Business & Community
Over the past ten years, the makeup of startup businesses has changed. Minority businesses account for 50 percent of the 2 million businesses started in America, with minority women leading the way. Minority women control 44 percent of all female-owned businesses in the United States. While the number of White women-owned businesses grew 40 percent from 1997 to 2016, those owned by Black and Hispanic women showed much higher growth rates at 518 percent and 452 percent, respectively, according to author Michelle Cheng at Inc. Magazine.
There are a variety of reasons for this impressive growth rate for businesses led by minority females. Some of the reasons include the following:
- More minority women are graduating from college. Education gives them greater confidence and skills to run a business.
- Minority women grew tired of jobs with little opportunities for advancement. They are sometimes asked to train their boss.
- Minority women are more likely to experience long-term unemployment and lower wages.
- Growth of technology and social media enable minority women to network and reach their customer base online.
While minority female led businesses are growing, they still have problems getting start-up and expansion funds. Lack of funding and unfair lending practices are common realities in minority communities. For example, mortgage discrimination – including higher online lending fees, higher loan interests, and higher home costs – are common in urban communities. Unfortunately, these discriminatory practices spill over into business as well.
According to a study by the Small Business Administration (SBA), women and minorities are deemed more of a risk for business lending. Minority women also have little access to credit. Not only credit for start-up funding but also credit for business expansion, even after successfully generating revenue in their businesses. The Federal Reserve System’s 2020 Small Business Credit Survey further indicated that Black women are more likely to identify access to credit as a challenge than their non-minority peers do. The survey also reported that they are less likely to receive some or all the financing they requested.
In addition, the SBA Office of Advocacy has found that women and minority business owners are denied loans and pay higher interest rates than White males, even when they have the same credit score.
Efforts to Improve Funding
There are increasing efforts to correct these funding inequities through various financial sources. A surge in female-focused funds is an encouraging sign. For example, New Voices Fund, Twenty65, Backstage Capital, and Cleo Capital are all capital funding resources available to qualified minority female entrepreneurs.
The plight of minority women in business is an exceptional journey and story of persistence. As many say, they are the epitome of being self-made. With so many resources now available, people expect to see continued growth among female minority owned businesses.
Minority business owners looking for support can contact Haley Burns, an Alabama Extension community and economic development specialist at Alabama A&M University. She can offer assistance to owners or put them in touch with other members of the community and resource development team across the state. Business owners can also contact their state’s SCORE chapter or business development center for assistance.