How Black Entrepreneurs Can Find Funding and Fuel Business Growth

Black-owned businesses have seen strong growth in recent years. Nearly 195,000 employer businesses were owned by Black Americans in 2022, according to the U.S. Census Bureau’s most recent Annual Business Survey, released in 2024[0]

Despite this progress, majority-Black-owned businesses represented just 3% of all U.S. companies in 2022[0]

“The proverbial pie would certainly grow if we continued to invest in these underappreciated companies,” Andre M. Perry, senior fellow at the Brookings Institution and author of “Black Power Scorecard,” told NerdWallet in an email.

Securing funding is a critical part of launching, sustaining and growing any businesses, but Black entrepreneurs often face unique challenges in accessing business credit. Fortunately, there are things they can do to try to unlock the financing they need.

Banks typically offer the best interest rates and terms on business loans. But they’re not always easy to access. Many require good credit, strong business revenue and at least two years in business. On top of that, lots of big banks have moved out of majority-Black communities[0]

Smaller, community-focused lenders are filling the void.

Local banks and credit unions offer personalized support and often have more flexible qualification requirements. This is especially true if it’s a community development financial institution (CDFI). CDFIs are mission-driven organizations that support underserved communities, including minority business owners.

Community lenders and CDFIs are more likely to recognize the value of local businesses, Perry says. They can also help you prepare your application.

If you need $50,000 or less, microloans can be a good fit. These are specifically designed to support minority, women, veteran, and low-income business owners.

Start with SBA microloans, which are available through CDFIs and other nonprofit lenders. They typically come with competitive interest rates and flexible eligibility criteria.

Online lenders have less strict requirements and faster approval times compared with banks. However, interest rates and fees can be high.

To avoid paying more than you have to, compare offers from multiple lenders. Working with a loan broker or using a business lending marketplace can simplify the process by showing you several financing options side by side.

Grants can be a powerful source of free money, especially for new businesses. But they’re highly competitive and often require you to fill out lengthy applications.

Instead of borrowing from a single lender, crowdfunding lets you gather small contributions from many different people.

This not only helps you raise money, but also lets you build an audience and validate a business idea before you launch it.

Depending on the crowdfunding platform, you might have to offer special perks, rewards, or a small stake in your company. Fund Black Founders is a rewards-based crowdfunding platform designed specifically for Black entrepreneurs.

Build momentum for your campaign by including a compelling story, clear mission and engaging video.

Finding a support system is important for seasoned and budding entrepreneurs alike.

Perry recommends exploring incubators, accelerators and other organizations geared toward supporting and mentoring Black entrepreneurs. These programs can help sharpen your business, boost your confidence and strengthen loan applications.

Networking is also important, Perry adds. Connecting with local Black entrepreneurs can lead to valuable referrals, peer support and new opportunities. Find fellow entrepreneurs in your area through directories like BuyBlack.org or your local Black Chamber of Commerce.

You can also check out SCORE’s “Find a Mentor” tool, join the Black Innovation Alliance or visit your nearest Small Business Development Center or Minority Business Development Agency (MBDA) for more mentorship and networking opportunities.