Supporting a Business Idea – Grants and Loans for Minority Businesses and Minority Women

Small businesses are the backbone of the United States economy. According to the U.S. Census Bureau, there are approximately 28 million small businesses across the country, with half a million small businesses starting up each year. 

Given the rate at which new businesses are starting up, there are now thousands of organizations that provide grants, loans, mentoring, and business coaching. 

So why are there significant roadblocks for minority and female applicants when it comes to securing grants for minorities or small business loans for minorities? 

In this article, we will explore:

  • The challenges faced by minority and female applicants,
  • How to secure grants and loans if you are a minority or female applicant, and
  • Some of the best avenues for grants and loans if you are a minority or female applicant.

minority business grants

Image Source: Minority Business Grants and Loans

The Importance of Racial and Gender Diversity in the Small Business Sector

As a community, we promote diversity as the key pillar upon which we build engagement, understanding and tolerance.  Accordingly, consumers expect to have access to different product options, cuisines to sample, and cultural experiences to immerse ourselves in.

But from a business perspective, there has long been resistance around the promotion of minorities and women to leadership positions, and there are unspoken but tangible barriers to minorities and women taking up key roles in leadership, innovation, entrepreneurship and public life.

In 1996, a nonprofit organization—Business Opportunities for Leadership Diversity—funded a study that used business-specific cases studies to identify how promoting diversity in a business context, namely facilitating increased opportunities for monitories and females, has a positive impact on business.

This happens because increased diversity allows us to:

  • Tap into the varied capabilities of the workforce,
  • Communicate with and understand the needs of a diverse cohort of customers,
  • Increase the productivity and performance of the workforce through improved workforce culture.

Let’s look at some of the challenges of securing minority owned business grants in a little more detail.

Challenges for Minority Applicants in Securing Grants

We know that securing an education has a direct and positive impact on a person’s ability to advance their immediate and projected socioeconomic standing in the community.  But right from the outset, minorities are at a disadvantage.  As early as applying for grants during college, minorities will experience challenges in securing funds to support their studies.  Later in life, applying for business grants for minorities can be just as difficult. 

One of the key reasons for this centers around the fact that, over time, there has been a gradual retraction in affirmative action policies with respect to grant applicants.  This has occurred as a direct result of adverse media publicity and public debate about the validity of quotas, as opposed to the awarding grants based on merit. 

Accordingly, people who identify with a minority group can struggle to secure the funds they need to start or expand their small business.  It is important that you do your homework and find organizations that actively promote their support for minority business grants.

Challenges for Female Business Owners in Securing Grants

Similarly, women too experience challenges in terms of securing grant funds.

In 2012, Babson College’s Global Entrepreneur Monitor concluded from a study that women who launch a startup business experience significant fear of failure and their network of successful, accessible leaders and role models can be limited.

We know too, that women often take a large share of responsibilities in the home.  If women lack time overall, they are less likely to pursue grant funds, particularly when they may need to apply for dozens of grant rounds before being successful.

Given that both minority and female grant applicants face challenges in securing funds, let’s take a moment to identify how you can locate the best grants for minority women.

Securing a Grant for Minority Applicants

Grants are a popular option for people who want to start or grow their small business.  Grants, unlike loans, rarely have a requirement to be repaid, and in return for the funds, applicants will be required to prepare periodic and final reports that outline how the funds have been used.

The best place to commence your search for minority grants that will help you kick start your business or expand an existing business is the website of the Minority Business Development Agency.  This agency works specifically to assist minorities and women to create and operate small businesses.

grants for minority women

Image Source: Grants for Minority Businesses​

Further, to secure minority grants for small business you may also want to explore:

  • Applying for and setting up an Individual Development Account where every dollar saved by the business is matched or even multiplied, and those matched funds can then be used by the business owner to build the business.
  • Regional Investment Boards that exist in some states to support small business startup and development through small business grants for minorities to promote increased employment in the region.

Securing a Grant for Female Business Owners

According to a study by American Express, in 2014, more than nine million women owned small businesses in the United States.  One of the keys to ensuring that small business continues to drive economic growth across the country is to ensure that owners are able to access funds so that they can undertake further research and development or expand their current capabilities.

This has, for some time, been a challenge for women as the big banks turn away applications for small business loans related to minority woman owned business.  In concert and as a direct result, women have turned to other avenues for funding, including philanthropic organizations, capital investors and crowd funding websites.

Sourcing the right small business minority grant can prove challenging.  There are a number of things you will need to do to identify the right grant for your business, including researching grants and reviewing the application process to verify your eligibility and preparing your application, which may include developing a proposal, business case and budget, securing and providing evidence of your business operations, forecasts, business partners and other investors who will match any grant funds received.

