Minority-Owned Businesses Face Challenges in Accessing Capital

Previously the president of Diversity Food Processing LLC, Stephen Singleteary grew the company to employ over 300 people and become one of the largest African-American-owned companies in the country. During this journey, Stephen Singleteary learned first-hand the challenges facing minority-owned businesses, one of which is access to capital. 

Minority-owned businesses face significant challenges accessing capital for their businesses. A study conducted by the Minority Business Development Agency revealed that minority-owned businesses were less likely to access lender financing than non-minority owned businesses. For those that did get loans, bias was evident in the amounts lent. According to the study, minority-owned businesses with less than $500,000 gross receipts received an average of $149,000 in loans, while non-minority owned businesses in the same category received an average of $310,000 in loans. 

In business, lack of capital can be the difference between success and failure. Therefore, much should be done by local, state, and federal agencies to improve access to finance among minority-owned businesses, since these businesses employed over 6.3 million people and generated $1.8 trillion in revenue in 2016. Minority-owned businesses can also do a lot to improve their chances of accessing loans. For example, they can keep good records of their financial performance, hire independent auditors to examine their financial statements, hire solid management teams, and maintain strong competitive advantages.