Not everyone possess the financing connections of a Donald Trump. Because of that, many small businesses must look to banks, loans, or alternative sources for funding opportunities. Unfortunately, when it comes to minority and women owned businesses, finding funding opportunities is near impossible.
The main reason is knowledge and perception. According to the Sun Sentinel minority entrepreneurs view bank financing as an unrealistic option. Last year, a Kauffman study found that “nearly 60 percent of black entrepreneurs and more than 50 percent of Hispanic entrepreneurs avoided bank financing because they didn’t think they would be approved.”
In addition, “while white entrepreneurs rely mostly on banks for financing a business, black entrepreneurs relied the most on credit cards, according to The Ewing Marion Kauffman Foundation , which studies entrepreneurship.” This lack of funding has alot to do with the climate of funding which has seen a drop since the 2008 Recession, and the inability of organizations like the Small Business Administration to properly educate minority businesses of opportunities throughout America.
Another problem is the time it takes to go through the process of gaining bank financing. Many businesses simply do not have the time or funds to put away for a bank application they may not win. As noted before, many small businesses are operating on month to month budgets and need help in putting things like financing applications together. While some organizations are helping in this regard, for the most part they are failing when it comes to minority owned firms.
Something must be done in an effort to create more accessible opportunities for small minority businesses because the simple suggestion of “Hey you guys should look for funding” is not the solution.