Key takeaways
- Systematic barriers limit access to funding for minority business owners, thus, they turn to grants for black owned businesses.
- Entrepreneurial activity in the US has been on the rise consistently, for the past few years.
- Lack of job opportunities and career fulfillment are cited as the main reasons for rising entrepreneurial activity.
- An entrepreneurship degree can enhance grant application success rate.
- With an entrepreneurship program, you learn to create financial statement, financial projections, business plan, conduct market research, and so on.
- HBCU and other US colleges and universities also offer scholarships and aid for aspiring black entrepreneurs.
- Entrepreneurship students can also take advantage of on-campus resources such as incubator centers, organizational partnerships, and networking opportunities.
Over the years, entrepreneurship has emerged as an important tool for economic empowerment. Post-pandemic, entrepreneurial activity in the US has risen consistently, especially among marginalized communities. A lack of employment opportunities has been cited as the primary reason why many people turn to entrepreneurship. However, for black entrepreneurs, starting a business is not as straightforward.
Systemic barriers, structural inequalities, and a deep-rooted bias prevent black entrepreneurs from benefiting from the same opportunities as white entrepreneurs or even other minorities. That is where a formal education can help. This guide explores how a formal education enhances your chances of obtaining grants for black owned businesses and also discusses the funding landscape in the US in detail.
Understanding the landscape for business loan grants for minorities
According to reports by the US Census Bureau, there are over 194,585 black owned businesses, employing over 1.6 million people and generating over $211.8 billion in annual revenue. However, despite being major contributors to the economy, black-owned businesses still struggle to obtain finance and funding for their entrepreneurial ventures.
Black owned businesses were half as likely to be fully approved for funding as compared to their white counterparts, according to research by the FED Small Business. Moreover, black business owners on average received a lower amount than white business owners, and that too at 22% higher interest rates than others.
If you are thinking about applying for minority business grants, you must first come to terms with the fact that there is a massive funding gap between white business owners and black business owners. The gap is fueled by many reasons.
- Lower household income – Black families have a significantly lower household income than white families.
- Wealth and financial assets disparity – a lower income means lower overall wealth.
- Lack of access to high-quality education – With many black families falling under the poverty line, access to college education is next to impossible for the majority.
- Poor credit score – Without much disposable income or wealth, the credit score of black families is significantly poor as compared to that of white families.
All these are reasons why an increasing number of black people are turning to entrepreneurship as they see it as the only way out of this vicious poverty cycle. But then the injustice of the system runs deep. A lower credit rating means higher interest rates. Lack of wealth and collateral means lower acceptance of loan applications. Thus, they turn to free grants for small minority businesses.
How can an entrepreneurship degree help you obtain minority grants to start a business?
Applying for and obtaining free grant money for minority small businesses is one of the safest and secure ways of financing a black owned business. However, grant applications are a tough and competitive process, and that’s where an entrepreneurship degree can help. Here’s all that an entrepreneurship degree offers and how it can help improve your chances of receiving minority grant money for business.
Business plan development
A well-developed business plan is an essential part of the majority of grant applications. Through an entrepreneurship program, you will learn how to create a detailed business plan with all the required details. An entrepreneur without a formal education will often struggle with formats, trying to learn at the last minute through online entrepreneurship courses, and so on.
However, those with a formal education will have the process at their fingertips. A business plan is a lengthy document, including everything from details about your products and services to market research, financial projections, organizational structure, and so on. Instead of taking multiple entrepreneurship courses to learn them all, pursuing a formal education in entrepreneurship is a better option.
Financial literacy
Running an entrepreneurial organization is about more than just leading teams. In the initial stages, you will be handling multiple tasks yourself, including financial management and financial planning. Finance is a scarce resource, especially for new entrepreneurial ventures, and thus it needs to be allocated carefully. The goal is to use the limited available finance to set up a functional operation, and being able to do that is not easy.
Through the program, you will learn how to secure funding for entrepreneurial ventures, how to allocate limited finance, prepare financial documents, create financial projections and estimates, and so on. Another way to build financial literacy is to pursue a degree in finance or learn financial management through courses and additional classes. However, these courses are not designed to equip aspiring entrepreneurs with the knowledge needed to set up their own business.
Innovation and strategic thinking
Many people are turning to entrepreneurship, citing a lack of available jobs or declining job satisfaction as major reasons for the career change. However, rising entrepreneurial activity means rising competition and increasing startup failure. According to the United States Bureau of Labor Statistics, nearly 20% of all US startups fail within the first year.
If you want to survive, innovation is essential. You have to learn how to deal with the challenges that come with establishing a startup, trying to establish market presence, gain a share of the market, and ensure sustainable business operation through innovation and strategic planning.
Related: 5 signs you should opt for entrepreneurship majors.
