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Racial minority-owned businesses are growing in the United States. According to the U.S. Senate Committee on Small Business and Entrepreneurship, about half of all small businesses created in the last decade are minority-owned, creating nearly five million new jobs and generating close to $700 billion.
Despite this success, there is still a major disparity in access to startup capital. The Minority Business Development Agency found that minority-owned businesses receive less than half the average amount of investment and loans than non-minority-owned companies.
Luckily, there are small business grants and programs available to minority groups, offered by local, state, and federal government agencies, as well as by nonprofits and private entities. Here’s where to find them and how to apply.
One of the best places to look for grants that support starting and expanding a business is Grants.gov, a federally operated website that hosts more than 1,000 funding opportunities — including those for small and minority-owned businesses. Grants offered on the platform include those provided by the Department of Commerce and the U.S. Small Business Administration.
These grants are offered for varying purposes and in varying amounts. Search the available grants and find the options that best match your business. Because government agencies offer these grants, you must meet strict qualification guidelines.
Businesses applying for grants through Grants.gov must have a DUNS number, a nine-digit identification number provided by Dun & Bradstreet. Once that number has been obtained, the business owner can register through the government’s System Award Management site and apply for grants made available via Grants.gov.
2. The USDA Rural Business Development Grant Program
While not specific to minority-owned businesses, the USDA Rural Business Development Grant Program offers funds to businessesoperating in rural areas — regions where minority populations are leading sources of economic growth.
The USDA offers two types of grants. While businesses can request any funding amount, smaller amounts are prioritized.
Opportunity grants can be used for businesses’ development, funding things like community improvement, feasibility studies, strategic planning and leadership training. Enterprise grants are available for training costs, land acquisition, pollution control, transportation and more.
Businesses that would like to apply for the USDA Rural Business Development Grant Program must have 50 or fewer employees and less than $1 million in gross revenue. Also, they must operate in an eligible rural area.
The USDA Rural Development’s local or state offices will ask business owners to provide specific information regarding their finances and operations as part of the application process.
3. The Coalition to Back Black Businesses
The Coalition to Back Black Businesses is a joint effort among several corporations to fund minority-owned businesses. The coalition includes American Express, ADP, AIG Foundation, Altice USA, Dow and the S&P Global Foundation.
Qualifying businesses receive $5,000 grants, along with mentorship and training. A few promising businesses also receive $25,000 enhancement grants.
The Coalition to Back Black Businesses Grant is available to Black-owned small businesses located in economically vulnerable communities and employing between three and 20 people.
Applicants can express their interest by providing their business name, zip code, industry and contact information. Grant finalists will be contacted and must complete a full application, submitting a W-9 form, Employee Identification Number and other supporting information about their business. The 2022 application period has passed, so check back in 2023.
4. National Association for the Self-Employed Growth Grants
While the National Association for the Self-Employed offers grants to small business owners in general, it can be a great resource for people who operate their own organizations and are looking to grow — which includes a growing population of business owners of color.
The NASE offers business grants of up to $4,000 to small business owners through its Growth Grants program. Since 2006, the organization has given out nearly $1 million in grants. Businesses can use the money for marketing, advertising, hiring employees, expanding facilities and other specific business needs.
To apply for a Growth Grant from the NASE, you must become a member of the organization and be in good standing. You will have to provide the organization with details on how you will use the grant and its potential impact on your business and its success. Applications must be submitted during open application periods, which are held throughout the year.
5. FedEx Small Business Grant Contest
FedEx launched its annual Small Business Grant Contest in 2012. In that time, the company has given away $1.5 million in cash prizes to more than 100 small businesses. Grants are available for up to $50,000 in funds to grow and develop the business, as well as $4,000 in credit for print and business services from FedEx Office. Top winners in specific categories, including one minority-owned business, will receive an additional $10,000 grant.
The contest is open to small businesses that have been open for at least six months, have fewer than 99 employees, use shipping services and have a FedEx account.
Applicants must provide details about their business and how they would intend to use the grant money if they received it. Details about the business, including revenue and industry information, will also need to be submitted. You can sign up to be notified when applications reopen.
6. Fast Break for Small Business
Launched by LegalZoom in partnership with the NBA, WNBA and NBA G League, Fast Break for Small Business has provided $3 million in grants to more than 5,000 small businesses. The program focuses on businesses run by minority and historically disadvantaged groups, including people of color.
These $10,000 grants come with an additional $500 worth of legal services provided by LegalZoom. The grants are available to businesses have been operating for at least six months, have an annual revenue of less than $1 million and have a business bank account.
The grants help new businesses complete tasks that require legal assistance. That might include filing as an LLC or corporation or applying for trademarks.
Applications for the Fast Break for Small Business are handled by the Accion Opportunity Fund, a nonprofit committed to financial inclusivity. Applications open during the NBA season. The application process requires the submission of tax returns, identification of the business owner, bank statements and a completed W9.
Alternatives to small business grants
Small business grants may not be the best solution for everyone. Grants are typically available for specific purposes and may have narrow eligibility restrictions. The application process is often competitive.
If you are looking for more flexible options, consider alternatives to small business grants. These are typically more widely available, easier to apply for, and have fewer restrictions. But unlike grants, most of these alternatives must be repaid.
- SBA microloans: The Small Business Association offers microloans of up to $50,000. Outside organizations or nonprofits typically service microloans.
- Business credit cards: Opening a business credit card offers your business a line of credit that can but used to pay for expenses related to your business.
- Business line of credit: Similar to a credit card, small businesses can seek a line of credit through a bank or other financial institution, providing flexibility to access funds when large expenses arise.
- Friends and family: While it can be difficult to ask, seeking financial support from friends and family can help. Formalize the agreement in writing and plan to repay the funds.
- Crowdfunding: Crowdfunding platforms can help you connect with potential customers enthusiastic about your product.
The bottom line
Seeking out grants is a great way for minorities to seek support in developing and growing their businesses. These grants may help businesses in underserved communities and support business owners who may not have ready access to other resources. If you’re a woman who owns a business, check out our list of small business grants for women.