Minorities In Business
Small business owners seeking assistance can find the maze of government, public and corporate resources too complex to tackle alone. When an entrepreneur belongs to a minority group, the obstacles may prove overwhelming.
By government definition, a minority-owned firm is one that is 51% owned by a U.S. citizen who is Black, Asian, Hispanic or Native American. The company can be any size, as long it's for-profit and physically located in the United States or its territories.
According to one congressional study, minority-owned businesses typically have a more difficult time accessing both funding sources and the federal marketplace. They also see fewer contracting opportunities and obtain smaller cuts of venture capital. Given this, many government and private sector agencies have stepped up efforts to help these companies grow.
The Minority Business Development Agency (www.mbda.gov) is the only federal agency solely dedicated to the creation, growth and expansion of minority-owned businesses in the United States. As part of the Department of Commerce, the MBDA has established a network of minority business centers and strategic partners who work with entrepreneurs to develop their firms to their full potential.
In addition to a wealth of business planning, start-up and expansion information, the MBDA also offers guidance on loans, grants, certifications and related topics.
The sections that follow describe other organizations and agencies that deal primarily with procurement and access to capital.
Hundreds of federal buying prospects are scattered all over the country. Procurement is the process, beginning to end, of landing one of these deals. While guidelines for government contracts vary from agency to agency, expect to do the following tasks no matter your product or service:
- Learn about the bidding processes for the contract award you are trying to win.
- Understand what the agency requesting bids expects from its vendors.
- Prepare a strong profile of your business for the Central Contract Registry.
- Contact the hiring agency's small business or procurement specialist.
For detailed help with the process in its entirety, these organizations are good starting points:
National Minority Supplier Development Council
The National Minority Supplier Development Council matches minority-owned businesses with large corporations looking to use their services. Currently, their network enrolls 3,500 corporate members, including most of the nation's largest publicly-, privately- and foreign-owned companies, universities, hospitals and other institutions. The NMSDC has connected more than 15,000 minority-owned businesses with member corporations seeking to buy goods and services they offer. Activities include regional trade fairs, business opportunity fairs and other business development events held nationwide throughout the year. The NMSDC also sponsors ad Advanced Management Education Program (AMEP).
Small Business Administration - Procurement
The Office of Government Contracting works to give small, disadvantaged and woman-owned businesses access to federal government contract awards, as well as to large prime subcontract awards. The site includes a complete online list of government procurement offices, instructions for Central Contractor Registration and information on disaster contracting. The rest of the comprehensive SBA site (www.sba.gov) also provides excellent guidance on scores of business topics, including business profiles, loans, business plans, insurance, corporate structure and much more,
This site not only offers links to government business opportunities, it also provides information on how to become a federal contractor and on the rules and regulations for federal contractors. In addition to these business opportunities, Business.gov lists individual state procurement agencies, instructions on how to register as a contractor and the correct way to bid on opportunities. The section on Government Contract Training for Small Businesses is particularly helpful.
The following Web sites provide additional information central to the procurement process - and some even offer contract opportunities within their organizations.
Central Contractor Registration
As mentioned earlier, a business must be registered in the CCR to do business with the U.S. federal government. On this site, business owners will find online forms, registration instructions, news for potential and registered contractors, and links to other resources. What's more, an entire section targets small businesses.
National Business Information Clearinghouse (BIC)
A free Web portal, BIC provides a number of resources for small businesses, one of which is on how to obtain certification as a minority business. Getting certified can help land contracts with local, state, and federal government agencies, as well as from large corporations
The U.S. Small Business Administration's SUB-Net lists government-wide subcontracting opportunities for construction projects.
NASA Acquisition Service
Available business opportunities for NASA's departments, offices and centers are listed. There also are links to NASA's procurement policies and tips on doing business with different centers.
U.S. EPA Regional Procurement
The Environmental Protection Agency has various needs for sources and solicitations. Sample solicitations include IT support services, furniture procurement and emergency and rapid response services.
Department of the Interior National Business
This site lists procurement opportunities for the Department of the Interior and participating agencies - Bureau of Indian Affairs, Bureau of Reclamation, National Park Service, Office of Aircraft Services, Office of Special Trustee for American Indians, U.S. Fish and Wildlife Service, U.S. Geological Survey and U.S. Maritime Administration.
Administration for Children and Families
This page lists mandatory and discretionary funding opportunities, as well as available grants.
USDA Office of Small and Disadvantaged Business
Its stated mission is "to provide maximum opportunities for small businesses to participate in USDA contracting activities." The site lists opportunities, events and guidelines.
Army and Air Force Exchange Service (AAFES)
The AAFES works with a large number of minority- and women-owned small businesses. They look for quality products, competitive prices, on-time delivery and customer demand when choosing suppliers.
Federal Business Opportunities
Government agencies will post their procurement notices. Companies can use FedBizOpps.gov to search for federal contracts by solicitation numbers, procurement classification codes, and selected government agencies.
