The Best Business Grants For Minorities
Modern American capitalism is full of contradictions. While cheap consumer goods are more accessible than ever and the price of large high-resolution TVs keeps going down, the things actually required for human beings to live and thrive—housing, health care, education, retirement security, etc.—are out of reach for many Americans. This reality has all the more salience to minority groups whose access to these necessities was precarious at best to begin with.
Startup capital is another resource that has been made scarce to marginalized communities. Nearly 12 years after the financial crisis of 2008, banks still aren’t lending to those who could do the most good with the cash (never mind that all of us, both marginalized and privileged, were made to bail out these same banks in the wake of the financial crisis). For most minority small business owners, the prospect of getting free money to cover business expenses is going to sound rather far-fetched.
That’s where business grants come in. Small business grants are not easy to obtain, but they do exist and can be an invaluable source of funding for those who obtain them. We decided to compile a list of the best grants and grant-related resources for minority-owned businesses.
But first, here’s more information on getting funding for your small business:
- Do I Qualify For A Startup Grant?
- How To Find A Startup Grant
- The Best Business Grants For Women
- The Best Business Grants For Veterans
- The Best Small Business Loans For Minorities With Bad Credit
Table of Contents
- Minority Business Development Agency
- National Association For The Self-Employed
- FedEx Small Business Grant Contest
- Dare To Dream Grant Program
- USDA Rural Business Development Grant
- Native American Business Development Institute (NABDI) Grant
- Office Of Minority Health Grant Programs
- State Government Grants
- Venture Capital Financing For Minority-Owned Businesses
- Getting Certified As A Minority-Owned Business
- How To Find & Apply For Small Business Grants For Minorities
- Final Thoughts
Minority Business Development Agency
An agency of the U.S. Department of Commerce, the purpose of the Minority Business Development Agency, or MBDA, is to help connect minority business owners to federal contracts and other financial resources. The agency also has historically periodically awarded grants to minority-owned companies for specific purposes. In November 2018, the federal government announced that the MBDA had awarded over $13 million in grants to 35 projects across the country. However, this announcement was followed up by the message that the MBDA’s total budget would be cut by $24 million; the remaining $10 million left of the MBDA’s budget would be transitioned away from serving individual minority business enterprises (MBEs) to “removing obstacles to the growth of the entire minority business community.” This likely means few if any grants will be awarded to individual minority businesses, but hey, you never know.
Fortunately, there remain MBDA centers in many major cities that can assist you in finding funding. From helping you find grants and loans to providing marketing and legal assistance, the MBDA’s physical business centers are set up to provide a range of assistance to minority business owners and entrepreneurs. Here’s a searchable directory of these MBDA business centers.
Grants.gov doesn’t originate grants; rather, it’s a searchable database of every grant program from across all 26 grant-making agencies of the federal government. It’s a valuable resource, though the website is pretty clunky. There is also a Grants.gov app available on the App Store and Google Play.
In order to apply for federal grants, you must do the following:
- Get a DUNS number from Dun & Bradstreet
- Register to do business with the federal government through its System Award Management website
- Create an account at Grants.gov
Note that most federal grant money is earmarked for institutions involved in healthcare, scientific research, education, and social services, with most grant funding going to city governments or nonprofits rather than to individual, for-profit businesses. However, there are some federal grant opportunities geared toward MBEs within those fields and possibly some other fields. As local governments often receive and redistribute federal grant money, you might also be able to find pertinent government grant opportunities through the website of your local city government.
National Association For The Self-Employed
The NASE is a nonprofit trade association that gives grants and provides educational resources for small businesses and entrepreneurs. Their Growth Grants Program lets small business owners apply for grant financing for a particular small business need.
These grants are worth up to $4,000 each, so while you won’t hit the funding motherlode with the NASE, it’s a great resource for minority business owners with a specific, defined funding need. You’ll need to join the NASE to apply for a grant, and you’ll need to explain in detail how you’ll use the funds and how this funding will bolster your business operations.
