It’s an indisputable fact that small and medium-sized businesses (SMBs) are vital to the U.S. economy.
Making up 99.9% of all businesses in the country, SMBs are the driving force behind innovation and job creation—across all communities.
And guess what? A big portion of this entrepreneurial spirit comes from minorities.
By “minorities,” we’re referring to women, immigrants, and non-white people—all of whom are carving out their own paths to achieve financial freedom, while bringing unique perspectives and experiences to the table.
In fact, every year, these minority entrepreneurs contribute nearly $2 trillion in revenue, making critical impacts on our economy. That’s truly impressive!
But still, in spite of these numbers, there exists an equity gap between minority-owned and non-minority-owned businesses.
In this article, we’ll explore the challenges and successes of minority-owned businesses, as well as the importance and existence of support systems to drive business growth.
The Challenges of Minority Entrepreneurship
Let’s be real—running a business is tough for anyone.
But minority entrepreneurs often face additional hurdles.
Take, for example, discrimination and marginalization—which make it harder to access the resources and opportunities they need to build, run and grow a small business.
Whether these biases are overt or more subtle, they can be a real barrier for women, immigrants, and people of color.
Below, we take a closer look at these challenges.
Access to Capital
Despite their role in the U.S. economy, minority-owned firms are much less likely to be approved for small business loans, compared with white-owned firms.
When it comes to funding requests, the comparison is clear: In 2020, 40% of white-owned businesses received the full financing they asked for, compared to only 31% of Asian-owned, 20% of Hispanic-owned, and 13% of Black-owned businesses.
One year later, minority-owned businesses were more likely to receive no funding at all.
Meanwhile, women own 49% of all businesses in the U.S., but they still face significant challenges in securing financing at the same amounts and interest rates as their male counterparts.
According to the U.S. Department of Commerce Minority Business Development Agency, these discrepancies have made minority entrepreneurs more likely to not apply for small business loans, usually out of fear of rejection.
Lack of Access to Networks and Mentorship
Starting a business without a strong professional network is tough. It’s even harder to navigate challenges without the right support.
Many minority entrepreneurs feel out of place at networking events, which often have mostly white or male attendees. This can make minority business owners hesitant to join, which already limits their chances to build relationships and gain skills essential for growth.
Meanwhile, in the U.S., attending expensive private schools can lead to valuable connections, internships, and mentorships. Unfortunately, systemic barriers often block access for those from underrepresented backgrounds.
Language and Cultural Barriers
Adjusting to a new language and culture can be particularly challenging for immigrant entrepreneurs, especially compared to U.S.-born business owners.
For example, starting a business requires understanding local regulations and applying for permits. But language barriers can make it hard to grasp important information, leading to misunderstandings that can slow down any business-making plans.
In addition, immigrants may come from countries with different business practices and legal systems. For instance, they might be used to informal networking or unique customer service styles that don’t align with American norms. This disconnect can make it hard to build relationships and market products.
Finally, not being familiar with local customs and consumer behaviors can create challenges in connecting with potential customers. While U.S.-born entrepreneurs may naturally understand their audience, immigrant entrepreneurs often have to spend extra time learning these dynamics.
Balancing Family Responsibilities
In the U.S., societal expectations and cultural norms often place additional pressure on women to prioritize family over their business ambitions. This expectation can lead to feelings of guilt or conflict, stress, and even burnout when they attempt to focus on their careers.
To women, balancing work and family responsibilities can feel like a real juggling act—especially for those who are immigrants or come from minority backgrounds. Many women find themselves trying to run a business while also managing the diverse needs of their family members.
Balancing roles like wife, mother, caregiver, and entrepreneur makes it hard to maintain that elusive balance between work and personal life. As a result, many women entrepreneurs feel stretched thin, constantly trying to meet the demands of both their families and their businesses.
Lack of Knowledge About Government Programs
Another hurdle many minority entrepreneurs face is a lack of knowledge about the government programs designed to help businesses like theirs.
Often, these business owners may not even realize that a wealth of resources exists to support them.
It’s easy to assume that if you’re not already familiar with these programs, they must be out of reach or not intended for you. But this misconception can prevent minority entrepreneurs from taking advantage of valuable opportunities.
In reality, there are numerous government programs designed specifically to support minority-owned businesses.
Further below, we’ll highlight how government programs can help minority entrepreneurs access funding, gain valuable skills, and ultimately grow their businesses. With the right information and support, these resources can make a real difference in achieving business success.
Minority-Owned SMBs: A Growing Trend
Despite the many challenges we covered above, many minority entrepreneurs are indeed thriving and finding success as small business owners.
Here are some uplifting statistics to highlight this progress:
- In 2021, there were about 5.9 million employer firms in the U.S. Out of those, around 1.2 million—about 21%—were minority-owned, employing roughly 9.9 million people, with an impressive annual payroll of over $357 billion!