ARNet Library - Procurement Regulations
The Acquisition Reform Network Web site contains a complete list of procurement regulations, as well as links to procurement forecasts at federal agencies.
Access To Capital
As most experienced entrepreneurs know, steady cash flow serves as a business's lifeblood. Without available money, the operation ceases to survive - plain and simple. Helping to assure longevity of minority-owned operations, various lending organizations, banks and government agencies offer exclusive access to capital for this market group.
Regardless of the type of financing you pursue, keep in mind that most lenders, including those that work with the Small Business Administration, expect applicants to come prepared. Before visiting the bank to request a loan make sure you measure up to the following criteria:
- Good Credit History. Obtain your credit rating well in advance of loan application. Mistakes sometimes take weeks to correct - so make sure figures, dates and other information is accurate and current.
- Ability to Pay Back Borrowed Funds. Banks look at business cash flow and collateral, so start-up owners should put together a loan package centered on a repayment plan.
- Equity. Even start-up business owners usually must invest some personal funds into the company. The amount depends upon the type of loan.
- Collateral. These are those personal and business assets that a business owner can sell off to repay a loan. Most loan programs, including microloans, mandate at least some collateral (e.g. house, car, equipment, etc.).
- Experience. Entrepreneurs with little or no experience in their new businesses should not apply for financing unless they have partners or employees familiar with the product or service. In addition, the owner should take time to work in the discipline first, as well as enroll in related classes.
The list below offers information and links to institutions prepared to assist minority entrepreneurs or other small business owners with the funding process:
The Minority Business Development Agency (MBDA)
A product of the U.S. Department of Commerce, the MBDA is a federal agency that focuses on growing minority-owned firms' size, capacity and scale. Through a solid network of minority business centers and strategic partners across the country, the MBDA provides information on, and resources for, loan application.
The MBDA Web site likewise provides excellent skill-building tools, addressing subjects critical to a business's establishment and operation. The Beginner's Essentials section focuses on the nuts and bolts of getting started, particularly on the steps leading to start-up funding.
Small Business Administration (SBA)
The SBA works with selected banks nationwide to help structure loans, provide equity capital advice and assist with special purpose loans for small business owners. Unfortunately, grant awards are very rare. Actually, neither the SBA nor other federal and state government agencies sponsor grants for starting a company, paying off debt or covering operating expenses. This includes designated gifts to minorities.
The most common SBA financial assistance programs are:
- Basic 7(a) Loan
Non-government lenders - including most banks and some non-bank financial institutions -- fund all 7(a) loans. Available on a guaranty basis and structured according to SBA requirements, this program mandates that applicant firms must: meet SBA size standards, be for-profit, lack business or personal resources to generate funds and be able to demonstrate repayment.
- CDC/504 Loan
In partnership with Certified Development Companies, the 504 Program, a financing tool for community economic development, offers small businesses long-term, fixed-rate financing for major fixed assets, such as buildings and land. A 504 project typically consists of a private-sector loan obtained with a senior lien covering up to 50% of the project cost; a loan secured with a junior lien from the CDC covering up to 40% of the cost; and at minimum , a 10% equity contribution from the applying business.
- Microloan Program
This program, which recently received additional funding through the Recovery Act, partners with commercial lenders to provide loans in amounts too small (up to $35,000) for larger loan programs to consider. Small business owners are the target market, particularly those with minimal capital requirements.
SBA loans come through commercial sources (the SBA does not directly lend money), so entrepreneurs must apply through their local participating banks or lending institution.
Visit www.sba.gov/localresources/district/or/financing/OR_ORPLPCLP.html for a list of SBA lenders.
This private non-profit organization is a part of the U.S.ACCION Network - the largest domestic microlending group. Established in 1991, ACCION USA largely works with minority-owned businesses and offers loans of up to $50,000. The organization also provides financial education opportunities, covering subjects such as understanding credit, money management, small business tips and other issues critical to running a small firm.
What's more, ACCION USA regularly helps owners who have been denied by the bank due to insufficient credit history, limited time in business or type of operation.
The agencies listed below also provide small-business loan assistance, with some offering special services to minority entrepreneurs:
Given that individual state governments offer assorted financial programs to minority-owned operations, Business.Gov provides an excellent search tool to locate regional funding opportunities nationwide.
Community Development Venture Capital Alliance - Central
Promotes use of the tools of venture capital to create jobs, entrepreneurial capacity and wealth to advance the livelihoods of low-income people and the economies of distressed communities.
Fulcrum Venture Capital Corporation
Assembles capital pools from qualified investors and invests that capital on their behalf in privately held businesses that are important in minority and urban communities.
Milestone Growth Fund, Inc.
Provides equity type financing to minority-owned companies.
New York Community Investment Company
Provides long-term capital of up to $1 million to select growing businesses in New York and has a special interest in funding companies that are minority-owned, woman-owned, or located in lower-income areas.
Pacific Community Ventures (PVC)
Provides resources and capital to businesses that have the potential to bring significant economic gains to low and moderate income communities.
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