Funding for black business owners isn’t always straightforward. Discover how cash-strapped entrepreneurs have accessed the money they need to grow.
FEBRUARY 22, 2018
In November 2016, Stephanie Caudle lost her job in public relations. Employment prospects looked bleak, so she decided to start her own business. She soon launched Black Girl Group, a micro job site that taps into the gig economy.
Caudle’s company is an online freelance platform that connects African-American women freelancers to companies seeking to market and advertise to African-American communities.
To keep her business afloat, Caudle found—like many business owners—the need for working capital. Rather than turn to her local bank, she found success receiving capital through unconventional means.
“I won the Black Enterprise and Hiscox’s 2017 Small Business Pitch Competition,” says Caudle. “Such pitch competitions—often geared towards providing startups with seed money—give you the chance to win monetary prizes and get your business in front of people who otherwise wouldn’t know your company exists.”
Eric Martin, co-founder of Black & Abroad, a cultural collective dedicated to celebrating and encouraging black travel, agrees.
“Black businesses, in general, suffer a much more difficult existence,” says Martin. “From limited access to seed capital, to trouble securing loans, to difficulty getting exposure, many of our businesses thrive in the gray area between operating costs and survival. In order for any business to thrive, there has to be adequate access to capital.”
Sufficient capital allows business owners to scale up, notes Steven Burton, CEO and founder of Perfect Tux, a formal wear e-commerce company.
“Having access to capital also keeps your business afloat during down seasons when cash flow is an issue,” Burton says.
FEBRUARY 22, 2018
In November 2016, Stephanie Caudle lost her job in public relations. Employment prospects looked bleak, so she decided to start her own business. She soon launched Black Girl Group, a micro job site that taps into the gig economy.
Caudle’s company is an online freelance platform that connects African-American women freelancers to companies seeking to market and advertise to African-American communities.
To keep her business afloat, Caudle found—like many business owners—the need for working capital. Rather than turn to her local bank, she found success receiving capital through unconventional means.
“I won the Black Enterprise and Hiscox’s 2017 Small Business Pitch Competition,” says Caudle. “Such pitch competitions—often geared towards providing startups with seed money—give you the chance to win monetary prizes and get your business in front of people who otherwise wouldn’t know your company exists.”
Making a Way
Unconventional means of accessing capital are especially important for black business owners, believes Caudle. “As black business owners, one of our largest barriers to success is lack of capital,” she says. “Because of this, it’s our primary responsibility to get creative and ensure we receive capital in unconventional ways.”Alternative funding options for black business owners do exist. Once you start looking, you may be surprised at the opportunities available.
Funding Options for Black Business Owners
Alternative funding options for black business owners do exist. Once you start looking, you may be surprised at the opportunities available. Here are some possible sources of operating capital.1. Minority Business Development Agency (MBDA) Business Center
At the Minority Business Development Agency (MBDA) Business Center, minority business owners can talk to business experts. You can speak to these experts about growing your business, including ideas and sources of securing capital.2. 8(a) Business Development Program
The Small Business Administration’s (SBA) 8(a) Business Development program was created to serve minority-owned businesses. If you’re accepted into the program, you can qualify for funding, as well as receive business guidance and opportunities to contract and subcontract with other entrepreneurs.3. Business Grants
A wide variety of organizations offer grants to African-American business owners, while others are open to all business owners. Here are three.- National Association for the Self-Employed (NASE) Growth Grants. These grants are worth $4,000 each. They can be used for financing specific business needs, such as creating a website, hiring employees and for equipment.
- The FedEx Small Business Grant Contest is open to small businesses from across the country. Cash prizes include one $25,000 grant, one $15,000 grant and eight $7,500 grants.
- Also known as America’s Seed Fund, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs provide significant sources of capital for technology commercialization. These programs enable U.S.-owned companies to complete research and development with potential for commercialization. In 2017, the programs granted more than $980 million dollars to companies creating innovative technologies in the health and life science fields.