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Inequities in Access to Capital Is a Problem for Entrepreneurs

Antionette Ball

CEO & Founder, Women’s Entrepreneurial Opportunity Project, Inc. (WEOP)

Black women represent one of the fastest growing segments of women starting businesses, yet access to capital is still a major obstacle.

According to the Center for American Progress, Black women are driving America’s entrepreneurship boom, starting six times more businesses than average and creating 1.4 million jobs. Businesses owned by Latina women are also making a significant contribution, comprising 944,000 firms with $65.5 billion in annual receipts.  

Although Black women are starting businesses at a rapid rate, they still have a higher failure rate, remain smaller, earn less revenue than their counterparts, and are usually in retail or service industries.

A history of social and racial inequalities means that businesses run by women of color often have less access to capital. This is due to wealth disparities and lending discrimination; less social capital, which is an important ingredient to acquire business deals; and fewer mentorship and training opportunities.

Access to capital is still a major obstacle that prevents the ability of women-owned businesses to leverage opportunities, or in some cases from even getting off the ground. The Small Business Administration (SBA) Office of Advocacy confirmed that women and minority business owners will usually pay higher interest rates and are denied loans from traditional banks.

The end result is a snowballing effect of inequality that plays out even among entrepreneurs. According to a report by the Georgia Budget and Policy Institute, Laying the Foundation: A Wealth-Building Agenda for Georgia Women, on average Black women’s businesses earn just 11 percent and Hispanic women’s businesses earn just 28 percent of the revenue earned by white women-owned businesses.

Despite all of the challenges, minority women are still starting and succeeding in business, which in some cases is necessary for economic survival due to the lack of employment opportunities.

The Covid-19 pandemic has created yet another shock of uncertainty for women and minority-owned businesses. This pandemic has created a critical need to support entrepreneurs with a coordinated system of services that addresses the unique challenges faced by women and underserved entrepreneurs. Women of color benefit from ecosystems that provide access to information, professional networks, and connections to business opportunities. 

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