As outlined earlier, to locate a grant that is suitable for your small business, we recommend that you commence your search at the website of the Minority Business Development Agency where you will be able to conduct comprehensive research on government grants for minorities, business startup grants for minorities and business grants for minority women.  Further to this, there are a number of organizations that promote grant opportunities specifically for women in small business, including:

  • The Eileen Fisher Women-Owned Business Grant Program: to be eligible the small business must be owned solely by women, have a business plan that is substantiated and aimed at driving growth, and subscribe to core values that center around social consciousness, sustainability, and innovation.
  • The Huggies Brand-Mom Inspired Grant Program: these grants (made up of cash and in-kind support) are focused on supporting women who run home-based businesses to develop innovative products that enhance parenting.

Challenges for Minority Applicants in Securing Small Business Loans

A recent study conducted by Utah State University and Brigham Young University reveal an alarming problem concerning non-white minority applicants in successfully applying for and securing small business loans.

The study revealed that a nuanced process of racism was being driven by what it terms “micro-aggressions,” small but cumulative behaviors by individuals that amounts to poor treatment of Black and Hispanic business owners seeking loans. The data suggests that minorities were only fifty percent as likely to receive approval for a small business loan. Clearly this disturbing result suggests a divisive inequality that has a major impact on the long-term prospects of business success and cultural and socio-economic mobility.

There is also a more subtle issue at work in this scenario. The study also found that white entrepreneurs were more likely to view business ownership and business loans as positive life experiences. Their non-white counterparts were more likely to have developed a negative view of business and business loans.

Challenges for Female Business Owners in Securing Small Business Loans

As outlined earlier, despite the fact that approximately nine million women run and own businesses, evidence suggests that women are more likely to face greater challenges in securing minority business loans. So, why is it that a significant number of business owners face an uphill battle when it comes to securing loans? Here are some possible reasons this might be occurring:

  • Perceived Risk: When it comes to loaning money, careful risk assessment is crucial to the decision. Female business owners are perceived as a riskier loan proposition over their male counterparts, but the reasons are not entirely clear. There may be a cultural perception that persists that suggests that women are simply bad business managers, thus reinforcing the notion that they are high risk loan recipients.
  • Lack of Professionalism: Similarly, banks often seem to overlook female entrepreneurs, or apply stricter guidelines to them, due to the negative perception that women are unprepared when it comes to the necessary paperwork for a loan application and the attitude required to “talk turkey” with the bank about business.

Female business owners face an institutionalized perception that often leads to low self-confidence. The culturally persistent negative stereotype of women being high risk and unprofessional business owners presents not only a steep challenge for any woman looking to secure a small business loan, but it also contributes to a lack of confidence in women. This lack of confidence is carried over into business affairs and simply reaffirms the negative perception in financial institutions where women apply for loans.

Where to Find the Best Loan Products for Minority Applicants

Given the challenging and institutionalized racism in the business loan industry and the limited access to grants for minority owned businesses, it is fortunate that a number of options exist for helping minority applicants secure a business loan. While most of the following programs and organizations are not solely for non-white business owners, they do provide more assistance to minority applicants:

  • Union Bank: Provider of small business loans specifically for minority business owners.
  • SBA Community Advantage Loans and the SBA Microloan Program.
  • Accion U.S. Network, which provides finance for those that have poor, limited or no credit history (a high proportion of minority and female applicants fall into one of these categories).

The following offices are also able to assist in securing a small business loan:

  • The U.S. Department of Commerce’s Minority Business Development Agency (MBDA). Their business centers operate in largely non-white areas and provide information on where to source business loans.
  • SBA District Office or Small Business Development Center (SBDC).

Where to Find the Best Loan Products for Female Business Owners

If you find that you are not eligible for any existing minority small business grants, then pursuing a loan is another way to inject cash into the business to support growth.

One of the best sources of information to get you started is the United States Small Business Administration Agency, and in particular their Office of Women’s Business Ownership. Through this office, women can access a range of support services related to starting and building a small business. Staff within the office can provide information about small business loans available directly from the Office of Women’s Business Ownership and provide information about banks and other organizations that can facilitate lending.

As an alternative, you may also like to consider some of the more popular small business loan programs for women including:

  • Elizabeth Street Capital: Through this organization (and in partnership with the Bank of America), women can access loans, mentoring, and support for the growth of their business.
  • Golden Seeds: This angel investment business provides small business loans with an emphasis of female owned business.


The evidence clearly suggests that women and minorities face steep challenges when it comes to securing small business minority grants and loans, but there are numerous organizations and programs in place that seek to minimize these challenges.

If you would like more information about securing a loan or grant, we urge you to make contact with the Minority Business Development Agency who can provide you with advice relevant to your circumstances.

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