Grants for Minority Business Owners

Minority-owned businesses often cite difficulty in finding resources for expansion or start-up funding. Both federal and state governments are trying to ease the situation through a combination of tax incentives, low-cost loan programs, and minority business assistance. However, the one thing they don't do is provide grants for minority business owners.

Free government grants for business owners, minority-owned or otherwise, is an unfortunate myth that persists despite the statements of various government entities to the contrary. The U.S. Small Business Administration (SBA) for example, clearly states on its website that it does not provide business grants. While individual states may offer grant programs for minority businesses, the fact remains that the federal government does not.

Locating State Business Grants

If they want to investigate state opportunities, minority business owners can contact their state's business departments to inquire about grants. Most do have some limited grant programs; some are indeed aimed at minorities but most are not. If your state does offer such small business grants, they will be able to provide you with the requirements and application details.

Don't be fooled by the TV commercials and websites that promise to open the door to free government money for your business. The vast majority of information they provide is in regards to state programs that is already freely available on the internet. The reality is you can only access opportunities in the state where you live and each state has, on average, less than half a dozen grant programs. The money you spend to get this information is money you could have spent investing in your business.

With the possibility of government’s grants as slim as it is, the best bet for minority business owners is to look to private foundations and corporations who are willing to help. The Foundation Center is one of many organizations that can provide you with a ton of information including where to find private grants, how to apply for them, how to write a grant proposal, and how to write a business plan. Their information is fee-based as well, but it's legit. It is a national non-profit service that's been around since 1956 helping match grant makers with grant seekers.

Small Business Loans for Funding

There are other opportunities for minority business owners in the form of targeted loan programs. The loan programs are established by government entities and private institutions to provide low-cost loans for business expansion or start-up. Examples of these programs include ACCION USA, the USDA Socially Disadvantaged Farmers and Ranchers, the Mississippi Minority Business Enterprise Loan Program, the Pennsylvania Minority Business Development Authority, and the Tennessee Small and Minority-Owned Business Assistance Program. These loan programs aren't “free” money, but they are a good alternative for funding your business.

Private Equity Investment

One last option is to consider private equity investment. There are plenty of investors with deep pockets just waiting for entrepreneurs with a good idea and a solid business plan. You'll have to do some work to convince them, but once they're on board they'll help you every step of the way.

When it comes to private equity investment the SBA manages a matching fund program called the Small Business Investment Company (SBIC) program. The program works with private equity investors to match their seed funding dollar for dollar. So for every dollar the SBIC company invests in you, the SBA kicks in another dollar.

The great thing is that's it's not a grant or a loan. It is an investment which makes the SBIC and SBA primary investors in your company. They want you to succeed so they make money. That means they are more likely to help you do whatever it takes to become profitable. Once you reach that stage you can buy out their investment and become totally independent.

Funding options for minority-owned business are out there if you're willing to look for them. Unfortunately, free grants are largely a myth. You'll have to work a little bit harder for funding because nothing in this world is free.