The growing concern for unequal business funding for black-owned enterprises compared to their non-minority counterparts has propelled several organizations to step up and bridge the gap.
Even though the records state that black owners are less likely to apply for grants due to fear of denial and racial discrimination, well-utilized business grants can be a game-changer.
After all, financial resources of this nature can open the doors to not just an attractive funding source but also necessary guidance to deal with most of the heightened business challenges.
The fact is several minority businesses can benefit from grants. But then, there won’t be any new-email notifications, Facebook replies, or grant-related predictions to inform us of such financial resources.
Luckily, we have zeroed down a comprehensive list of the available opportunities and resources for black-owned business enterprises to secure funding.
What Types of Grants Exist for Black-Owned Businesses?
From federal grants, state grants, private grants, non-profit grants, and more, black entrepreneurs have several grant-receiving options to get financial assistance.
Grants can be used to launch or expand a business. The biggest caveat is that grants do not have to be repaid. That said, grant recipients are expected to share their results with the grant issuer.
Federal Grants for Black-Owned Businesses
Grants.gov
Grants.gov is like a one-stop shop for acquiring information about federal grant opportunities. The federally operated website hosts 1000+ minority grants and other equivalent opportunities on its portal.
SBIR and STTR programs
The SBIR and STTR grant is funded by eleven federal agencies to help support small businesses engaged in federal research and development. It’s typically reserved for U.S.-based firms with less than 500 employees. Funding for qualified enterprises is usually offered in three phases.
Phase I grants can go up to $250,000. Phase II grants are usually around $750,000. No additional funding is provided in Phase III, but suitable financial assistance and production contracts may be provided through non-SBIR/STTR programs.
National Minority Supplier Development Council (NMSDC)
NMSDC is one of the long-existing funding sources for black-owned enterprises. To bridge the wealth gap between minorities and their counterparts, NMSDC develops programs to create more opportunities for minority communities.
Interested prospects must acquire the Minority Business Enterprise Certification, which will get them listed on the NMSDC Database. So, some cost is involved to take advantage of the funding sources and contract opportunities. The cost isn’t wallet-breaking, though.
United States Economic Development Administration (EDA)
The EDA offers grants to economically depressed communities for commercial growth. They support the new generation of black entrepreneurs by providing access to capital, which may not be possible through traditional means for many black entrepreneurs.
State Grants for Black-Owned Businesses
Many state agencies also provide small business grants to black-owned enterprises. State grants are usually industry-specific. To get information on state grant opportunities, interested prospects can visit the state economic development agency website. Alternatively, they can also get in touch with the local chamber of commerce.
Private Grants for Black-Owned Businesses
Comcast RISE Innovation
Intending to uplift the minority, they issue $5,000 grants to hundreds of small black-owned companies to assist the businesses with their expenses. Money aside, they also provide technical and marketing support. They really were the unsung hero during Covid times.
PowerShift Entrepreneur Grants
To help grow small businesses without debt, PowerShift Entrepreneur Grants offer deserving black entrepreneurs a chance of winning $25000. Supported by Shark Tank’s Daymond John, twenty entrepreneurs stand a chance of receiving capital, mentorship, and brand visibility.
Black Founder Startup Grants
Requiring only a brief online form to get started, the Black Founder Startup Grants is a bliss for entrepreneurs of color. Along with other sponsors, they provide $5000 to $10000 to launch businesses with growth potential.
Backing the B.A. R.
As the name vaguely suggests, the Backing the B.A. R. initiative is limited to specific industries, such as alcohol, hospitality, and sales. The establishment offers $10,000 to black-owned liquor stores, nightclubs, restaurants, and lounges. Just so that it’s known, the deadline for grant application is July 30.
The Coalition to Back Black Businesses
Formed in September 2020 by several brands, The Coalition to Back Black Businesses aims to support and empower black entrepreneurs by providing them with both capital and training. Over the last four years, they have helped many small businesses grow and even survive the covid setback.
Qualified businesses receive $5000 each fall in addition to committed mentorship and training benefits. A few businesses receive additional funding of $25,000 to help support business growth. Applications are accepted on their website in the fall.
Non-Profit Grants for Black-Owned Businesses
Code2040
Code2040 is a non-profit establishment that aims to increase diversity in the technology sector by providing necessary support to deserving minority organizations. Funding aside, they also assist in both educating and employing black people at tech companies to meet Code2040’s goal of achieving racial equality in the tech field.
