Entrepreneurs from our nation’s minority groups often face a variety of challenges when opening up a new business or expanding an existing one. Obtaining affordable commercial financing has become harder after the 2008 economic crisis. Many of the bigger banks are now reluctant to give loans to new businesses, especially if the owners have a less than stellar credit history. In this scenario, some minority small business owners are left with no other choice but to go to lenders specializing in high-risk loans and pay much higher financing fees as a result.
But there are some other sources of financing made specifically for minority-owned businesses. Business grants and financial assistance programs can provide much-needed funding for startups and small businesses. Here is an overview of some grant options available:
Federal Funding Opportunities Through Grants.gov
This online service is operated by the federal government and provides a lot of information on grants available through a variety of agencies, including the U.S. Small Business Administration and the Department of Commerce. Details related to over 1,000 grant programs are available for free, including requirements to qualify for them and the procedure to apply. Some of the grants are geared towards minority-owned businesses, while others are open to everyone starting or expanding a business in a specific industry or area.
FedEx Small Business Grant Contest
Everyone in America has heard of FedEx as a courier company, but few people know that they run an annual grant contest. Each year, 10 small businesses are selected to receive a grant of up to $25,000. To enter the contest, the small business needs to have been in operation for a minimum of six months and employ less than 100 people. While it’s a contest, so the chances of winning are small, participating is completely free and there’s no requirement to be a FedEx customer.
Minority Business Development Agency
This government agency helps minority-owned and operated small businesses find opportunities for growth and expansion in today’s competitive market. They do so by helping them find lucrative market opportunities, obtaining federal contracts and connecting them to sources of low-cost financing.
Small Business Administration 8(a) Business Development Program
Even though the situation has somewhat improved in the last few decades, citizens belonging to some racial or ethnic groups still face economic disadvantages. This can make it much harder for them to start a business and make it successful in the long run. In an effort to counter this and even the playing field for entrepreneurs, the Small Business Administration has put together a program to help small business owners who are disadvantaged due to their minority status.
The program offers various training workshops, help in developing a business, professional management and technical guidance and the opportunity for business owners to partner with others when bidding on potentially lucrative contracts. Another big advantage of the program is that it also provides guidance on how to obtain SBA-backed small business loans, thus giving minority business owners access to the financing they need to expand their enterprise and take advantage of opportunities they wouldn’t have had access to before.
USDA Rural Business Development Program
In an effort to promote business creation, growth and innovation in rural areas, the United States Department of Agriculture has put together a program that provides grants for small businesses operating in rural areas, whether or not they’re owned and operated by minorities.
While the program is managed by the USDA, the business doesn’t have to be related to agriculture to qualify. The general requirements for a business to obtain a grant are being located in a town of less than 50,000 people, having fewer than 50 employees and annual revenues under $1 million. Currently, the program gives out grants ranging from $10,000 to $500,000 qualifying businesses, making it an option that any small business owner based in a rural area should consider taking advantage of.