Provide legal and regulatory knowledge.
Whether you are applying for a loan or a grant, or even trying to obtain a license or register your business, legal knowledge is essential. While you can hire a lawyer or a consultant to help you with the process, they do come at a cost. Moreover, not knowing the legalities leaves you dependent on a consultant or vulnerable to scams.
Through an entrepreneurial degree, you will develop comprehensive knowledge of corporate laws, rules, and regulations, all of which will make launching a business easier and relatively less expensive.
Provide institutional support and access to resources
To apply for minority grant money for business, you need to prove that you are a capable entrepreneur and that your entrepreneurial idea has merit. More often than not, many grant awarding agencies want to see a functional setup prior to approving minority grants for small businesses. However, that is costly and requires substantial investment.
However, entrepreneurial colleges and universities feature a setup that enables entrepreneurs by providing them access to resources, incubation centers, mentorship opportunities, and seminars. All of these are designed to put aspiring entrepreneurs in contact with people who can help them on their entrepreneurial journey, and this includes investors.
Builds credibility and provides confidence
Thousands of aspiring entrepreneurs send in applications seeking grants for small black owned businesses. However, grant money is limited, and reviewers need to sort through all the applications to find a select few that meet their criteria. An entrepreneurship degree can prove extremely helpful as it indicates you have the knowledge and skills needed to run an enterprise.
It also provides the confidence needed to navigate challenges and overcome hurdles as they come. Through the program, you learn how to handle a variety of situations, from leading teams, hiring talent, financial management, accounting, marketing, product development, market research, and so on.
With knowledge and skills gained from a comprehensive curriculum and experiential learning opportunities, you can confidently lead your organization, strategize, and scale your entrepreneurial venture. Moreover, you can confidently pitch your business to investors and easily obtain government grants for minority owned businesses.
How to access an entrepreneurship degree as an aspiring black entrepreneur?
College education, especially a bachelor’s degree, can be quite expensive. It is not only a significant financial commitment, but also a time investment. The high price tag automatically puts many educational programs out of reach for a significant number of individuals, specifically individuals living below the poverty line.
Related: Is getting an online entrepreneurship degree worth it?
However, when it comes to entrepreneurship programs, there are a number of available programs and scholarships for black entrepreneurs. A scholarship can help you access high-quality entrepreneurial education, which in turn provides access to a significant number of entrepreneurial jobs and career opportunities.
Explore HBCU-targeted initiatives
Historically Black Colleges and Universities (HBCUs) such as Spelman College, Howard University, Morehouse College, and others offer entrepreneurship programs alongside additional resources such as business development programs, incubator centers, and networking opportunities.
Search for local and national grant partnerships
Several colleges and universities partner with national and local grant-providing agencies to help educate black entrepreneurs on how to apply for minority business grants. Additionally, you will also be able to benefit from corporate partnerships with grant-providing agencies such as UNCF and Thurgood Marshall College Fund, which aim to equip black entrepreneurs with the finances needed to launch their startups.
How to apply for minority business grants?
To know is only the first step. Successfully applying that knowledge to secure government grants for minority business owners is a whole other story. Here’s how you can apply for minority business grants.
- Explore multiple grants for black owned businesses, including federal, local, state, corporate, and non-profit programs. Not sure where to start? Explore these 33 grants for different types of black owned businesses.
- Understand the requirements for each program, making sure to understand the eligibility criteria for your business, as the requirements vary by industry, business type, organization size, and so on.
- Identify your specific funding requirements, such as technological updates, expansion, marketing funds, and so on, and make sure the grant you are applying for will fulfill your requirements.
- Gather all required documents, including registration, licenses, patents, business plan, financial statements, tax returns, and so on.
- Conduct and include in-depth market research clearly identifying your market, potential sales, profitability, cost-benefit analysis, and so on.
- Pay extra attention to detail, such as the required format and deadlines, when filling out your application.
- Track your application to stay up to date with the latest developments.
- DO NOT GIVE UP! – Persistence is essential if you want to secure grants for black owned businesses.
Related: What are the key strategies for entrepreneurs seeking grants for small businesses?
Gain the skills needed to get grants for black owned businesses!
An entrepreneurship degree is more than just a qualification. It is more of a road map that can help you secure grants for black owned businesses. A degree in entrepreneurship not only educates you but also gives you the confidence and skills needed to apply for grants. Moreover, with the knowledge gained, fulfilling grant applications becomes a breeze, and enables you to submit all required documentation in the first go.
Related: How can an entrepreneurship degree help you get chamber of commerce grants for your startups?
So, if you are on the fence about whether an entrepreneurship program is ideal for you or not, just leap. As a black entrepreneur, securing grants for black owned businesses can become so much easier with a formal education.