By Lakshmi Gandhi
Black women are starting successful businesses in the United States faster than the population at large — despite often lacking critical access to loans and venture capital funding. The State of Women-Owned Businesses Report, which is released annually by American Express, found that women of color founded nearly 90 percent of the new women-owned businesses opened per day between 2018 and 2019. American Express also found that businesses founded by Black women entrepreneurs experienced the highest rate of growth of any group during this period.
This success is made all the more impressive by the reality that this growth in success has not coincided with an increase in financial investments in black women’s businesses. A recent Wisconsin Public Radio report noted that only 2 percent of venture capital funding goes to companies started by women, and women of color get only one percent of all venture capital investments. Banks are also still reluctant to lend Black women money to grow their businesses, Nicole Mason, the president and CEO of the Institute for Women’s Policy Research, told Supermajority News.
This lack of access to loans and investments can significantly impact the profit margins and security of black women-owned companies. The Institute for Women’s Policy Research found that businesses owned by Black women tended to be less profitable than companies started by other ethnic groups. “The inability to attract the capital and investment a business needs to grow causes a tremendous amount of strain on women-owned or black-owned businesses,” noted Mason. In fact, any entrepreneurs continue to work full-time jobs while working on getting their companies off of the ground because of these slim profit margins, she added.