Lifting a small business off the ground is commonly considered a challenging endeavor but when you are part of a minority group that challenge becomes a tall wall to climb, especially when it comes to securing funding for your venture.
According to the latest Small Business Credit Survey conducted by the Federal Reserve, only a small percentage of the firms owned by an individual considered a minority reported that they received the funding they were seeking for their companies including as little as 13% of non-Hispanic Black and African American-owned companies reporting that they received the financing required.
This coincides with another interesting finding disclosed in the survey, which is that 30% of the individuals from this same demographic expressed that their biggest challenge at the moment is credit availability while other groups reported demand for products and services as the top obstacle for the success of their ventures.
This situation is particularly troubling and could be limiting the growth and potential of these companies in the United States, which is why minority business owners should consider applying for small business grants for minorities like the ones described in this blog from Camino Financial as a way to bypass the traditional financial system since banks seem to remain reluctant to extend credit to this group of firms.
Main benefits of small business grants for minorities
Small business grants for minorities give entrepreneurs the opportunity to grow their existing promising ventures into larger entities by acquiring more customers, implementing the technology they need, or hiring new members for the team that could help in achieving the company’s vision.
Different from a loan, a grant is essentially a gift as the entrepreneur will not be asked to repay the amount he/she receives as part of the grant.
Meanwhile, in some cases, business grants can be extended in kind, which means that a company offers to provide a certain service that is crucial to the small business’ operations entirely free.
Additionally, although most grants are offered with no strings attached, certain grant providers add the possibility of receiving training in areas that are seen as relevant to the success of the company.
In most cases, grants are provided by private companies, local or regional government entities, or non-profit organizations, which also produces the added benefit of raising awareness about the existence of the business. This particular aspect makes grants not just financial aid but also a powerful marketing tool.
Top small business grants for minorities in the United States
With inequality becoming a central point in the US public agenda, many private companies and non-profit organizations have launched small business grants for minorities to support entrepreneurs within this key demographic group in building successful businesses.
The following is a list of some of the grants available for minority-owned companies in the US:
- Grants.gov: a federal program that offers access to a wide range of grants extended by different institutions across the United States territory. Essentially, it is a database of grants through which entrepreneurs can identify potential programs they can apply for.
- FedEx Small Business Grant: a grant sponsored by this private transportation company that consists of a top prize of $50,000 per winner. Last year, the firm picked 12 different projects.
- National Black MBA Association Scale-Up Pitch Challenge: this grant offers prizes from $1,000 to $50,000 based on the quality of the pitches sent by entrepreneurs. It is exclusively offered to 18-year old Black or African American US residents.
- State-level grants: most states nowadays offer grants to minority-owned businesses as a way to help them in surpassing the obstacles that the financial system seems to be still imposing for this group of entrepreneurs.
- Asian Women Giving Circle (AWGC) Grants: as the name suggests, this grant is specifically designed for Asian female entrepreneurs in the United States including artists. The institution usually picks around five to eight recipients every year and they award up to $15,000 per project.
What if I am rejected?
Even though you might fit the description and scope of a particular grant, that doesn’t necessarily mean that your application will be approved immediately.
For this reason, you should have a plan B in case your project is not selected. One suggestion would be applying for a small business loan for minorities such as those offered by financial technology companies.
Since, from a statistical standpoint, traditional financial firms seem to be limiting the number of loans they extend to minorities, you can rely on the cold nature of artificial-intelligence-driven online lenders to secure funding for your business.
In most cases, the requirements are less strict and the conditions of the loans are more flexible compared to big banks.
If that particular alternative seems attractive enough for you, Camino Financial is a California-based company that specializes in providing business funding. The application process for obtaining one of Camino’s loans can be completed in only a few minutes and they will usually respond to your request in less than 48 hours.