Whether you’re starting your own business for the first time or have decades of experience in your field, securing funding for your new venture can be a challenge. Minority entrepreneurs generally face additional challenges. The most common obstacle to entry is access to funding. Fortunately, grant programs are designed to fill these gaps.
Minority Business Owners
Government funding is a major part of the United States’ commitment to minorities. Funding for minority-led projects by the government exceeds $1 billion a year. Minority-owned small businesses have special importance from the government’s standpoint because they provide the chance for people to start something on their own, to get their feet wet in the world of business, and provide employment localized.
According to the US Census Bureau, only about 20% of US employers are minority-owned. Grants are one solution that aims to help increase minority business owners’ access to funding. Grants allow you to get funding for your business without having to repay it or share a piece of your company with investors. You’re likely to face stiff competition during the grant application process because grants are an attractive funding source.
Issues With Small Business Grants
You should take some caveats into account. Small business grants cannot be used for any kind of business expense. A grant is typically awarded for a specific purpose, and when you receive a grant, you may only use the money for that purpose. For example, you cannot use the grant money allocated to a project to acquire inventory for an unrelated project.
Moreover, applying for grants is a challenging process. Applying for a grant is very competitive, depending on the number of applicants and how many grants are awarded.
Among the many different grants available to small businesses, some are restricted to one particular group of business owners. There is a tendency for these programs to be geared towards those adults who face greater financial, social, and political challenges attempting to gain a foothold in the business world, such as people of color.
How Grants Work
Grants are the best option over loans since they are free money. The problem is that requesting and receiving grants isn’t easy. An application can be lengthy, intensive, and often accompanied by a significant waiting period. There are several requirements that you have to meet before applying.
Grants come in many different forms, such as federal grants, state grants, and grants funded by private foundations, non-profits, and private organizations. According to the grantor (the entity dispersing the grant funds), the grantee (the individual or organization receiving the grant funds) must meet certain criteria and have other stipulations.
Minority-owned businesses have long been advised to start researching grants available at the state level by experts in the field. State grants may not have as stringent requirements as federal funding, and you may have a greater choice than you would if you were applying for federal funding.
The state websites will have a section on business grants for minority-owned businesses, which will provide detailed information about available grants. Many states have grant programs open to minority-owned businesses in traditionally male-dominated sectors, such as construction. To find out what options are available in your state, you can start by visiting the website for your state.
Grants for Minority-Owned Businesses
As mentioned in the previous paragraph, there are many grants available at all levels of government and the private sector. You should not just stop there; you should also look at these five grants in addition to those listed above. These are some of the best financial aid programs available, and if you qualify, they can make a huge difference to your business.
The Coalition to Back Black Businesses
Several brands have come together to form the Coalition to Back Black Businesses to empower Black-owned businesses by providing them with resources and expertise.
In addition to providing $14 million in minority grants, resources, and training over the next four years, the Coalition will also provide small businesses all across the country with training and resources to help them recover from pandemic-related setbacks. The Coalition comprises companies such as American Express, ADP, AIG Foundation, Altice USA, Dow, and the S&P Global Foundation.
As part of the program, businesses that qualify will be able to receive grants of $5,000 every year, along with training and mentorship services. As part of the second round of funding and support, a few initial grant recipients will receive additional enhancement grants of $25,000 during the summer.
A business must be owned by a minority and located in a community or region that is economically distressed to be eligible. If you are interested in applying, you can do so once the Coalition’s application process opens in the fall. Four hundred or more of the most deserving applicants will be selected at random to receive cash awards and other benefits during the grant selection process.
National Black MBA Association Scale-Up Pitch Challenge (NBMBAA)
The National Black MBA Association (NBMBAA) Scale-Up Pitch Challenge may benefit you if you have an idea for a scalable Black-owned startup. NBMBAA has launched a competition called “Make Big Ideas Bigger.” through this competition, eligible startups will have the chance to connect with venture capitalists and other early-stage investors.
As a part of the competition, the NBMBAA’s judges will also select and award cash prizes to three finalists. Eligible businesses will hold a virtual pitching session via the application process by sharing their business ideas with a panel of judges when the application process is live. The finalist companies will then have the opportunity to pitch visually and verbally to the judges in a live, three-minute presentation, explaining why they should consider their product or service for this grant.
