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The Comprehensive Guide to Minority Business Grants

The ubiquitous saying “it takes money to make money” is repeated for a reason: it’s true, in most cases.

From upfront costs to additional funding needed to hire or open a second location, capital is needed to start and grow a business.

Unfortunately, for women-and-minority business owners, the American Dream is not as equally accessible when compared to the opportunities afforded to white- and male-owned businesses. According to the Minority Business Development Agency, minority-owned businesses are turned down for loans three times more often than non-minority owned organizations. Those that do get a loan typically get stuck with a higher interest rate and are awarded much less than their male and white counterparts.

A 2014 study in the Journal of Consumer Research found that minorities looking for a business loan have a different experience compared to their white counterparts — despite being in the same type of business, having the same background and citing the same reasons for needing the loan. The study, which was conducted by researchers from Rutgers University, Brigham Young University and Utah State University, asked nine people – three black, three Hispanic and three white — to apply for $60,000 in small business loans. The results were disheartening, showing that the black and Hispanic business owners were given less information about loan terms, offered less help when it came to their applications, and asked more questions about their personal finances.

Given this unfortunate funding gap reality, minority business owners should investigate all possible avenues, like looking for extra cash through small business grants or federal government grants. While searching for money requires a bit more determination and patience, it can often be a great option. The caveat with grants is that they’re typically more restrictive when it comes to who qualifies and how those funds can be spent.

10 minority business grants

Although not all of the following are exclusively for minority business owners, below are a few grant opportunities worth checking out:

This government website provides information for more than 1,000 programs across 26 federal agencies offering grants, including the U.S. Small Business Administration and the Department of Commerce.

With access to so many different options, minority business owners can do a more tailored search by using keywords like “minority owned” to garner results for their type of business.

The USDA Rural Business Enterprise Grant Program

Rural business grants typically range from $10,000 to $500,000 and can be used for  – but are not limited to – purchasing equipment, acquisition or development of real estate; and long-term business training and planning.

In order to qualify, you must own a small business with no more than 50 employees, generate less than $1 million in annual gross revenue, and be based in an eligible rural area. Applications are accepted through the USDA’s Rural Development state offices.

National Association for the Self-Employed

NASE is a non-profit trade association that provides educational grants and resources up to $4,000 for micro-business owners. Since 2006, NASE has awarded nearly $1 million to small business owners looking to grow their businesses.

In order to apply, you must be an active member of the organization and provide a detailed account of what you’ll do with the capital and how it will help the expansion of your business.

FedEx Small Business Grant Contest

Each year since 2013, FedEx has awarded 10 small businesses — minority or not — with funds totaling $120,500, with the first prize winner receiving $25,000. Since its start, $548,000 in grants and prizes have been given to entrepreneurs.

In order to apply, you must be a for-profit organization in business for at least six months with fewer than 100 employees. Applicants are asked how they got started, their goals, and how the capital will help them achieve said goals.

Miller Lite Tap the Future Business Plan Competition

Since 1999, MillerCoors has awarded up to $200,000 annually in grant money to five winners with the purpose of empowering urban communities. Formerly known as the MillerCoors Urban Entrepreneur Series, the grant program is not exclusively open to minority business owners, but does place heavy emphasis on promoting diversity in entrepreneurship.

In order to qualify, the business owner must be at least 21 years old, a legal U.S. resident or citizen and living in the U.S. He or she must also submit a business plan. The top 25 finalists then go on to live pitch events with the opportunity to take home tens of thousands of dollars in prize money at each event. The winner advances to the national finals and competes for the grand prize money on top of other resources that are extremely valuable in growing a business.

Improving Minority Health Grant Program

This USDA grant was created for “national organizations, states, tribes, minority-serving institutions, community and faith-based organizations and local agencies,” and is aimed at improving the health of racial and ethnic minorities. Funds from this grant can only be used toward activities outlined in a submitted business or project plan.

Partnerships for Opportunity, Workforce and Economic Revitalization Initiative (POWER)

Started by President Obama’s efforts to help communities negatively impacted by changes in the power and coal industries, POWER is a congressionally funded initiative that has awarded $94 million in 114 investments projected to create and retain nearly 9,000 jobs.

