Guide: Roundup of Funding Resources for Biz Owners of Color

Jan 18, 2021

Guide: Roundup of Funding Resources for Biz Owners of Color

Starting, growing, and managing a business is a daunting task for anyone. However, business owners of color face particular challenges that are often related to funding. As a result, they start at a disadvantage and struggle to even keep up, much less gain a competitive advantage.    

“New Black-owned businesses start with almost 3 times less in terms of overall capital than new white-owned businesses, and this gap does not close as firms mature,” says Jonathon Whaley, Esq, compliance officer at Wunderfund, an investment crowdfunding portal dedicated to raising capital for underserved communities.  

“Close to 15% of Black entrepreneurs and 11.5% of Latino entrepreneurs report using a personal credit card to fund a new business or acquire an existing business, compared to a little over 9% for white and Asian entrepreneurs in the Annual Survey of Entrepreneurs.” 

In addition, Whaley tells us that minority firm owners tend to be charged higher interest rates on bank loans than similar white borrowers. “Also, Black entrepreneurs’ loan requests are 3 times less likely to be approved than those of white entrepreneurs, and this difference persists even after accounting for credit scores and other observable characteristics.” According to a 2019 report by the New York Federal Reserve Board, only 17% of non-Hispanic nonemployer Black firms said that their funding needs were satisfied, compared with 39% of all nonemployer firms. 

These stats underscore the need for business owners of color to find funding sources. We’ve put together a roundup of various funding options.

About the Author

Terri Williams

Terri Williams

Terri Williams is a writer based in Birmingham, AL, who specializes in business, technology, education, real estate, and personal finance – and dabbles in home improvement/décor. She has bylines at The Economist, USA Today, Bankrate, Investopedia, US News & World Report, American Bar Association Journal, Verizon, Realtor.com, Apartment Therapy, and several other clients you’ve probably heard of. Follow her adventures @Territoryone.

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