FedEx Small Business Grant
FedEx awards grants of up to $50,000 to several winners of their annual contest. There are gold, silver, and bronze winners – who also receive various FedEx business products to supplement their prize winnings. Entry for the grant money requires a business plan, business description, and photos and video (optional) of your intended business goals.
Many small businesses have struggled as a result of the Covid-19 pandemic. FedEx created the FedEx Small Business Grant Contest in response to the crisis. Ten small businesses (with less than 100 employees) will receive one of the following grant award packages in 2022.
A total of three winners will be awarded a $50,000 grant, $4,000 in FedEx Office credits (for business and print services), and many other benefits. A grant of $20,000 will be awarded to seven winners and a $1,500 FedEx Office credit.
The FedEx grant contest will run from February 28, 2022, to March 28, 2022. Those eligible can create an account with FedEx and enter the contest. Voting for the top 100 winners takes place between March 22 and 31. FedEx will announce the top 100 winners on April 1, 2022. Those will be followed by the final winners on May 4, 2022.
National Association For The Self-Employed (NASE)
NASE is a nonprofit organization dedicated to assisting entrepreneurs looking for assistance in running successful businesses. They offer a variety of tools and resources to help entrepreneurs grow their businesses. There is a wide variety of member-only resources offered by NASE and a grant program called Growth Grants that offers grants of up to $4,000 for business development. The business must also commit to using the grants for marketing, advertising, hiring new employees, expanding facilities, and any other business needs to be considered for these grants.
The qualification requirements for applying for a NASE growth grant are the following:
- You must be a current NASE member.
- There must be a business need that you can demonstrate with the grant.
- You must explain how you will use the grant money and how it would increase your business’ success.
- You must submit supporting documents (such as a business plan).
NASE has handed out nearly one million dollars in grants to members of small businesses through its Growth Grants program. Throughout the program, small businesses that meet the eligibility criteria can receive grants worth up to $4,000, awarded every quarter.
When you become a member of the Small Business Association, you will have the opportunity to apply for grant awards every quarter, as outlined below:
- January to March
- April to June
- July to September
- October to December
During the month following the completion of the quarterly application deadline, all applications are reviewed by the grant committee. The recipients must be able to demonstrate an identifiable business need, explain how they plan to use the money to meet that need, and demonstrate a potential for growth and success if they receive the money to be eligible for a grant.
There is no better source of information regarding government grants than Grants.gov. This web page helps people find information on various grants available from various agencies and offer many opportunities. However, getting small business grants through government agencies may be more challenging than you think. It would still be worthwhile to look at the available options, particularly if you are unsure whether you would qualify.
It is advisable to start by looking for business grants at Grants.gov. You may be able to find minority grants and other kinds of grants. The database, which is maintained by the Office of Management and Budget (OMB), is a source of information regarding more than 1,000 federal grants. It also includes information regarding the eligibility requirements for the various grants.
To apply for a Grants.gov grant, you’ll need to create a Workspace account through which you (along with the rest of your team) can access the system’s grants applications. As soon as you are done with this process, you can search for federal grants that match your business goals and apply for those you believe are the best fit.
Fast Break for Small Business
Small and diverse businesses belonging to Black and ethnic minority communities may be eligible for grant funding through the Fast Break for Small Business program, sponsored by LegalZoom and the NBA, WNBA, and NHL. Over 5,000 small businesses are expected to benefit from the program, resulting in $6 million in grants in cash awards. There will be three $10,000 grants, and each winner will receive a $500 LegalZoom service award.
Applicants should submit their grant applications in the spring of 2022. If you are interested in receiving updated information during the process, please register online.
First Nations Development Institute Grants
With direct financial grants, technical assistance & training, and advocacy & policy campaigns, First Nations Development Institute improves the economic conditions of Native Americans. In addition to providing grants, First Nations has provided technical and financial support to over 2,611 Native American organizations and projects since 1993, totaling $51.6 million in grants and technical support.
