business owners.
4. Local funding
One of the best resources may be in your own backyard. Funding is often available from regionally based organizations, specifically geared towards minority business owners. This includes opportunities provided by your local or state governments, as well as local credit unions and banks.
The Access to Capital Directory for Black Entrepreneurs, created by Bank of America and Seneca Women, is a great place to begin this research. It contains hundreds of organizations providing funding for Black-owned businesses across the U.S. By simply using the dynamic search tool you can sort not only by need, but location as well, making it easier to locate local funding opportunities.
5. Grants.gov
While looking for state-based grants and loans largely depends on what’s happening locally, the best place to look for federal grants is through Grants.gov. Grants.gov is a centralized website where federal agencies post available funding opportunities for grant seekers to find and apply. Grants are provided to businesses who can aid the government in “projects to provide public services and stimulate the economy.”
Recent Article: Starting A Small Business In 2024: How to Finance A Start Up
Start.Pivot.Grow. is business acceleration program created to fuel equitable economic development by supporting small to midsize businesses through results driven business education, business acceleration and access to capital. Click here to join our newsletter and stay up to date on the latest capital resources for small business.