What is a minority small business grant?
Minority small business grants are financial assistance for businesses owned by members of a protected group based on factors, such as race and gender. Business owners who receive these grants don’t have to repay the money, but the funds might have conditions attached.
In some cases, the funds must be used for a specific purpose, while in others, there are strict reporting standards that the company must follow to continue receiving funds. Minority business grants are designed to uplift and empower business owners who belong to a marginalized group and may have been previously underrepresented in their industry.
Benefits of minority small business grants
Minority grants for small business owners benefit them and their community. Businesses rely on capital to establish their products and branding, but social inequity can add additional financial challenges for minority entrepreneurs.
According to the Small Business Association, white small business owners are approved for more loans at lower interest rates than non-white business owners. Geographic inequity can also make it harder for minorities to find business resources in their community network. Small business grants help fill this gap by providing a clear channel for BIPOC (Black, Indigenous and people of color) business owners to fund their companies.
Empowering women and minorities to start their own businesses through grant money helps break a cycle of inequity and boost the local economy, especially in disadvantaged areas. Minority grants help a diverse range of professionals participate in the economy, bring new innovations to established industries and serve new markets using personal insight.
Who qualifies for a minority small business grant?
Minority small business grants can be available to a range of candidates or for a specific intersection of identities. For example, one grant may offer small business funds for any person of color, while another provides grants to Black women in the tech industry. Grants for minority-owned business owners can be classified as:
- Ethnicity
- Religion
- Race
- Socioeconomic status
- Citizenship status
- Sexuality
- Disability
- Profession
Available minority business grants
Organizations across the country give out millions of dollars in minority small business grants each year. Here are some of the places minority entrepreneurs can find small business grants to start or grow their business:
Grants.gov
Grants.gov is a website database of thousands of federal, state and local small business grants that you can sort by eligibility requirements to find grants that apply to your business. The small business grants on Grants.gov usually fit into a niche, such as research or community organizing. In addition to the application portal, Grants.gov has resources to help you gather application materials and find grants that you have a good chance of receiving.
First Nations Development Institute
The First Nations Development Institute has connected indigenous entrepreneurs with over $36.7 million in grants. It offers mentorship, technical resources and significant financial support to business owners in different tribes to support community development and preservation.
National Black MBA Association
The Scale-Up Pitch Challenge sponsored by the National Black MBA Association gives out grants of up to $50,000 to Black entrepreneurs running a startup business. Applicants must be NBMBAA members and prepare a three-minute pitch. Winning pitches present at the organization’s national conference, where funds are distributed.
Minority Business Development Agency
The Minority Business Development Agency is a chapter of the U.S. Department of Commerce that offers grants and loans for minority groups. In addition to hosting grant competitions, the MBDA has physical business centers throughout the United States where business owners can take advantage of financial counseling and other guidance.
Amber Grant Foundation
The Amber Grant is a monthly grant for women-owned businesses. The foundation gives out $4,000 each month to grant recipients, as well as an annual $25,000 award. You can apply for an Amber Grant using a simple online form where you explain your business or idea and describe how you would use the grant to grow your company.
In addition to this and other minority grants for women, an eligible women-owned small business can get help with competing for federal contracts. This opportunity can open businesses up for further funding and contracts.
National Association for the Self-Employed (NASE)
Organization members in good standing with a tenure of 90 days or longer may be eligible for NASE grants of up to $4,000. Businesses must demonstrate their financial need and show details of how the grant will be used. Applications are accepted throughout the year.
SoGal Foundation Black Founder Startup Grant
The SoGal Foundation provides business grants for Black business owners across vastly underserved cross-sections within the Black business community. They specifically target multiracial, women and nonbinary Black entrepreneurs who have scalable startups. Grants are $5,000 and $10,000.
How to apply for a minority small business grant
Follow these steps to find and apply for a minority small business grant:
1. Seek certification
Build a strong professional network that will connect you with minority small business loans by getting certified as a Minority Business Enterprise (MBE) by the National Minority Supplier Development Council. You don’t have to be a certified minority-owned business to qualify for all minority small business grants, but it can be a useful attribute to have.
2. Create a plan for funds
Your business plan is usually a significant part of a small business grant application. Think about how much money you need to grow your business, and create a clear outline for how you would spend those funds. Grant organizations look for applicants who have a strong business plan that they can reasonably execute.
3. Search within your niche
Look for niche grants that have less competition to give your business increased visibility in the eyes of the organization giving out the grant. Searching for keywords related to your business can help you find smaller grants that get less publicity and recognition.
4. Prepare business documents
Grant applications require certain paperwork to process your application and confirm that you have legitimate business within their qualifications. Gather proof of business address and ownership to submit alongside your business plan.
6 tips for writing your grant proposal
Some applications are very relaxed but professional, while others are more rigorous in their requirements. In all cases, you should:
- Read the instructions carefully. There’s nothing more disheartening than realizing you ruined your chance because you missed a deadline or forgot a simple piece of documentation.
- Write an engaging executive summary. These paragraphs are the introduction to your business. This main overview needs to be a short and crisp one-page section at most.
- Your problem/needs statement. This tells administrators the scope of your need and what sets your business apart from your competition. Use supporting data and other types of research to make your case.
- Your project description. This is the meat of your proposal. Here, you lay out the timeline, budget and how your business is in a good position to tackle the problem or need. This is where you’re making the case of the benefits your business can offer to the community and how you plan to evaluate project success.
- Detail your budget. The project description touches on the budget, but this is where you go into details with your financial documentation. Make sure your budget is realistic and your calculations are accurate.
- Include a nice cover letter. After you’ve completed all the other parts, write your cover letter. This needs a more personal touch with facts about your approach and a compelling take on why you need this grant.
Once you’ve completed your proposal, review your document and have a proofreader look through it for any errors that can hurt your chances.
FAQs about grants for minority-owned businesses
The answers to these frequently asked questions about grants for minority-owned businesses will help you understand more about these grants.
How do I get a minority business grant?
To strengthen your application for a minority business grant, go through several drafts of your business plan and application materials to make sure they’re as strong as possible. Research the organization providing the grant, and tailor your application materials to their values to show how your business will use the grant money to support their overall mission in some way.
What qualifies as a minority-owned business?
Businesses certified as minority-owned businesses must be at least 51% owned and operated by a racial or ethnic minority in the United States.
What is the difference between a grant and a loan?
Grant recipients don’t have to pay grant funds back, while people who take out a loan expect to pay it back, often with interest.
