How diverse businesses can find equitable access to funding

(BPT) - In the U.S., diverse entrepreneurs launch new businesses at a faster pace than any other group, serving as an important source of jobs and opportunity in their communities. Every year, minority-owned employer firms generate $1.48 trillion for the U.S. economy. They're also responsible for 9.43 million jobs, according to the Minority Business Development Agency.

Despite the positive contributions they provide, diverse-owned business ventures often struggle to survive and grow in part because they can't easily access the necessary bank loans and other funding.

When seeking credit, non-diverse businesses receive all the money they request about 35% of the time. That success rate is roughly double what Asian small businesses (15%), Black-owned businesses (16%) and Hispanic-owned companies (19%) experience, according to the Federal Reserve's Small Business Credit Survey.

It's a threat to the larger economy. If diverse businesses can't access working capital, it could stifle an important source of jobs, innovation and growth and delay wealth creation for diverse businesses.

The roots of the problem

Why is this happening?

First, there is the nation's racial wealth gap. In 2019, white Americans had average per capita wealth of $383,093 compared with $60,126 for Black Americans, the Minneapolis Fed reported. When Black entrepreneurs open businesses of their own, they have fewer financial resources to draw on.

Many diverse businesses also find themselves held back by the outdated nature of business lending. Some banks simply won't lend to younger companies unless they can pass strict guidelines, effectively making it impossible for small, newer businesses to qualify.

Unable to access capital through a business loan, diverse entrepreneurs try other, less affordable options like merchant cash advances or small business loans - often at predatory rates.

Other options for funding diverse businesses

Fortunately, there are other, more inclusive options. For example, C2FO - the world's largest online platform for working capital - allows suppliers to receive early payment on approved invoices in exchange for giving a small discount to their customer. Some large enterprises have created special programs on the C2FO platform where they agree to pay diverse suppliers at a preferential rate.

Last year, C2FO's platform delivered over $4.7 billion in payments to diverse-owned companies - without mounds of paperwork or any qualification requirements outside of being in the C2FO network.

C2FO and the Schultz Family Foundation, which was created by Sheri Schultz and Starbucks cofounder and current CEO Howard Schultz, are partnering to unlock $100 million in loans for small and diverse businesses. The joint initiative aims to accelerate the growth of emerging, high-potential businesses to encourage job creation, support the building of wealth in historically marginalized communities and fuel a more inclusive economy.

Unlike traditional bank loans that focus on limiting risk, loans given to qualified businesses under this partnership are based on sales growth and the company's trajectory, not traditional hard requirements like substantial profit and multiple years in business. Interested businesses can learn more at This new approach to lending will open doors to many businesses that have been left behind by the established banking system.

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