African-American women are setting up businesses faster than any other racial group. The number of businesses owned by African-American women has risen by 164% since 2007. Unfortunately, our chances of qualifying for funding are slim compared with other ethnicities.
The Plight of African-American Women Entrepreneurs
African-American women are at a disadvantage in accessing credit, according to the 2016 Small Business Credit Survey. Only 2% of the capital goes to women-only founders, and only a fraction of this reaches African-American women entrepreneurs. We are overlooked for these opportunities despite high credit scores.
Viable Sources of Funding
Fortunately, African-American entrepreneurs are getting acknowledged. Several VC firms, government agencies, and private organizations are setting up programs focused on lending to African-American entrepreneurs.
Viable sources of funding for African-American women entrepreneurs include:
- Backstage Capital (popular in the tech industry)
- Community Development Financial Institutions Fund
- Founders First Capital Partners
- Harlem Capital Partners
- Humble Ventures (provides consulting for tech startups)
- Kapor Capital (based in Oakland)
- Minority Business Development Agency
- Small Business Administration
Tips for Loan Readiness
We can increase our chances for funding by being loan-ready. Three basic requirements for loan readiness include:
- Idea Readiness–Having a comprehensive written business plan and some experience in the targeted industry.
- Financial Readiness–Having enough business and personal income to cover your monthly personal expenses.
- Feasibility–Proving that your business has the potential to be profitable and sustainable.
It is also important to have all the required documents ready before approaching lenders. Necessary documents include:
- A budget for your business
- Monthly cash flow projections
- Personal and business tax returns
- Personal and business bank statements
- Profit and loss statements
- Proof of business insurance
Final Thoughts
African-American women are driving entrepreneurship in the U.S., and we are more credit-ready. The Oakland African American Chamber of Commerce regularly hosts webinars on loan readiness for its members. Be sure to join their mailing list to learn more.