FedEx Small Business Grant Contest
The FedEx Small Business Grant Contest is a nationwide competition held annually to award grants in the form of cash and prizes (such as credits for FedEx services) to small business owners and entrepreneurs. The amount awarded to contest winners and the number of grant recipients varies year-to-year. The details of the 2020 competition have yet to be unveiled, but these specifics will be unveiled when the competition is announced early in the new year.
For reference, here is a series of features on the winners of the 2019 Grant Contest. The 2019 grand prize winner received $50,000, plus $7,500 in FedEx Office® print and business services; second place took home $30,000, plus $5,000 in FedEx services; and eight recipients won $15,000, plus $1K in FedEx services.
Dare To Dream Grant Program
The Eugene Applebaum Dare to Dream grant is a prominent program based at the University of Michigan offering business development seminars and $500–$5,000 in grants to individual students and/or student teams. Prospective entrepreneurs in the upper midwest, take note!
USDA Rural Business Development Grant
For minorities in rural areas, this grant, issued by the United States Department of Agriculture, is an attractive prospect. In the words of the USDA:
This program is a competitive grant designed to support targeted technical assistance, training and other activities leading to the development or expansion of small and emerging private businesses in rural areas which will employ 50 or fewer new employees and has less than $1 million in gross revenue.
Note that this is not a grant you apply for directly from the federal government; towns, communities, state agencies, and nonprofits can qualify for the grant, and then these entities distribute those funds as they see fit. Contact your local USDA Rural Development office to find out what’s on offer in your state.
Native American Business Development Institute (NABDI) Grant
This grant program is funded by the U.S. Department of Indian Affairs and is intended to support Native American and Alaskan Native business owners. Currently, they don’t have a great deal of information posted on the grants being offered, but you can always contact the Office of Indian Energy and Economic Development to learn how the program stands to benefit your business.
Office Of Minority Health Grant Programs
A division of the Department of Health and Human Services, the Office of Minority Health (OMH) offers grants to businesses whose mission is to eliminate health disparities among racial and ethnic minority populations. Keep an eye on the OMH website to learn about grant opportunities when they are announced.
State Government Grants
As mentioned, federal grant money is usually awarded to local governments and nonprofit entities, which may then redistribute eligible funds to small businesses in their region. Local governments can also use local state and city taxes to fund business grants. So, be sure to search for government grants particular to minority-owned businesses in your city and state.
For example, the state of Maryland has not one, but several different business grants for minority-owned businesses, including the Small, Minority and Women-Owned Business Account – Video Lottery Terminal Fund (VLT), which uses proceeds from video slot machines to assist small, minority, and women-owned businesses located in targeted areas surrounding six Maryland casinos.
Venture Capital Financing For Minority-Owned Businesses
VC funding is not a grant per se, as the venture capitalists who invest capital in your company (this capital is also called “seed money” or “seed funding”) receive ownership in your company in exchange for their investment. However, VC funding can be a viable source of capital for some businesses, especially tech startups. There is also a growing list of VC groups that specifically invest in minority-owned business. And while venture capitalists still give most of their money to white men, there are a lot more VC funding opportunities for minorities than there are grants for minorities.
Here are just a few VC investors that provide seed money to minority-owned businesses:
- New Voices—“New Voices provides capital for start-ups, established businesses and community-based enterprises led by women of color entrepreneurs. “
- Kapor Capital—“Kapor Capital invests in tech-driven early stage companies committed to closing gaps of access, opportunity or outcome for low income communities and/or communities of color in the United States. We are particularly interested in those that address gaps of disproportionate relevance to African-Americans and Latinx communities.”
- Access Latina—“Access Latina is a non-profit accelerator that empowers Latin American women in Puerto Rico, US mainland and Latin America by providing access capital, knowledge acquisition and public policy. The program also provides investment resources to women-owned businesses with high-growth potential via a yearly competition in agriculture, social innovation and STEAM industries. Although Access Latina does not invest directly, it provides capital through grants, loans, crowdfunding round with Kiva Zip, and other accelerators.”
Keep in mind that VCs typically invest in high-growth startups that are already turning a strong profit (e.g., $500K/year). Angel investors—affluent individuals who invest their private money into startups—may invest lesser amounts at an earlier stage of the startup process.
