COVID-19 presented companies with more challenges than one, and the pandemic was even more challenging for minority owners.
With minority business owners experiencing cash scarcity, not many have been able to secure credit to keep their doors open.
In 2020, 400,000 small businesses decided to shut down permanently due to the effects of the pandemic – many in underserved communities. Whether you’re in the idea phase or already established, this guide will help get your minority-owned business off the ground.
Before diving into this guide, read this blog to learn how to start a business if you’re still in the idea phase.
By the end of this article, you will have everything you need (and more) to succeed as a minority entrepreneur – from minority company certification to funding options and growth resources.
Get certified as a minority owned company
Now that you’ve got your business idea in a nutshell, planned and registered your company, it’s time to get certified as a minority owned company. This certification is not required, but it does help educate consumers and potential partners about your business leadership.
You may also need this certification if you are applying for government-funded minority business grants and loans or other programs.
Illinois, Ohio, California, and New York have local agencies that can be state-certified as minority-owned companies. There are several ways to get certified by local government and business authorities. So it might be best to consult them directly depending on where your business is registered.
Here are a few other high-profile agencies that should consider getting minority-owned company certification:
- The National Minority Supplier Development Council (NMSDC): The NMSDC, headquartered in New York, administers 22 regional member councils in the United States. The NMSDC offers minority owned corporate certifications and business development programs. The council has a network of more than 1,750 corporate members and has brought more than 12,000 minority-owned companies together with these member firms. The certification process includes an online application, fee, interview, and site visit upon approval.
- Small Business Administration’s 8 (a) Business Development Program: The federal government is committed to giving five percent of all federal contract dollars to 8 (a) small disadvantaged businesses each year. This is an SBA-specific certification for minority owned companies that is required if your company plans to better compete for federal contracts.
The same organizations and agencies may also offer women-owned and LGBTQ-owned company certifications.
Apply for minority business grants
Minority founders often start with bootstrapping, launch crowdfunding campaigns, or even try to get initial funding from family and friends.
There are several ways to fund your startup, but if you’re on your own with funding, finding funding is a good place to start. Grants.gov is handing out 1,000+ small business grants for open search. All federal authorities publish their funding opportunities here.
Here are some opportunities for minority entrepreneurship grants:
- The Coalition to Back Black Businesses Fund: This initiative was launched to help small black businesses struggling through the pandemic. The coalition awards 300 grants of $ 5,000 each.
- The U.S. Department of Agriculture (USDA): This agency runs the Rural Business Development Grant Program for businesses that operate in rural areas with populations less than 50,000. The program offers grants to minority small businesses ranging from $ 10,000 to $ 50,000.
- Rebuild the Block (RTB): As part of its Small Business Relief Fund, RTB awards 15 grants a month to black business owners affected by the pandemic. There is no set monetary value for each grant, and freelancers and other creative types are encouraged to apply.
- First Nations Development Institute (FNDI): Deadlines and opportunities vary, but this nonprofit organization provides financial and technical assistance to Native American organizations. FNDI has provided 2,150 grants totaling $ 43 million for native projects across 40 phases and regions.
- The National Black MBA Association: Since 2017, the association has hosted the Scale-Up Pitch Competition, which awards grants ranging from $ 1,000 to $ 50,000 to black entrepreneurs. To apply for this opportunity, someone from the company must be a member of the association.
- Asian Women Giving Circle (AWGC): This scholarship is exclusive to Asian-American women companies. The AWGC awarded 11 grants between $ 2,500 and $ 10,000 each in 2020, and this year the maximum grant amount is $ 15,000.
- SoGal Foundation: This ongoing program awards $ 5,000 and $ 10,000 to black female founders and black non-binary entrepreneurs.
- FedEx: FedEx holds a nationwide Small Business Grant Contest every year, and while it’s not exclusive to small minority businesses, many of the winners have been minority founders in the past. The winners will receive grants ranging from $ 15,000 to $ 50,000, as well as funding for FedEx printing services.
If you’re looking for more options, Please Assist Me Co-Founder and CEO Stephanie Cummings recommends subscribing to the 1863 Ventures and Backstage Capital newsletters.
Each organization sends out a monthly newsletter with updated grant and funding options specifically for minority founders.
Apply for a minority business loan
Another financing option could be applying for credit. In the past, minority founders have struggled to obtain business credit due to credit inequality and discrimination, but sensible credit options still exist.
