Can black women entrepreneurs obtain a business loan?
While it may be harder to obtain a business loan due to discrimination or racial bias, although illegal, black female entrepreneurs can obtain a business loan. By educating yourself on available options and legalities you can increase your chance of finding the right business loan. Black woman entrepreneurs can pursue SBA loans, credit union loans, and business loans from online lenders. In addition, small business owners can take advantage of grants, tax credits, and other opportunities for financial assistance.
What are the benefits of business loans for black women?
Business loans offer many benefits to entrepreneurs and business owners of all backgrounds.
Obtaining financing can help cover temporary gaps in funding, pay for start-up and marketing costs, pay for business expansion or upgrades, fund real estate purchases, and more.
A business loan offers companies a convenient way to pay for emergencies, recurring costs, and large purchases without the need for cash up front. Lastly, most business loans are paid back in equal installments with low interest rates that make monthly payments manageable.
Types of business loans for black women
There are a few different types of business loans that black female business owners and others can take advantage of. We’ve outlined them below:
- Business Term Loans: As the most basic form of business loan, these common loans are paid back in equal monthly payments over a predetermined repayment period (also known as the loan term). Banks, credit unions, and online lenders offer these types of loans in amounts ranging from $1,000 to upwards of $1 million.
- SBA Loans: The Small Business Administration (SBA) offers a variety of loan programs through a network of partner lenders including microloans, real estate loans, equipment loans, and general business loans. SBA loans provide access to financing for businesses who may not otherwise qualify for traditional loans. The 8(a) Business Development program further helps minority-owned businesses by boosting access to certain contracts.
- Online Business Loans: For some of the best deals in business loan programs, consider looking online. Online lenders (like Prosper or Upgrade) offer competitive interest rates, flexible loan terms, and lenient loan requirements due to their low operating costs. At PrimeRates you can expedite the online business loan shopping process while keeping your information safe. With access to a network of top rated lenders, you are sure to find a personalized business loan offer that works for you.
- Business Credit Cards: Many business owners prefer using credit cards to using cash or business loans. Credit cards give you access to a revolving door of credit that can be used multiple times – as long as you pay off the balance. Credit can be an especially great choice for emergencies or recurring monthly expenses. Look for a deal on a card with a 0% introductory interest rate to save the most money on your business financing.
Do business grants exist for black women?
Grants are another way of financing your business that, unlike a loan, does not need to be paid back. Grants are offered through government agencies, non-profit organizations, companies, and other business organizations. Many grants are targeted specifically to certain segments of the population such as female entrepreneurs or minority-owned businesses. Black women who own businesses should consider the following options to find a grant:
- NASE Growth Grants – The National Association for the Self-Employed (NASE) issues grants to small business owners regardless of race, gender, or background. The NASE Growth Grants program awards grants of up to $4,000 to qualified businesses.
- Minority Business Development Agency (MBDA) – The Minority Business Development Agency (MBDA) helps minority-owned businesses access grant funding via the MBDA Business Center program. Distributions take place annually with applications typically accepted during the spring or summer.
- Amber Grants – Two $10,000 Amber Grants are awarded each month to qualifying business owners. Other grant opportunities exist throughout the year as well. The simple online application process takes just minutes to complete.
- Coalition To Back Black Businesses - This Coalition offers $5,000 grants to black business owners each fall. Other resources include business mentorship and training.
- SheaMoisture - SheaMoisture regularly offers new grants, scholarships, and other funding opportunities specifically for black female-owned businesses. Programs include Women of Color E-Lab, The Black Business Relief Fund, Brown Girl Jane, Social Justice Coalition, and The Next Black Millionaire Fund.
- The Power Forward Small Business Grant - Black-owned small businesses with no more than 25 employees in certain areas of New England may be eligible for a $25,000 small business grant via the Power Forward Small Business Grant program. This initiative is offered by Vistaprint and the Boston Celtics in partnership with the NAACP.
- Cartier Women's Initiative - The Cartier Women's Initiative is open to female-owned businesses "from any country and sector that aim to have a strong and sustainable social and/or environmental impact". Awards include the Diversity, Equity & Inclusion Award, Science & Technology Pioneer Award, and various Impact and Regional Awards.
- IFundWomen - IFundWomen offers a variety of grant opportunities for women-owned businesses. Other funding tools include crowdfunding and 7(a) Small Business Loans.
- Grants.gov - The U.S. government maintains a searchable database of grant opportunities available to business owners across the United States.
How hard is it for a woman to get a business loan?
American business owners of all genders, races, and economic backgrounds are entitled to equal access for loans and other types of financing, as long as they qualify.
However, women can often struggle to obtain loan approval from traditional sources. Certain non-profit organizations can help minority-owned and female-owned businesses gain access to loans and other sources of funding.
