Black Entrepreneurs & the Conundrum of Loan Readiness

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. 

woman-using-computer-in-workshop

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.

Leave a Comment