Water & Waste Disposal Loan & Grant Program

While this grant is not exclusively for minority-owned businesses, the program includes federally recognized tribes as qualified applicants – those who would typically not be able to access a loan in the marketplace on reasonable terms.

The grant was created for organizations aimed at investing in clean and reliable drinking water, waste disposal and stormwater drainage in rural areas with populations not exceeding 10,000. Check here for eligibility.

First Nations Development Institute Grant

Founded in 1980, First Nations is an American Indian institute aimed at strengthening the economies of Native American, Alaska Native and Native Hawaiian communities. The program started offering grant money in 1993 and has since awarded nearly 1,500 financial grants totaling more than $31.7 million, as well as technical resources.

America’s Seed Fund

The following two programs provide early-stage capital for small businesses in  biomedical technologies:

  1. The Small Business Innovation Research Program (SBIR) provides funding for research and development with awards that go up to $1 million over multiple years. In order to qualify, you must be a for-profit business with no more than 500 employees.
  2. The Small Business Technology Transfer Program (STTR) also offers research and development funding but to for-profit small businesses and nonprofit institutions. The award amounts go up to $1 million over multiple years. In order to be eligible, you must be registered in the SBA’s Company Registry Database, and small businesses must collaborate with a research institution in certain phases.

Considering small business financing? Learn more about small business loan options here.

Invaluable resources for minority small business owners

If you’ve found a grant that looks interesting, first make sure you’re eligible. Many grants are very specific when it comes to who can receive the money and what you can do with the awarded funds. Next, since grant applications can get rather technical, look to resources, like the below organizations, that can help you position yourself for success.

If you still haven’t identified a grant that works for you, the below resources can still possibly provide invaluable information and resources to help set you up for success.

Minority Business Development Agency (MBDA)

The U.S. Department of Commerce’s MBDA does not offer grants, but it is committed to addressing the unique financial challenges faced by minority business owners by connecting them to financial resources, federal contracts, market opportunities and even networking opportunities.

Business owners should contact a local business center to learn more about these opportunities.

National Minority Supplier Development Council (NMSDC)

This corporate membership organization helps minority-owned businesses get certified as minority business enterprises. It then connects them to national and regional corporate members and partners who have access to contracting opportunities, capital loans, specialized financing and long-term financing.

In order to become be certified, you must be a U.S. citizen with at least a quarter of the following origins.

8(a) Business Development

A sector of the SBA, the 8(a) business assistance program helps “socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society.”

While the program does not offer grant money, it does help with training and technical guidance. It also assists minority business owners in competing within the financial marketplace.

Once accepted, the organization is part of the program for nine years. Check here for the list of eligibility requirements. Also check your local SBA District Office or Small Business Development Center (SBDC), which can help small business owners connect with lenders who offer loans for minority entrepreneurs.

Service Corps of Retired Executives (SCORE)

An SBA partner, this nonprofit offers business owners access to a large network of business mentors in the U.S. It also provides free and affordable specialized workshops, seminars and online training, which can help entrepreneurs find small business loans or other kinds of funding for minorities.

Operation Hope Small-Business Empowerment Program

Designed for entrepreneurs from low-income and underserved communities, this program offers participants a 12-week training program that includes workshops on business financing, credit and money management.

Local government centers

Many programs for minority small businesses operate on a local level, so check out your state’s resources. For instance, the city of Cleveland’s resources page proves to be extremely helpful for small business owners, as does the state of Georgia’s small business directory.

The bottom line

The aforementioned Journal of Consumer Research study found that the financial challenges faced by minority small business owners (such as getting turned down for a loan or having restricted access to funding options) had a major negative impact on the applicants’ self-worth and self-esteem.

Despite the challenges, however, minority-owned businesses grew at a rate more than three times faster than overall U.S. businesses from 2007 to 2012, according to the Minority Business Development Agency. It might take a little creativity and perseverance, but the grants and resources covered here can help, or at least be a starting point, to helping you start and grow your business and attaining your version of the American Dream.


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