If you’re an entrepreneur in Minneapolis, Atlanta or New York, these programs could help fund your business idea.
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Building a business is not an easy undertaking. Whether it’s time management or trying to increase profits, there are many hurdles all entrepreneurs face when starting and growing their companies. As Commissioner of the NYC Department of Small Business Services, the biggest challenge I hear about from entrepreneurs is obtaining capital to start or grow a business. For minority and women business owners, hurdles like these are coupled with longstanding inequalities.
Given these realities, it shouldn’t come as a surprise that nationally, black- and Latinx-owned businesses, as well as those owned by women, cite lack of capital and cash flow as their biggest challenge. For these groups, raising capital tends to be overwhelming and difficult. Although minority and non-minority owned business are established at the same rate, minority-owned businesses often pay higher interest rates and are more likely to be denied credit lines when applying for loans.
Yet city agencies across the U.S. understand the importance of investing in minority communities. In 2012, women-owned businesses employed over 8.4 million people and contributed almost $2.5 trillion to the U.S. economy. Latinx-owned businesses contribute more than $700 billion in sales to the economy annually, and there are over 2 million black-owned firms in the U.S. with $150 billion in annual receipts. Minority-owned businesses are also more likely to reinvest in their own communities.
Although all cities face their own challenges, many understand that supporting these businesses bolsters economic success and closes the prosperity gap.
Although minorities make up nearly 20 percent of all business in Minneapolis, these firms only receive 5 percent of CRA loans under $100,000. If these companies were given financing comparable to their share of the market, their loans would have totaled more than $143 million.
The city of Minneapolis is taking strides to close the local economy’s race and gender gap. The city has created opportunities for Minority-owned Business Enterprises (MBEs) and Women-owned Business Enterprises (WBEs) through its Small Underutilized Business Program (SUBP). SUBP contracts MBEs and WBEs as part of a city goal to have more inclusive construction, technical services and commodity vendors.
Studies on entrepreneurs of color have taken a closer look at minority-owned businesses in Atlanta. About 28 percent of minority-owned businesses are located in the inner city of Atlanta. Between 2005 and 2015, Atlanta businesses experienced 12 percent growth, but inner city businesses experienced less than one percent growth. Essentially, minority-owned businesses were left behind as the rest of the city flourished. Women entrepreneurs also experience major setbacks, with 32 percent reportedly citing raising funding and capital as a major challenge.
Mindful of the challenges minority and women owned businesses face, Atlanta’s division of Economic Development is collaborating with organizations to bring necessary change. Invest Atlanta provides gap financing through various loan programs to small businesses, as well as minority- and female-owned businesses. The city also partnered with the Center for Black Women’s Wellness via the Center’s Economic Self Sufficiency Program to increase the opportunity for women to become self-employed by starting and operating microbusinesses.
As Commissioner of NYC’s Department of Small Business Services, I’ve had a chance to talk to local small businesses about the challenges they face.
Black individuals account for more than 20 percent of New Yorkers but only own 2 percent of NYC businesses and hire only 1.9 percent of employees. Women also face significant barriers; in fact, 70 percent reported that obtaining capital is a major challenge when launching and growing their businesses.
At the city’s Department of Small Business Services (SBS), we understand Black and Latinx individuals, as well as communities of women, have been historically deprived of opportunities, and we offer programs that could be helpful as far as pursuing entrepreneurship. Last year, SBS connected entrepreneurs with nearly $76 million in funding, and in 2019 we launched two new programs: BE NYC, which aims to help marginalized communities start and grow prosperous businesses, and WE Fund Credit, which aims to connect women entrepreneurs with minimal experience and limited credit history to affordable lines of credit to help build their businesses.
Diversity not only creates equity of opportunity, but also economic empowerment. Diversifying a financial portfolio can create greater security, lessen the risk and expose higher chances of return. Similarly, investing in diverse businesses supports the national economy, brings awareness to society’s needs and creates a cyclical investment in our communities. In the case of New York City, this diversity has created an economic backbone that ideally supports everyone.