Unlocking Capital for Minority Entrepreneurs
How might we all help unlock more capital for minority entrepreneurs? An inclusive economy is one that provides equal access to capital for all entrepreneurs, yet we see everyday how access in some ways has grown more exclusive. The playing field is not even when it comes to entrepreneur’s obtaining a loan for a small business.
To better understand the problem, it’s important to realize that there are not many options for entrepreneurs to find start-up or small growth capital when it comes to a new business venture. Though people debate the exact methodology used to calculate business failure, an optimist would say there’s roughly a 50% chance of surviving the first year. That’s not a very safe bet if your job as a lender is to minimize risk and focus on financial return. As a result, many entrepreneurs have to seriously consider abandoning their efforts, and all the value to the community that comes along with small business growth.
If your household is not white, statistics reveal that lack of access to capital is an even bigger problem. According to CFED, “Most entrepreneurs, regardless of race, rely on personal savings and net worth to launch their enterprises. However, in the 2016 Assets & Opportunity Scorecard, the median net worth of white households in the US ($110,637) is more than 15 times greater than that of African American households ($7,113)—leaving Black entrepreneurs at a significant disadvantage.”
Kiva is a simple solution for innovative access to capital in any community. Currently, 30% of the loans funded on Kiva U.S. goes towards African-American business owners. In this short video, David Taliaferro, Director of Microfinance at Access Ventures, sits down with Jonny Price, Senior Director of Kiva U.S., to talk about financial inclusion, the democratization of lending, and how aggregating small dollar amounts can free a lender to offset risk with social impact.
What are some of the solutions and programs that your community uses to create more equitable access to capital? We would love to learn from your experience so send us a message and say hello!
If you are interested in making a loan to a local entrepreneur, you can find a small business in your area on Kiva’s website. If you are an entrepreneur interested in applying for a Kiva loan, then consider applying and learning more about these equitable sources of capital on their website.
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Written by David Taliaferro @dtaliaferro