Challenges Securing Funding for Minority Women Business Owners

In today’s society, approximately 40% of small businesses are owned by women. Moreover, according to the 2016 State of Women-Owned Businesses report, 8 out of every 10 businesses started since 2007 were launched by women of color – with African American women entrepreneurs making up the fastest-growing group of women-owned businesses.

All of this success, however, comes in the face of enormous challenges. It is well-known that minority women entrepreneurs face tremendous difficulties when seeking capital to fund their startups and small businesses. According to the American Express State of Women-Owned Businesses, women own 49 percent of the businesses in the U.S. but account for less than 10 percent of the country's earned revenue. This percentage is even lower for minority women-owned businesses. To work out appropriate solutions, we first need to identify the specific barriers that are holding back minority women-owned businesses the most.

The Hurdles of Getting funding for minority Women entrepreneurs

 Several factors attribute to minority women in business not receiving capital. To work out appropriate solutions, we first need to identify the specific barriers that are holding these assertive women back. We have compiled a list of the most prominent obstacles that minority women entrepreneurs face when seeking funding:

1. Lack of Access to Capital and Funding

It is a well-known fact that raising capital for minority women is extremely challenging. According to the Minority Business Development Agency (MBDA), minority small business owners are more likely to be denied credit than other small business owners and tend to pay higher interest rates than other groups.

2. Gender-Based Biases

women entrepreneurs continue to face biases due to their race and gender. This discrimination is felt far worse by minority women. This discrimination can translate into difficulties raising capital, networking, and establishing business relationships.

3. No Representation in the Business World

The business world is still predominantly male and thus women can find themselves feeling alone and misunderstood when seeking funding for their businesses. Often these women find the lack of representation intimidating and unfavorable. The most effective way to offset this is to find a women mentor or advisor who has launched a successful firm to teach you the ropes and strategies as to how to get navigate through a male-dominated arena. 

Solutions to Ensure Funding for minority women in business

To work out appropriate solutions, we first need to identify the specific sources from which minority-owned businesses the most are receiving funding from presently.

Most minority women receive funding from the angel and venture funding arenas. Angel investors and venture capitalists are individual investors who invest a large sum of money as a group into businesses of their choice. Each investor hopes to gain a significant return on their investment. With more women becoming investors, minority women might see the tide turning in their favor. 

Nonetheless, minority women still have to position themselves to get noticed to receive funding. Here are some things they can do to secure funding more easily: 

1. Create a detailed business plan and execute it.

2. Build a wide and deep network of people who can help them obtain funding for their business endeavors.

3. Build relationships with seasoned and trusted advisors.

4. Maintain excellent and thorough financial records.

6. Effectively market your business in your community.

7. Check their credit score and steadily improve it.

8. Build relationships with bankers, microloan organizations, and entrepreneurial support entities.

9. Seek out angel investors and venture capital funders who have businesses in your industry as part of their portfolio.

Bottom line

For minority women, raising capital to fund their startups or small business is extremely challenging. Despite such challenges, minority women business owners are still exponentially starting businesses, having success, and creating their own economy. With the current increase in women investors and the above-mentioned tips, minority women can secure funding faster, grow their businesses, and leave a legacy. 

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About the author...Dr. Lewis is President/CEO of the Executive Women's Success Institute and creator of the online course “Crack the Career Code: Unlock the Amazing Power Within to Lead With Confidence, Charisma & Credibility." She’s an International TEDx Speaker, International Bestselling Author, host of the Success 4 Women Radio/TV Show, Career Strategist, Trainer, and Business Consultant. To contact her email info@exwsi.com or go to her website www.exwsi.com. You can also view her TEDx Talk here: https://youtu.be/xH3A6ZWGwX8