Essential Insights
- Capital access remains one of the chief financial hurdles for businesses owned by minorities.
- Grants serve as an excellent funding route for minority entrepreneurs since they don’t require repayment.
- Other funding options to consider include loans, business credit cards, and crowdfunding campaigns.
Minority-owned enterprises constitute a significant portion of the entrepreneurial landscape, yet often grapple with limited access to business funding. Unlike other forms of financing, grants offer a non-repayable resource that can fuel growth.
Financial Obstacles for Minority-Owned Businesses
The Federal Reserve Banks’ 2023 report sheds light on the financial strains minority small business owners endure:
- Under 10% of minority-owned businesses demonstrated outstanding financial health last year.
- Rising costs related to goods, services, and wages topped the list of monetary challenges these businesses face.
- Across the preceding five years, personal savings have been more commonly tapped by minority entrepreneurs than alternative funding sources.
Federal Grants Tailored for Minority Entrepreneurs
1. Grants.gov
This federally managed online hub features over a thousand funding possibilities, encompassing support for small and minority-owned businesses. Agencies such as the Department of Commerce and the U.S. Small Business Administration regularly post opportunities here. After registering, entrepreneurs can browse and pinpoint grants best suited to their ventures.
How to Apply
To kickstart your application on Grants.gov, registration with the System for Award Management (SAM.gov) is mandatory to obtain a Unique Entity Identifier (UEI) – a 12-character alpha-numeric code essential for federal transactions. Following acquisition of a UEI, applicants return to Grants.gov to submit the necessary paperwork.
2. USDA Rural Business Development Grant Program
Though not exclusively for minority-owned outfits, this USDA program offers technical assistance, training, and development projects targeting rural communities where minority populations often reside.
The USDA differentiates between opportunity and enterprise grants:
- Opportunity grants support community enhancement, feasibility studies, strategic planning, and leadership skills development.
- Enterprise grants further embrace training, technical aid, distance learning, and land procurement.
Application Criteria
Eligible applicants must have no more than 50 employees, annual revenues under $1 million, and be situated within USDA-designated rural locales. Applications are processed through local USDA Rural Development offices.
3. SBIR/STTR Programs – Federal R&D Grants
Supported by eleven federal agencies including the Department of Health and Human Services (HHS), these grants fund early-stage, high-risk research and development projects. The National Institute on Minority Health and Health Disparities (NIMHD) focuses on research addressing health inequalities in underserved populations.
| Phase I | Feasibility and proof of concept | Up to $314,363 |
| Phase II | Further development and testing | Typically $750,000 over two years |
| Phase III | No direct funding; focus on commercialization through other sources | N/A |
Applying for SBIR/STTR
Applicants, generally U.S.-based for-profit enterprises with 500 or fewer employees, must verify eligibility, then navigate registrations on systems like SAM and Electronic Research Administration (eRA) Commons before submitting proposals.
Additional Federal Tools
Pure grant dollars alone rarely offset the systemic disparities minority businesses encounter. Additional federal entities such as the National Minority Supplier Development Council (NMSDC) act as catalysts, unlocking contracts and fresh opportunities for entrepreneurs of color.
Private Grants and Initiatives
Beyond government programs, several private organizations extend crucial support to minority founders:
4. Wish Local Empowerment Grant
Wish extends grants ranging from $500 to $2,000 targeting Black-owned small businesses with fewer than 20 employees, under $1 million in annual revenue, and a physical storefront. Funds may offset rent, inventory purchasing, and other operational costs.
5. HerRise Microgrant
The Yva Jourdan Foundation along with HerSuite Spot supplies monthly $1,000 grants to women of color entrepreneurs, aiding in equipment purchases, marketing efforts, and business expansion.
6. AAPI Women-focused Programs in Hawaii
This initiative nurtures businesses founded by women, particularly historically underserved AAPI and Native Hawaiian wāhine, through mentorship, progress tracking, and a blend of virtual and in-person sessions.
7. BGV Pitch Competition
Exclusively for Black or Brown women entrepreneurs, Black Girl Ventures hosts pitch events on the Raisify platform where founders present their businesses in rapid-fire 3-minute pitches followed by Q&A. Prizes total $30,000 across first, second, and third places.