Galaxy Microgrants
The Galaxy Microgrants platform gives away grants to small minority businesses each year. The grant application form is available on their website, which stays open until June 30, 2023. An applicant is required to fill out basic personal information such as contact details, ethnicity, and nature of the current or pursued business.
Locally Available Grants
Wish Local Empowerment Grant
Open only for black-owned stores; the Wish Local Empowerment Grant supports USA-based businesses with fewer employees (20 or less). According to industry reports, they have dedicated $2 million in funds to help nearly 4000 black-owned small businesses.
Fast Break for Small Business
The Fast Break for Small Business aims to provide grants to thousands of small black-owned businesses nationwide. It provides financial assistance to deserving small businesses that are at least six months old. Applications are usually accepted in February.
How to Apply for a Grant as a Black-Owned Business?
The grant application process will vary from one grant to another. But then, procedure-wise, it will mostly be the same. Here are some steps that most black-owned entrepreneurs must usually follow.
Ideally, one is expected to curate a proper business plan, showcasing that the business is positioned for solid growth and has a distinct cash need. Established businesses should be registered with the state.
A grant applicant should also have all the accounting records and tax returns properly organized, portraying a good sense of financially healthy business.
It’s equally important to prove that the company will be engaged in decent marketing efforts to generate sales. Once these basic formalities are taken care of, one can apply for a grant that best fits the needs of the business.
One should also pay close attention to deadlines to avoid unnecessary last-minute hassle. Furthermore, it’s important to check the spam folder to not miss important correspondence.
What Resources Are Available for Black-Owned Businesses?
More than a handful of private, non-profit, and government agencies are available to guide and assist black-owned enterprises. Digital media outlets such as the Black Enterprise also host podcasts and networking events every now and then to feature black-owned establishments.
Organizations such as the Advancing Black Pathways (set up by JP Morgan Chases) offers both capital and technical support. A Los Angeles-based company, Black Business Association advocates policies favoring the minority. They also provide training and networking help.
Not to mention that several organizations have started black-owned business directories. From restaurants to auto repair centers, fitness centers, and more, these minority-focused search directories focus on uplifting black-owned businesses.
How to Verify if a Grant Is Legitimate?
Grants not run by larger organizations or non-profit entities will usually carry a nominal application fee. Grant application fees over $25 should ring alarm bells in the ears.
It’s also important to know that legitimate grants do not enter our lives out of nowhere as a sheer tale of luck. Grants offered without application are mostly scams waiting to happen.
What Organizations Help Black-Owned Businesses?
Given the minor pocket of progress in black-owned businesses over the years, many organizations such as the Black Founders, Minority Business Development Agency, Black Owned Everything, Techstars Foundation, NewME Startup Accelerator, CODE2040, and Coalition to Back Black Businesses have stepped up to the plate to change gears.
By offering financial assistance, mentorship, and advice, they have successfully launched and established hundreds of black-owned businesses across the country, bringing about a small surge in black-owned business entities.
Examples of Successful Black-Owned Enterprises That Utilized Grants
Not all grant-receiving black-owned enterprises made it to the Forbes list, but quite a few made good economic gains. For instance, the Coalition to Back Black Businesses grant turned out to be a turnaround point for Fresh Sportswear, a small business in Antioch. According to Deandre Wade (the owner), the grant helped move the business out of the living room.
Credit to the grant, Deandre Wade was able to mass-produce products, which helped Fresh Sportswear reach new heights. Gladly enough,
many similar success stories have motivated black entrepreneurs to be grant seekers without any mental blockage.
Common Misconceptions and Challenges for Black-Owned Businesses Applying for Grants
The challenges of entrepreneurs of color are not very different from their non-minority counterparts, except minorities usually go through more obstacles.
Because black-owned businesses are relatively lesser, it gets increasingly difficult to seek advice on grants or even new business ideas.
Lower education levels also serve as a great barrier. Most new minority entrepreneurs get into the muddy business waters with a lack of formal education and ultimately less skillset to succeed.
Entrepreneurs of color usually have lesser credit scores, which gives them reduced access to gain capital in many cases. Sometimes, they are denied grants as well.
Some also live in areas that grant givers do not traditionally support due to higher crime rates, low economies of scale, and similar other reasons.
While these challenges are nerve-racking, many entrepreneurs deprive themselves of any business opportunity for fear of rejection without fully understanding the grant’s worthiness.
It’s also worth pointing out that most of them refrain from taking the first step in the right direction based on their misconception of inequality in accessing financing. Since algorithms and not humans handle risk assessment, unfair rejections are out of the question these days.