Grants have previously been offered for numerous programs related to US Drug Enforcement Agency (DEA), Covid-19 response, native youth and culture support, college scholarships, and native youth business plan competitions. If you’re interested in learning more about new grant opportunities for First Nations when they arise, check out the First Nations website.
Power Forward Small Business Grant
Black-owned and operated small businesses throughout New England are supported by the Power Forward Small Business Grant program. Vistaprint, the Boston Celtics Shamrock Foundation, and the NAACP have partnered to provide funding and management as part of the award program. Businesses owned by Black-owned business owners with one to twenty-five employees can apply for grants of up to $25,000. Awards will be granted on a rolling basis for this program since it is a multi-round program.
Capital One Business Grant Program
The Capital One Business grant program is being launched in partnership with the Association for Enterprise Opportunity. Capital One provides free resources in its Business Hub and grants to Black-owned businesses. This program has been officially launched in the spring and will award grants on a rolling basis as applications come in.
Sage Invest in Progress Grant
The Invest in Progress Grant from Sage supports Black women entrepreneurs in their early stages of business development. Earlier this year, Sage announced it is partnering with BOSS Impact Fund to create a three-year grant fund of $1.5 million. As part of the work, 35 grant proposals are expected to be submitted by 2022. The fund will also expand its opportunities each year.
Annuity Freedom BIPOC Small Business Grant
After learning about the pandemic’s effect on Black, Indigenous, and People of Color (BIPOC) businesses, Annuity Freedom created the Small Business Grant Program for BIPOC businesses. Grant opportunities from the organization are available in multiple forms, including marketing grants, and microgrants, which are awarded on a rolling basis.
Black Founder Startup Grant
The SoGal Foundation and its partners run the Black Founder Startup Grant program on a rolling basis. Black and multiracial women and nonbinary entrepreneurs can receive grants of $10,000 from the organization. As a condition of eligibility, startups must hold a legally registered business and be planning on seeking investor funding.
Grow by Invoice2go
Grow by Invoice2go gives small business owners from underrepresented groups a way to recognize their contributions and untapped potential. As a result, they give away $200,000 to help small business owners from minority communities take the next step in their business ventures.
Minority Business Development Agency
Small businesses run by minorities and owned by minorities can substantially benefit from the Minority Business Development Agency, a department within the US Department of Commerce. It works to connect business owners and entrepreneurs with government contractors, financial resources, and elected officials to help them succeed in their endeavors.
The MBDA offers grants to minority business owners every year, so regularly check out the site for grant opportunities. In addition to providing educational resources to minority entrepreneurs, they also operate a website with free resources for them.
Through this grant, we will be able to provide technical assistance to socially disadvantaged or minority individuals who have been victims of racial or ethnic cultural discrimination in American society due to their racial, ethnic, or cultural identity. Funds are available for feasibility studies, business plans, strategic planning, and leadership training.
Frequently Asked Questions:
Small business grants for minority business owners in the US include federal and state-funded programs, private or nonprofit organization grants, and local economic development initiatives. These grants aim to support and encourage the growth of minority-owned businesses across various industries.
Minority business owners can find grant opportunities by exploring resources from the Minority Business Development Agency (MBDA), Small Business Administration (SBA), and state or local government agencies. They can also search for grants from private organizations, foundations, or business associations by conducting online research, networking with other business owners, or attending industry events.
The application process for minority small business grants varies depending on the specific grant program. Generally, applicants need to complete an application form, provide information about their business, describe their proposed project or plan, and demonstrate how the grant funds will be used. Some grant programs may require additional documentation, such as financial statements, business plans, or proof of minority status. Carefully review the grant requirements and follow the application guidelines provided by the grantor.
The Bottom Line
There are several ways to fund your business, but why get a loan when you can get a grant without paying it back? On the other hand, several minority-owned businesses find it more difficult to obtain traditional funding than their white counterparts. If you’re considering taking out a loan, consider checking out the grants you may be eligible for before deciding.
In need of a grant to start a company? Check out our article about grants to start a truck company.
Are you interested in learning more about different grants and programs that can help you with your living situation? Check out the rest of Gov Relations’ blog section today!