Tips for applying for a small business loan
To make the process of applying for a business loan easier, keep the following tips in mind:
- Gather business documents: To get approved for a business loan, you’ll likely need to submit some of the following documentation: articles of incorporation, bank statements, tax returns, financial projections, and other important information. The sooner you can gather this paperwork, the smoother your application process will be.
- Create a business plan: In addition to the paperwork listed above, many lenders will request a copy of your written business plan. A business plan outlines the strategies you plan to undertake in different areas of your business such as marketing, staffing, financial, inventory, and operations. Having this document will not only help you get approved for a loan but will help your business succeed.
- Check your credit score: One of the most important things that business lenders check is your credit. Lenders may check your personal and/or business credit score. The higher your credit score, the more money you can expect to save on interest (and even fees). If your credit is not quite up to par – you may be able to use a cosigner on your loan application or make some moves to bring your credit score up like paying down your existing debts and requesting credit limit increases. If you plan on applying for a loan, be sure to thoroughly check your credit report for errors and consider getting prequalified to compare terms and rates.
- Consider alternative lenders: The best deals and lowest interest rates are often found from non-traditional sources such as online banks, non-profit lenders, credit unions.
Other helpful resources for black women business owners
By taking advantage of the available resources for black female entrepreneurs, you can increase your chances of seeing business success. Check out the following organizations for more help:
- Digitalundivided: This innovative non-profit organization helps women of color gain access to funding, educational resources and other business opportunities.
- Black Women Connect: Black Women Connect is a "collective of executive and senior-level Black women administrative leaders" offering programs for black female business owners such as mentorship, networking events, and educational resources.
- The BOSS Network: The BOSS Network runs the BOSS Impact Fund to support black-owned / female-led businesses. The BOSS Network also offers business coaching, financial coaching, an online network of professional women, and other educational resources to their members.
- Black Girl Ventures: The Black Girl Ventures Foundation seeks to create access for "black and brown women founders" through the BGV Pitch Program (a crowdfunded pitch competition), the Change Agent Fellowship Program (a 9-month leadership skills development program), the BGV NextGen Program (designed for the next generation of HBCU students), the BGV Community and a variety of other partnerships and events.
- SoGal Foundation: SoGal is defined as a "global movement to close the diversity gap in entrepreneurship". This nonprofit organization exists to change the game for female entrepreneurs by offering educational programing, grants, other funding opportunities, training, networking events, and more.
- Tory Burch Foundation: The Tory Burch Foundation exists to support female entrepreneurs through summits, webinars, blogs, coaching, and other small business resources. Financial resources include various grants and loan programs.
- IFundWomen: IFundWomen seeks to close the funding gap for women-owned businesses via a variety of grant programs, expert business coaching, and a network of female entrepreneurs.
- The National Black Chamber of Commerce: The National Black Chamber of Commerce provides advocacy, support, and resources to empower and sustain “African American communities through entrepreneurship and capitalistic activity”.
- U.S. Black Chambers, Inc.: Similarly, the USBC has been nicknamed the “National Voice of Black Businesses” and supports a network of black enterprises and organizations.
- National Black MBA Association: The National Black MBA Association offers a variety of resources for aspiring business owners including scholarships, webinars, networking events, conferences, and other opportunities. The NBMBAA also runs the annual Scale-Up Pitch Challenge which awards funds to startups based on their business pitch.
- Minority Business Development Agency : As a division of the U.S. Department of Commerce, the MBDA focuses on assisting minority-owned businesses. MBDA Business Centers in various locations offer the community access to information and resources.
- National Minority Supplier Development Council: The NMSDC offers a variety of financial, educational, and entrepreneurial resources as well as networking opportunities for black business owners.
- The Accion Opportunity Fund: The AOF provides small business owners with loans, business coaching, grant opportunities, educational programming, and more.
- Small Business Administration: The SBA Learning Center offers a variety of free online training courses designed to assist business owners of all backgrounds. In addition, the 8(a) Business Development program helps minority-owned businesses by improving their access to certain contracts.
- SCORE: SCORE is designed to help business owners of all races, genders and economic backgrounds. Resources include webinars, mentorship programs, and educational blogs.
Black female entrepreneurs have an endless amount of opportunity available, especially when it comes to business loans. If you’re concerned about discrimination, although illegal, you may feel more comfortable applying for a business loan online. Regardless of your reasoning, applying for a business loan online is smart. It allows you to carefully consider your options from the comfort of your home or office, without any pressure from a representative. When shopping for a business loan, it’s important to compare options.
At PrimeRates you can receive personalized business loan offers that you actually qualify for in a matter of minutes. Your credit score will not be impacted by checking offers, unless you decide to accept an offer. Once you’ve found the business loan that meets all your needs and budget, you can finalize the loan with the lender and receive funds quickly.
Unlock the best business loan offers in minutes. . . check offers at PrimeRates today!