The ultimate guide to starting a minority-owned business [+ expert tips]
COVID-19 presented more challenges to businesses than one, and the pandemic placed even greater demands on minority business owners.
As minority business owners experience a cash crunch, not many have been able to secure loans to keep their doors open.
In 2020, decided 400.000 small businesses due to the impact of the pandemic, to close permanently – many in underserved communities. Whether you're in the idea stage or already established, this guide will help you get your minority-owned business off the ground.
Before diving into this guide, read this blog to learn how to start a business if you're still in the idea phase.
By the time you finish reading this article, you'll have everything you need (and more) to succeed as a minority business owner – from minority business certification to financing options and growth resources.
Get certified as a minority-owned business
After you have your business idea down pat, planned and registered your business, it is time to get certified as a minority owned business. This certification is not required, but it helps inform consumers and potential partners about your company's leadership role.
You may also need this certification if you plan to apply for federally funded minority business grants and loans or other programs.
Illinois, ohio, california and new york have local agencies to get certified as minority-owned businesses at the state level. There are several ways to get certified by local state and business authorities. So it may be best to consult these directly, depending on where your business is registered.
Here are a few other high-profile agencies to consider obtaining minority-owned business certification:
- The national minority supplier development council (NMSDC): the NMSDC is headquartered in new york and manages 22 regional member councils across the U.S. NMSDC offers minority-owned business certifications and business development programs to. The council has a network of more than 1.750 corporate members and has more than 12.Matched 000 minority-owned businesses with these member companies. The certification process includes an online application, a fee, an interview and a site visit upon approval.
- The small business administration's 8(a) business development program: the federal government has committed to awarding five percent of all federal contract dollars each year to small disadvantaged businesses with an 8(a) designation. This is an SBA-specific certification for minority-owned businesses, which is required if your business plans to better compete for federal contracts.
These same organizations and agencies can also offer women-owned and LGBTQ-owned business certifications.
Apply for minority business grants
Minority founders often start by bootstrapping, launching crowdfunding campaigns or even trying to raise initial funding from family and friends.
You can go a number of different ways to fund your startup, but if you're on your own for funding, seeking funding is a good place to start. Grants.Gov distributes more than 1.000 small business grants for an open search, and all federal agencies post their grant opportunities here.
Here are a few business funding opportunities for minority founders:
- The coalition to back black businesses fund: this initiative was created to help small black businesses struggling through the pandemic. The coalition awards 300 grants, each amounting to 5.000 US dollars.
- The U.S. Department of agriculture (USDA): this agency runs the rural business development grant program for businesses that operate in rural areas with a population of less than 50.000 inhabitants. The program offers grants to minority small businesses in the amount of 10.000 to 50.000 U.S. Dollars.
- Rebuild the block (RTB): under its small business relief fund, RTB awards 15 grants a month to black business owners affected by the pandemic. There is no set monetary value for each grant, and freelancers and other creatives are encouraged to apply for.
- First nations development institute (FNDI): deadlines and opportunities vary, but this nonprofit organization provides financial and technical assistance to native american organizations. FNDI has 2.Provided 150 grants totaling $43 million to native projects in 40 phases and regions.
- The national black MBA association: since 2017, the association has been hosting the scale-up pitch competition, which offers scholarships of 1.000 to 50.000 US dollars to black entrepreneurs. To apply for this opportunity, someone from the company must be a member of the association.
- Asian women giving circle (AWGC): this scholarship is exclusive to asian american women-owned businesses. The AWGC awarded 11 grants in 2020, each between 2.500 and 10.000 US dollars, and this year the maximum grant amount is 15.000 US dollars.
- Sogal foundation: this ongoing program forgives 5.000 and 10.000 US dollars to black women founders and black non-binary entrepreneurs.
- Fedex: each year, fedex hosts a nationwide small business grant contest, and while it's not exclusive to small minority businesses, many of the past winners have been minority founders. Winners receive grants of 15.000 to 50.000 US dollars as well as funds for fedex printing services.
If you're looking for more opportunities, please assist me co-founder and CEO stephanie cummings recommends subscribing to newsletters distributed by 1863 ventures and backstage capital.
Each organization sends out a monthly newsletter with updated grant and funding opportunities specifically for minority founders.
Apply for minority business loans
Another funding option could be to apply for credit. Historically, minority founders have had difficulty obtaining business loans due to credit inequality and discrimination, but there are still reasonable loan options available.
Here are some business loan opportunities for minority founders:
- Accompany capital: to specifically support immigrants, refugees and women entrepreneurs, accompany capital offers microloans ranging from 500 to 50.000 USD with repayment terms of six months to three years at.
- U.S. Small business administration (SBA): SBA administers some lending opportunities, including the microloan program and the community advantage loan program. The microloan program is open to all small businesses and offers loans up to 50.000 dollars with an average loan size of 13.000 US dollars. For the community advantage loan program, SBA encourages local lenders, primarily nonprofit financial institutions, to provide loans of up to 250 to minority, women, veteran and other underserved founders.Grant USD 000.
- Business consortium fund: offered to NMSDC-certified businesses, the fund provides loans and lines of credit between 250.000 and 750.000 USD with repayment terms of up to five years.
- USDA: through its business and industry loan guarantee program, USDA offers loans to local banks and direct lenders operating in rural areas with fewer than 50.000 residents, loan guarantees of up to $1 billion. Minority businesses can also directly apply for a USDA loan of 200.000 to $5 million, with a maximum cap of $10 million, can apply for.
Tap into additional minority programs and resources
While you may think you have it all figured out, a little extra guidance wouldn't hurt.
Here are ten accelerators, startup programs and other resources for minority founders:
- The visible hands grant runs a 14-week virtual program to provide business-building services to underrepresented entrepreneurs and investments of up to $200.000 USD to offer. The startup cohort will welcome more than 30 grantees.
- Black founders is dedicated to diversity in tech and offers programs and events for black tech entrepreneurs.
- Operation HOPE offers an eight-week entrepreneurship training program designed to help entrepreneurs in low-income communities.
- SBA's business development program helps minority business owners better qualify for SBA loans. Your business must be registered with the SBA as a small business to participate.
- The minority business development agency, an agency of the U.S. Department of commerce, was created to give minority business founders better access to capital and resources. The agency manages business centers across the country and hosts business development programs.
- 1863 ventures – a business development organization dedicated to empowering people of color, women, immigrants, LGBTQ people, veterans, and physically disabled business owners – runs two accelerator programs. Its pipeline program is for pre-growth stage companies, and its acceler8 program is for growth to scale companies.
- Y combinator's startup library includes a wealth of resources spanning 15 years.
- The national minority business council provides minority business owners with educational opportunities, entrepreneurial boot camps, seminars, business assistance and more. Membership is encouraged.
- The U.S. Minority chamber of congress is a nonprofit organization that advocates for small business rights. The organization has chapters across the U.S. That host networking events and offer local entrepreneurial resources.
- Founder institute compiled the black american startup resource list of 742 resources for idea-stage entrepreneurs. If you are looking for accelerators, investors or even events, this list is a great starting point.
Treat yourself to motivational tips from other minority founders
It is difficult to start a business from scratch, but doing so as a minority can present greater challenges to.
Many inequities stand in the way of minority owners, but hopefully these opportunities and resources will ease some of the problems. While starting a minority-owned business can be the same as starting any other business, there are a few additional things you can do – like getting certified – to take advantage of some unique opportunities that are reserved for minorities only.
I reached out to some minority entrepreneurs who have done the hard work and are still looking to grow their ventures. Here are some tips if you're feeling discouraged: