Black-owned businesses have seen strong growth in recent years. Nearly 195,000 employer businesses were owned by Black Americans in 2022, according to the U.S. Census Bureau’s most recent Annual Business Survey, released in 2024
. That’s a 45% growth compared with Census Bureau data from three years prior
.
Despite this progress, majority-Black-owned businesses represented just 3% of all U.S. companies in 2022
.
“The proverbial pie would certainly grow if we continued to invest in these underappreciated companies,” Andre M. Perry, senior fellow at the Brookings Institution and author of “Black Power Scorecard,” told BW in an email.
Securing funding is a critical part of launching, sustaining, and growing any business, but Black entrepreneurs often face unique challenges in accessing business credit. Fortunately, there are things they can do to try to unlock the financing they need.
Look to community lenders
Banks typically offer the best interest rates and terms on business loans. But they’re not always easy to access. Many require good credit, strong business revenue, and at least two years in business. On top of that, lots of big banks have moved out of majority-Black communities
, creating another barrier to entry.
Smaller, community-focused lenders are filling the void.
Local banks and credit unions offer personalized support and often have more flexible qualification requirements. This is especially true if it’s a community development financial institution (CDFI). CDFIs are mission-driven organizations that support underserved communities, including minority business owners.
Community lenders and CDFIs are more likely to recognize the value of local businesses, Perry says. They can also help you prepare your application.
Consider microloans for smaller funding needs
If you need $50,000 or less, microloans can be a good fit. These are specifically designed to support minority, women, veteran, and low-income business owners.
Start with SBA microloans, which are available through CDFIs and other nonprofit lenders. They typically come with competitive interest rates and flexible eligibility criteria.
Explore online lenders for fast financing
Online lenders have less strict requirements and faster approval times compared with banks. However, interest rates and fees can be high.
To avoid paying more than you have to, compare offers from multiple lenders. Working with a loan broker or using a business lending marketplace can simplify the process by showing you several financing options side by side.
Know your grant options
Grants can be a powerful source of free money, especially for new businesses. But they’re highly competitive and often require you to fill out lengthy applications.
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Fifteen Percent Pledge Achievement Award Grant.
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Pathway to Opportunity Competition.
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Scale Up Pitch Challenge.
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Wish Local Empowerment Program.
Consider crowdfunding to launch your business
Instead of borrowing from a single lender, crowdfunding lets you gather small contributions from many different people.
This not only helps you raise money but also lets you build an audience and validate a business idea before you launch it.
Depending on the crowdfunding platform, you might have to offer special perks, rewards, or a small stake in your company. Fund Black Founders is a rewards-based crowdfunding platform designed specifically for Black entrepreneurs.
Build momentum for your campaign by including a compelling story, clear mission, and engaging video.
Don’t overlook mentorship and networking
Finding a support system is important for seasoned and budding entrepreneurs alike.
Perry recommends exploring incubators, accelerators, and other organizations geared toward supporting and mentoring Black entrepreneurs. These programs can help sharpen your business, boost your confidence, and strengthen loan applications.
Networking is also important, Perry adds. Connecting with local Black entrepreneurs can lead to valuable referrals, peer support, and new opportunities.
Discover other entrepreneurs in your vicinity by utilizing resources such as BuyBlack.org or your local Black Chamber of Commerce. To further expand your network, consider exploring SCORE’s “Find a Mentor” tool, joining the Black Innovation Alliance, or visiting your nearest Small Business Development Center or Minority Business Development Agency (MBDA) for additional mentorship and networking opportunities.
For Black business owners seeking to enhance visibility, it’s essential to leverage platforms like BuyBlack.org to connect with potential customers who are eager to support Black-owned businesses. According to a recent BW survey, a significant percentage of Americans express a desire to patronize Black-owned enterprises, highlighting the importance of boosting your online presence.
Incorporating supplier diversity programs into your business strategy can also lead to lucrative opportunities. By registering with SAM.gov and corporate supplier diversity portals, you can position your minority-owned business to secure government and corporate contracts. Partnering with large organizations through these programs can significantly impact your business growth and sustainability.
Moreover, obtaining certification as a minority-owned business through the National Minority Supplier Development Council (NMSDC) can unlock various benefits, including access to specialized lending programs and supplier diversity initiatives. Taking this proactive step can pave the way for long-term success and expansion within the business landscape. phrase “I don’t know how to do this” to make it more positive and empowering.
“I am still learning how to do this.”