Bridge To Success
Written by: Cristina Deptula
Person crossing bridge to success
New Partnership Helps Black Entrepreneurs and Marginalized Diverse Creatives Seize The American Dream
Entrepreneurship represents a pathway out of poverty for many people, particularly those who lack connections or the right background for traditional employment.
This pathway is particularly important for Black people in the U.S., 19.5 percent of whom were living below the poverty line in 2021, more than twice the number of other racial groups. Poverty is defined as single people earning less than $12,880 per year and families of four earning less than $26,500. The U.S. had the third highest poverty rate of all OECD (The Organization for Economic Co-operation and Development) countries in 2019, and women, children, and racial minorities were the most affected. California, the 5th largest economy in the world, had the highest number of people living below the poverty line in 2020.
Main Street’s minority owners need loans to grow, but access to capital remains inequitable. Unfortunately, underserved communities, especially Black people in the U.S., struggle to access the resources that make entrepreneurship possible. That is not for lack of effort or creativity but a result of systemic injustice.
Diverse entrepreneurs seated in row
According to the Stanford Institute for Economic Policy Research, only 1% of Black business owners could obtain loans in their founding year. Black-owned businesses get only 66% of the funding that they request from banks, compared to 80% that White-owned businesses get for the same requests. Additionally, the average loan size for small White-owned firms was over $30,000 higher than for small BIPOC-owned firms. Black Americans are turned down for loans at a rate more than double that of their White counterparts. This is even worse in the venture capital industry, particularly if you are a Black woman. Since 2009, Black women have received just 0.0006% of the total $424.7B in venture capital funds invested in tech companies. Overall, Black women receive 0.34% of all VC funding each year.
The fact is that Black-owned small businesses are statistically less likely to receive financing. “Lenders and VC firms do not visit or host events in marginalized communities,” points out Chris Horton, founder and executive director of the National Black Entrepreneurs Project.
Not only do many Black entrepreneurs lack helpful relationships within the business community that could provide tools, resources, and expertise, the United States’ history of discrimination has left many Black people with a mistrust of institutions outside their communities.
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