Entrepreneurship continues to be on the rise in Black America. According to the most recent statistics provided by the U.S. Census Bureau, the number of firms owned by Black Americans grew by 34.5% between 2007 and 2012. If you’re a part of the black community, you probably know that black business ownership will continue to increase. Starting a business and creating generational wealth has been a hot topic over the last few years. So why are we still struggling to obtain capital to fund our business endeavors?
Black Entrepreneurs Are Being Denied Business Loans with 700+ Credit Scores
In an article by Moguldom, it was reported that the most recent data available from the Federal Reserve states that black business owners have the highest denial rates amongst firms applying for credit cards. If you know anything about financing a business, you know that credit cards are among the top ways to fund a business, especially for new businesses with no track record of sales and revenue.
According to St. Louis Public Radio, black business owner Freddie Lee James said he was denied a small business loan by his local bank despite having a 700+ credit score and consistent revenue. The same holds true for many other black business owners that are finding it difficult to capitalize their business despite having an excellent credit history.
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Get up to $50,000 in Microloans or Grants (Starting at 8% Interest) Get Microloans & Grants |
Get up to $250,000 in Business Credit Lines (Starting at 0% Interest) Get Business Funding |
Should Black Bank Owners Step Up to The Plate and Create Their Own Credit Scoring System?
The idea may seem far fetched for some. However there are 38 black owned banks in the United States according to Watch the Yard. Do any of these banks desire to cater to underserved Black American business owners? How is it that we can own banks but not create our own credit reporting system? Or better yet, where are the business loan programs specifically for black business owners at black owned banks?
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Alternative Funding Sources Like CDFIs and Microlending Institutions May Be the Answer
Until black bank owners decide to step up to the plate (if they ever do), black entrepreneurs should take advantage of the business funding opportunities available from Community Development Financial Institutions and Microlenders.
In Detroit, CDFIs like Detroit Development Fund and microlenders like Michigan Women Forward (formerly Michigan Women’s Foundation) are providing low interest microloans to black entrepreneurs. Funding amounts range from $25,000 to $250,000 (or more in some cases). Local economic development programs like Motor City Match and consulting firms like QT Business Solutions also provide technical assistance services such as help finding space, cash grants up to $100,000 and business plan writing.
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| Fund Your Startup or Small Business | |
|
Get up to $50,000 in Microloans or Grants (Starting at 8% Interest) Get Microloans & Grants |
Get up to $250,000 in Business Credit Lines (Starting at 0% Interest) Get Business Funding |
I suggest checking with your local city government to find out if there are any CDFIs, microlenders or grantmakers who may be able to serve your black owned business. You can also find a list of microlenders (by location) on the U.S. Small Business Administration website. Lastly, check out myWay to Credit. They specifically cater to small business owners in need of funding that have been turned down by banks. They will connect you with a network of microlenders who may be able to fund your company.
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