Black women entrepreneurs might be all things magic, but they are at the low end of receiving investment capital.
Ark Republic had a chance to chat with CEO and Founder of the Brandprint and Director of Marketing and Production at the Theatre Communications Group, Erica Lauren Ortiz – who says President Joe Biden’s plan to increase small business funding is great, but relationships between Black women business owners, banks and the federal government are sorely needed.
President Biden stated in a tweet, “America has never lived up to its founding promise of equality for all, but we’ve never stopped trying.” To that end, one of the campaign promises proposed in his Lift Every Voice Plan for Black America, is to generate a weekly dashboard to show which businesses are acquiring small business support related to COVID-19. The study will compile data by gender and race.
“Black women are the fastest growing group of entrepreneurs, yet they really have a hard time with funding,” Ortiz told Ark Republic.
CBS News reports many minority-owned firms applied to multiple banks early in the PPP program and were turned down, while others couldn’t get banks to respond to questions about their applications.
“I think that’s unfortunate quite honestly because you’ve seen the magic of Black women especially in the last few years in terms of Black women founders and all of the magical things Black women do but we don’t have the relationship with the banks and with the government,” says Ortiz.
Currently Biden’s plan for Black America includes a reservation of PPP funds for small businesses with 50 employees or less.
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Black women are the most educated group in the US, and black women are the highest percentage of any group enrolled in college, but on average get $32,000 of investment money to white males who get an average of $1.3 million. Photo credit: Neosha Gardner of CreateherstockConversely, friends and family tend to be one of the top forms of funding for women Black owned businesses. “We’re in service business to business so it’s very rare that you see Black product owners for example that can go get a line of credit based on their inventory,” Ortiz told Ark Republic.
That said, financial institutions are often skeptical about lending money to Black women entrepreneurs. “When people are really selling themselves and the magic that is Black women, banks are like show me the proof. What are you selling?” says Ortiz.
It is not lost on President Biden that there is a funding disparity among women entrepreneurs of color. To remedy this, Biden’s agenda for Black America aims to double financial backing for the state small business credit initiative to $3 driving nearly $30 billion of private sector investments to small businesses, highlighting people of color and women owned businesses.
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Alternatively, there is an even more practical solution to this funding crisis according to Ortiz. Increasingly, community organizations are helping to distribute PPP and provide education about funding programs. In this capacity, they will also help foster the relationships needed to fund their businesses.
Indeed, in an interview with Inc. president of the U.S. Black Chambers Ron Busby stated that encouraging relationships with CDFIs and other community focused lenders could help increase access to funding. As per Busby, CDFIs are willing to work with smaller businesses.
U.S. Black Chambers tweeted, “Black-owned businesses were at the back of the line for financial support during this pandemic, now is the time for that to change.”
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