There’s something that we need to be transparent about: trying to obtain a business loan as a Black woman is a feat.
A 2015 study conducted by Wells Fargo revealed “twenty-two percent of African American business owners say they felt that discrimination from a financial institution based on their race, ethnicity, gender or sexual orientation had impacted their chances to obtain credit for their business.” Furthermore, a lack of generational wealth and high interest rates are daunting, too.
Additionally, women’s business loan applications are accepted 33% less frequently than men, a 2016 study showed. So, it’s a gendered and racialized problem.
Racist factors tie into a bank’s decision to approve a small business loan—one deals with the location of your business, according to Forbes. If your business is located in a low-income area that Black people and people of color predominantly inhabit, then there’s a higher chance that your business loan application will be denied.
Additionally, the staff of the bank, or the venture capital film, that you’re going through likely has a diversity issue. Nearly 90% of the people working at venture capital firms are white men, meaning that they’re content with exclusively investing in people who look like them.
How To Overcome The Obstacles
A tool that will allow you to better navigate the world of business loans is the Small Business Administration (SBA). SBA supports Black people and people of color who are applying for business loans. Fundera reports that the SBA is willing try help fund your business through other means, including “SBA microloans, private microlenders, or non-profit companies specifically offering funding for minority-run businesses.” The SBA also allows you to pay back loans over the course of a decade.
Working towards good credit can also help you snag the business loan that you need. Impressive credit never hurts. It shows loaners that you have a great history of paying credit card bills on time.