If you operate a minority-owned business, there are many opportunities to obtain government and corporate contracts that are allocated specifically for businesses with this classification. However, what if your business is just getting started or has hit a rough patch and you could use some additional funding?
Many government agencies, banks, corporations and associations offer grants and loans designed to provide aid to minority-owned enterprises. While some of the best funding opportunities specifically target minority-owned businesses, other still-good options for funding have broader eligibility but should still be explored. Additionally, some venture capital firms specialize in investing in minority founders.
Here are nine public and private programs that offer good funding options for minority-owned businesses.
Community Development Financial Institutions Fund
The Community Development Financial Institutions (CDFI) Fund, part of the U.S. Treasury Department, awards funds to community development organizations, banks, credit unions and other financial institutions. Those recipients, in turn, provide low-cost loans and services to underserved populations and communities, including many minority-owned businesses. You can search for local financial institutions that have received awards from the CDFI Fund.
Disadvantaged Business Enterprise (DBE) Program
The U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) Program aims to give minority- and women-owned businesses “a fair opportunity to compete for federally funded transportation contracts.” Substantial awards are given out each year to businesses that focus on highway, transit, airport and related projects. While it does not offer direct funding in the form of grants or loans, this program is still notable for its contracting opportunities.
FedEx Small Business Grant Contest
Each year, the FedEx Small Business Grant Contest awards more than $250,000 to 12 small businesses. The contest focuses on providing grants to businesses with “products reaching niche and under-served markets, business models focused on sustainability, and just all-around innovative products.” Many winners over the years have been minority- and women-owned enterprises. The winners for 2020 have been announced, but the contest will open up again for entries in early 2021.
Many government agencies, banks, corporations and associations offer grants and loans designed to provide aid to minority-owned enterprises.
Grants.gov
One of the best places to generally look for federal grants is the perfectly named site, Grants.gov. While the site may be a tad hard to navigate, it has access to thousands of funding opportunities. Grants are matched with businesses and individuals who can help the government with “projects to provide public services and stimulate the economy.” Types of projects that receive funding are incredibly broad and include economic recovery initiatives, innovative research, training programs, and targeted work for U.S. embassies around the world.
Minority Business Development Agency
The Minority Business Development Agency (MBDA), an agency of the U.S. Department of Commerce that “promotes the growth of minority-owned businesses” offers various targeted grants and loans throughout the year. Some examples of grants include an “Entrepreneurship Education Program for Formerly Incarcerated Persons Grant” and an “Enterprising Women of Color Grant Competition.” Minority-owned businesses can also take advantage of MBDA Business Centers that are located around the country. These centers can help companies with “securing capital, competing for a contract, identifying a strategic partner, or becoming export-ready.”
National Association for the Self-Employed
The National Association for the Self-Employed (NASE), the largest organization in the country supporting self-employed and micro-businesses, offers grants up to $4,000 to help its members. These “Growth Grants” provide NASE members with capital to train employees, improve their marketing assets, invest in hardware and software and more. The NASE says it has distributed about $1,000,000 in Growth Grants to members since 2006.
Small Business Administration (SBA)
Businesses can seek low-cost loans between $500 and $500,000 from the SBA. Additionally, the SBA has a program called 8(a) Business Development, which specifically offers opportunities and contracts to businesses that are “at least 51 percent owned and controlled by U.S. citizens who are economically and socially disadvantaged.”
Small Business Innovation Research and Small Business Technology Transfer
Small businesses can have a difficult time competing with larger players when it comes to cutting-edge research and technology. The federal government’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) programs are designed to help counter this notion by offering hundreds of grants a year for innovative small businesses.
Venture capital firms
While the majority of venture capital firms don’t tailor investments specifically to minority-owned businesses, some firms have been established during the past few years that are designed to invest in minority- or women-owned businesses. A few examples of VC funds that have been established with this mission include:
- Backstage Capital
- Digitalundivided
- Founders First Capital Partners
- Harlem Capital Partners
- Humble Ventures
- Kapor Capital
- MaC Venture Capital
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