Here are some business loan options for minority founders:
- Accompany Capital: To specifically support immigrants, refugees and women entrepreneurs, Accompany Capital offers microloans ranging from $ 500 to $ 50,000 with repayment terms of six months to three years.
- U.S. Small Business Administration (SBA): SBA manages a number of credit options, including the Microloan Program and the Community Advantage Loan Program. The micro-credit program is open to all small businesses and offers credit up to $ 50,000 with an average credit size of $ 13,000. For the Community Advantage Loan Program, SBA is encouraging local lenders, primarily nonprofit financial institutions, minorities, women, veterans, and other underserved founders, to provide loans of up to $ 250,000.
- Business Consortium Fund: The fund is offered to NMSDC certified companies and offers loans and lines of credit between $ 250,000 and $ 750,000 with repayment terms of up to five years.
- USDA: As part of its corporate and industrial loan guarantee program, the USDA provides loan guarantees of up to $ 1 billion to local banks and direct lenders operating in rural areas of fewer than 50,000 residents. Minority companies can also apply directly for a USDA loan of $ 200,000 to $ 5 million with a maximum limit of $ 10 million.
Tap additional minority programs and resources
While you might think you’ve figured it all out, a little extra guidance wouldn’t hurt.
Here are ten accelerators, startup programs, and other resources for minority founders:
- The Visible Hands Scholarship conducts a 14-week virtual program to provide business building services and investments of up to $ 200,000 to underrepresented entrepreneurs. The founding cohort will welcome more than 30 fellows.
- Dedicated to diversity in technology, Black Founders offers programs and events for black tech entrepreneurs.
- Operation HOPE offers an eight-week entrepreneurship training program designed to help entrepreneurs in low-income communities.
- SBA’s business development program helps minority owners better qualify for SBA loans. Your company must be registered as a small business with the SBA to participate.
- The Minority Business Development Agency, an agency of the US Department of Commerce, was established to give minority founders better access to capital and resources. The agency manages business centers across the country and runs business development programs.
- 1863 Ventures – a business development organization promoting the advancement of colored people, women, immigrants, LGBTQ people, veterans, and the physically challenged business owner – runs two accelerator programs. The pipeline program is for pre-growth companies and the Acceler8 program is for growth to scale companies in the growth phase.
- The Y Combinator startup library contains a wealth of resources spanning 15 years.
- The National Minority Business Council offers education, entrepreneur bootcamps, seminars, business support, and more to minority business owners. Membership is encouraged.
- The U.S. Minority Chamber of Congress is a not-for-profit organization that advocates the rights of small businesses. The organization has chapters in the US that host networking events and provide local business resources.
- The Founder Institute has compiled the Black American Startup Resource List of 742 resources for entrepreneurs in the idea phase. If you’re looking for accelerators, investors, or even events, this list is a great place to start.
Treat yourself to motivational tips from other minority founders
Starting a business from scratch is difficult, but doing so as a minority can be more challenging.
Many inequalities stand in the way of minority owners, but hopefully these opportunities and resources will ease some of the problems. While starting a minority owned business can be the same as starting another business, there are a few additional things you can do – like getting certified – to take advantage of some unique opportunities that are only reserved for minorities.
I reached out to a few minority entrepreneurs who have done the hard work and are still eager to grow their businesses. Here are some tips if you are feeling discouraged:
- “Understand that it’s hard to start a busy business and it’s ten times harder for minority founders. When you’re committed to your dream, work hard, dig in and let your work speak for itself. ” – Stephanie Cummings, Co-Founder and CEO of Please Assist Me.
- “Just do it – one of my favorite slogans. As minorities, we often don’t see similar faces on the cover of Forbes or anywhere else. That is slowly changing. But that doesn’t mean you can’t, at the end of the day it is when your company is actually helping others. “- Nhon Ma, Co-Founder and CEO of Numerade.
- “Don’t get too attached to ideas. Spend your time being committed to your values and knowing what you stand for as a person – your values will be your guiding light, not the ideas. ”- Ronnie Kwesi Coleman, Co-Founder and CEO of Meaningful Gigs.
- “Use your networks to build brand awareness organically, but don’t forget who helped you get there once you get some momentum.” – Leela Bhatia-Newman and Mariana Magala, co-founders of DistrictlyLocal.