8. Feed the Soul Restaurant Grant
Offering $10,000 grants plus six months of tailored consulting and training, this program supports food businesses majority-owned by individuals from diverse minority or marginalized backgrounds. Focus areas include menu design, HR, customer service, and merchandising.
9. Freed Fellows Monthly Grants
With $500 grants issued monthly, Freed Fellows empowers minority entrepreneurs, plus provides strategy sessions, access to the Freed Studio for sustainable business growth, and an opportunity to earn an additional $2,500 year-end grant.
10. Rebuild the Block Bridge the Gap Fund
Annual grants assist Black business owners impacted by COVID-19 disruptions and related unrest. Selection occurs every three months, with up to 15 winners per cycle.
11. NASE Growth Grants
Through the National Association for the Self-Employed, grants up to $4,000 help cover marketing, hiring, or facility expansion costs. Applicants must be members in good standing for at least three months.
12. Merchant Maverick Opportunity Grants
These grants target small businesses often overlooked by conventional lenders. Eligibility, which shifts yearly, has favored Black female entrepreneurs, AAPI restaurateurs, and various startups. Funds can cover rent, payroll, loan repayment, equipment, marketing, and travel.
13. National Black MBA Association Scale-Up Pitch Challenge
Started in 2017, this competition promotes scalable businesses, connecting founders to investors. Top prizes include $50,000 for first place, $10,000 for second, $7,500 for third, and a $1,000 People’s Choice award.
14. Regional Minority Entrepreneur Grants
Focused on cities like Baltimore, Detroit metro, Memphis, Philadelphia, and Portland, these grants provide $5,000 funding plus media production support for businesses operating at least three years with up to 100 employees.
15. Sia Scotch Whisky Inspired Grants
In collaboration with Hello Alice, this award supports minority food and beverage business owners aged 25 and older, with revenues under $5 million in select states, excluding alcohol manufacturers and retailers.
16. Democratizing the Friends & Family Round
This grant program supports female founders of color operating New York City businesses. Applications require a Hello Alice profile and are reviewed periodically.
17. Sage Invest in Progress Grant
A partnership between an online community for women of color and the Sage Foundation offers periodic grants. Prospective applicants are encouraged to monitor Sage’s website for openings.
18. First Nations Development Institute Grants
Since 1993, this institute has supported Indigenous projects across 45 states, D.C., and American Samoa, including initiatives like Native Youth Business Plan competitions.
19. Beyond Open Small Business Grants
Targeted at businesses within specific Charlotte zones, these grants (ranging from $30,000 to $5 million in revenue, max 200 employees) cover equipment, tech, real estate, or inventory—but exclude operational expenses like payroll and utilities.
20. Galaxy Grant
Offered by Hidden Star, this grant extends up to $2,950 to women, people of color, and entrepreneurs from economically challenged backgrounds. The 2025 cycle closes September 30.
Supplemental Private Sector Avenues
Private sector entities offer additional support for minority-owned businesses, including nonprofit grants for family farms, rural organizations, and racial equity efforts, often providing a critical lifeline where government funding falls short.
Networking and Commerce Chambers
Various Chambers of Commerce exist to support historically underserved demographics, acting as conduits for resources, advocacy, and contract opportunities.
Exploring Alternatives to Grants
While grants provide valuable financial relief, they may not suit every entrepreneur due to eligibility, purpose, and competition constraints. Other avenues include:
- Business loans: Many lenders design programs with flexible repayment for minority-owned businesses.
- Business credit lines: These offer revolving credit to handle expenses as they arise.
- Friends and family: Informal funding, best formalized in writing, to maintain relationships.
- Crowdfunding: Platforms where community support can generate capital without debt.
FAQs
What defines a small business?
Small businesses are privately operated ventures with fewer employees and lower annual revenues compared to large corporations. The SBA provides precise size standards which influence loan and grant eligibility.
Who qualifies as a minority according to SBA?
The SBA recognizes Asians, African Americans, Native Americans, Hasidic Jews, Hispanics, and Pacific Islanders as minority groups.
How many minority-owned businesses exist in the U.S.?
The 2020 U.S. Census revealed that minorities own over a third of employer businesses nationwide.