Up The Mountain

Securing capital remains a steep challenge for female entrepreneurs

As we reported last year (“And Still They Rise,” Facts & Figures, October 1997), the million-plus businesses owned by women of color are on the rise, employing nearly 1.7 million people and generating more than $180 billion in revenues.

However, access to capital remains a key issue for women business owners particularly black women. In a recent study by the National Foundation for Women Business Owners, 73% of black women entrepreneurs rated access to capital as very or extremely important (vs. 61% or less for other groups of women). Black women are less likely to borrow money to launch their business — only 29% of blacks borrowed capital compared with 37% of Asians, 45% of Native Americans, 49% of Caucasians and 51% of Hispanics. And they’re more likely than other groups to be turned down for commercial bank loans when starting their business — 27% of blacks reported being turned down vs. 24% of Native Americans, 20% of Asians, 19% of Caucasians and 18% of Hispanics. Consequently, many black women seek alternative sources of capital, turning to their spouses or tapping into personal savings.

Nonetheless, women entrepreneurs are undaunted by these challenges. The vast majority say they would gladly walk the entrepreneurial path again in order to be masters of their own destinies.
The majority of black women used less than $10,000 to start their business

The majority of black women used less than $10,000 to start their business

<$10,000

$10,000-$49,999

$50,000+

Asian

22%

32%

31%

Black

53

31

8

Caucasian

33

36

19

Hispanic

41

28

17

NA/AN*

44

29

21

* Native American/Alaska Native
Note: Numbers do not add up to 100% due to nonresponses.
Source: Women Business Owners of Color: Challenges and Accomplishments, National Foundation for Women Business Owners, Silver Spring, Maryland, 1998

Women of color are less likely to have bank credit

Asian 45%
Black 38
Caucasian 60
Hispanic 50
NA/AN* 42
* Native American/Alaska Native
Source: Women Business Owners of Color: Challenges and Accomplishments, National Foundation for Women Business Owners, Silver Spring, Maryland, 1998
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