Getting Certified As A Minority-Owned Business
While the federal government only has limited grant opportunities for minority-owned business, it does set aside a certain portion of federal contracts to disadvantaged businesses, including minority-owned businesses. If your business is eligible for federal contracts—for example, you have a construction business or manufacture goods that government agencies purchases—then it’s a good idea to get an 8(a) small disadvantaged business certification, as this status can help you get contracts.
An 8(a) small business is any business whose owner(s) are socially and economically disadvantaged. This includes any minority-owned small business whose owner is also economically disadvantaged; see the specific criteria on the Small Business Administration (SBA) 8(a) Business Development Program page.
You can apply for 8(a) status through the certify.SBA.gov website. If you are a woman, you can also apply for Woman Owned Small Business (WOSB) status on that same website.
Note that there are various other organizations that offer minority-owned business certifications. Other MBE certifications from reputable organizations may still offer some benefits and could help you qualify for business financing in general. However, you will need certification from the SBA or another government agency (such as the EPA or DOT) in order to receive preference for federal contracts.
How To Find & Apply For Small Business Grants For Minorities
Finding the right grant program, applying for it, and actually getting the grant in question can be a daunting prospect. That’s why it may be a good idea to simultaneously look for alternate sources of funding, such as personal loans or lines of credit. We recommend the following reputable funders to minorities who are looking for business financing:
Personal Lenders For Business
|Lender||Borrowing Amount||Term||Min. Credit Score||Next Steps|
|$1K - $50K||3 or 5 years||8.16% – 27.99%||620||Apply Now|
|$2K - $35K||3 or 5 years||6.95% - 35.99% APR||640||Apply Now|
|$1K - $40K||3 or 5 years||5.32% - 30.99%||640||Check Rate|
Lenders That Specialize In Lines Of Credit
|Lender||Borrowing Amount||Draw Term||Draw Fee||APR||Next Steps|
|$6K - $100K||6 months||None||Starts at 13.99%||Apply Now|
|$2K - $5M||Varies||Varies||Varies||Apply Now|
|$5K - $5M||6 months||1.50% per draw||21% - 65%||Apply Now|
|$1K - $100K||12 weeks||None||12% - 54%||Apply Now|
Remember that unlike with loans and the like, the money that comes with grant programs has strings attached. It must be used in precisely the way specified by the grant giver. That’s why it pays to know the details of the grant you’re applying for, as there’s no reason to apply for grants that would disburse money for a funding need you don’t even have.
I should reiterate that in order to qualify for any federal grants, you need to register at sam.gov. Unfortunately, the registration process isn’t as straightforward as it should be, as the government agencies in question seem to be in the middle of shifting their small business assistance materials between agencies and websites. As things stand, sam.gov lays out the steps required to register your small business here.
One organization that can get you pointed in the right direction in your quest for business funding is SCORE. It’s a partner of the SBA and provides mentoring services to small business owners and entrepreneurs from over 300 chapters across the country. They also provide online webinars and business courses.
What To Do Before Applying For A Grant
- Define your exact funding need: be ready to define the precise objectives a grant would help you meet
- Create a detailed business plan
- Gather and assemble all the business records you can from at least the last three years
- Have your plan and records reviewed by experts, whether they be SCORE mentors or others with experience in guiding business owners through the grant-hunting process
- For a large grant, consider hiring a professional grant writer if you can
Entrepreneurial talent can be found in every community across this land. Sadly, social and structural barriers to equality persist. Small business grants are but one means by which minority small business owners can get some ever-elusive funding. For other such means, check out our article on the various types of alternative financing available for small businesses, or look into one or more of the alternative funders below:
|Lender||Borrowing Amount||Term||Req. Time in Business||Min. Credit Score||Next Steps|
|$5K - $500K||3 - 36 months||x1.003 - x1.04/mo||12 months||600||Apply Now|
|$5K - $500K||13 - 52 weeks||x1.029 - x1.1872||9 months||550||Apply Now|
|$5K – $300K||6, 9, 12, 15, or 18 months||x1.15 – x1.31||1 year||600||Apply Now|
|$2K - $5M||Varies||As low as 2%||6 months||550||Apply Now|