Funding For African-Americans Starting Their Own Small Business

Funding For African-Americans Starting Their Own Small Business

Black-owned businesses accounted for 5 percent of American businesses, according to a 2007 report by the federal Small Business Administration from 2002 U.S. Census Data. The federal government as well as a number of private organizations make it their mission to increase that percentage. Therefore, there are special resources to help African-Americans get their businesses off the ground. African-American entrepreneurs with a good business plan have good odds of getting the help they need using the right channels.

Preparation

The first step to getting funding for any business is a solid business plan. You must be able to present your ideas in a way financiers can understand and find confidence inspiring. The federal government charges the Minority Business Development Agency with the task of giving African-Americans free help devising business plans and preparing to present to banks and investors. Similarly, numerous nonprofit organizations, such as the Northside Residents Redevelopment Council in Minneapolis, Minnesota, perform the same function for African-Americans and other minorities. In addition, these organizations offer connections to mentorship and technical advising opportunities.

Debt

So many small businesses start out using small business loans. The federal government knows how difficult it can be for any entrepreneur to secure a loan, let alone a minority entrepreneur. The SBA's 8(a) Business Development Program is dedicated to helping racial and ethnic minorities secure financing for their small businesses. The SBA can connect you with lenders who are predisposed toward lending to minorities, such as the Minneapolis Consortium of Community Developers, which is dedicated to supporting African-Americans in its community. In addition, you can apply for an SBA guarantee which means the government promises to pay off your loan should you default. This opens the door with many lenders.

Equity

If going into debt isn't an attractive prospect, you can always try to sell equity in your business to get your needed startup capital. Many people turn to friends, family and community business leaders as potential investors. However, if you need more than that, organizations facilitate networking with African-American and minority business leaders and groups, which can help connect your with investors who may give you special consideration. "Minority Business Entrepreneur" magazine has a resource network for subscribers to help them connect with other minority entrepreneurs and business leaders who invest in minority businesses.

Venture Capital

Venture capital groups are dedicated to buying equity in businesses and helping them grow. Again, you have to be willing to sell part of your business, but the resources and the advice and input of a venture capital group can really help a business succeed. Groups, such as Diverse Strategies and Active Capital, are known for their support of minority businesses.

Grants

The federal government says very clearly on the SBA, MDBA and a number of other business resource sites that it is not in the business of giving grants to startup businesses. However, many private organizations are. It takes some research to find an organization whose qualifications you meet, but one well-known organization that give grants to African Americans includes the MillerCoors Urban Entrepreneur Series. This grants is focused especially on businesses in areas in need of urban renewal.

Visit to - http://business-startupgrants.blogspot.com
Source - http://smallbusiness.chron.com/funding-african-americans-starting-own-small-business-4819.html
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