- According to the U.S. Small Business Administration (SBA), immigrants own businesses at higher rates compared to individuals born in the United States.
- In 2023, women business founders in the U.S. hit a big milestone by securing 22.8% of all venture capital funding, up from 18.7% in 2022. Although the total cash raised dropped by about 30% from last year, these figures show that woman-owned businesses are still making progress in the funding scene.
- Also in 2021, there were approximately 642,950 Asian-owned businesses in the United States. These businesses had the largest estimated receipts ($1 trillion) among all minority race groups.
- According to the Census Bureau, the number of Black and African American-owned businesses in the U.S. increased 14% between 2020 and 2021.
- Between 2007 and 2017, businesses owned by “entrepreneurs of color” grew 10 times faster than the overall growth rate for U.S. small businesses over the same 10-year period.
You’ll find tons of other statistics online—but keep in mind that most come from the 2020 Census and the latest Annual Business Survey, which focuses on 2021 data.
While these numbers might seem a bit dated, they paint a clear picture of the impact of minority-owned businesses. And above all, the overall trends and outlook for these businesses is rather encouraging.
Rising Opportunities for Minority-Owned SMBs
So, what’s behind these positive trends for minority-owned businesses? Much of it is due to individuals and organizations committed to providing support and investing in minority entrepreneurs’ success.
Federal Agencies
Several federal departments—like the Minority Business Development Agency—are helping promote the growth of minority-owned businesses across multiple sectors by providing programs, offering support, and advocating for the needs of business owners who are women, immigrants, and people of color.
Government Contracting Assistance Programs
The U.S. Small Business Administration also has several programs to help minority-owned SMBs compete in the economy, including:
- The 8(a) Business Development program, which helps ensure businesses owned by Alaska Native corporations, Community Development Corporations, Indian tribes, Native Hawaiian organizations, and socially and economically disadvantaged individuals have fair access to government contracts.
- The Women-Owned Small Business Federal Contract program, which aims every year to ensure the government awards at least 5% of all federal contracts to women-owned SMBs. This program sets aside some contracts for women business owners who are also economically disadvantaged.
State Support
Similar to the above, many state and local governments are also implementing procurement policies to diversify their supplier bases. Moreover, some governments offer tax incentives to companies that use the services of minority-owned businesses.
Corporate Supplier Diversity Programs
Several major corporations like AT&T, Johnson & Johnson, and Mastercard are expanding their own supplier diversity programs to include minority-owned businesses. They specifically seek SMBs run by women, immigrants, and people of color for contracting opportunities.
Other Private Sector Initiatives
Large corporations and financial institutions are increasing their investments in minority-owned businesses. As just one example, in 2022 JPMorgan Chase pledged $30 billion to promote racial equity—aiming to empower Black and Latina women through education, financial training, mentorship, and grants.
Nonprofit Grant and Mentorship Programs
Nonprofit organizations and foundations have established programs committed to celebrating diversity, inclusion, and community investment in minority-owned business.
For example, the MBDA Grant and Comcast RISE provide money as well as business-building services like consultations, mentorship, and even “technology makeovers.”
Digital Transformation
For many minority-owned businesses, e-commerce has been a game-changer, as it enables entrepreneurs to tap into broader consumer bases and diversify their revenue streams. These platforms are especially helpful for minority entrepreneurs who face barriers in physical retail spaces or local markets.
Programs like Amazon’s Black Business Accelerator also offer additional support such as financial aid, marketing tools, and training to help businesses succeed online.
Shopify similarly plays a role, helping Black and Indigenous business owners set up their online stores and build their brand presence.
Consumer Awareness
Especially since the pandemic, consumers are more generally aware of the challenges faced by minority entrepreneurs—and are wishing to support them.
One survey found 80% of U.S. respondents intentionally sought out minority-owned businesses in 2020—with 90% voicing plans to maintain or increase how much they purchased from them.
uLink: Empowering Minority Entrepreneurs for Success
Seeing more minority-owned businesses thrive across the U.S. is great news for all of us.
After all, when we recognize and support minority entrepreneurs, we help boost the economy, while also adding fresh ideas and perspectives to our communities.
Moreover, by valuing these business owners’ experiences, we take steps toward building a more accepting and inclusive society for everyone.
At uLink, we want to empower you to live your best life in the U.S. That’s why we provide educational articles like this one to boost your financial confidence.
But that’s not all—we also make it easy to send money so you can support your loved ones overseas. The uLink SuperApp is quick, secure, and features excellent exchange rates with fees starting at $0. Download the uLink SuperApp to get started!
Moreover, if you’re an entrepreneur with suppliers or operations abroad, we support you by facilitating your B2B payments with our platform, uLinkbusiness.
