New Funding Sources for Minority-Owned Firms

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Digital Library > Building and Inspiring an Organization > Minority-owned firms"New Funding Sources for Minority-Owned Firms"

One of the first hurdles that minority-owned firms face is financing. In a 1999 Federal Reserve study, 68.5% of small businesses owned by black men were denied loans in the past three years.

The vast majority of small-business owners (regardless of race) said poor credit history was to blame.

Some government programs exist on a federal, state and local level to lend money to minority-owned firms. A growing number of nonprofit "community-development corporations" also provide funding through a revolving loan pool.

Another layer of support is emerging from the private sector: community-development agencies. These for-profit corporations attract equity from banks that they, in turn, loan to promising entrepreneurs.

Rhode Island's Minority Investment Development Corp. is a typical example. The 6-year-old firm's average loan is $65,000, and the Providence-based corporation has not rejected any applicant for lack of funds.

Writer: Morey Stettner

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Articles in our Entrepreneur’s Resource Center appeared in print and online newsletters published previously by the foundation. More than 1,000 articles can be found in the categories below, addressing timeless challenges faced by entrepreneurs of all types.