Access to Capital is Still a Challenge for Minority Business Enterprises

In the current financial environment, access to capital is as much an issue today as it was in 1969 when the Minority Business Development Agency (MBDA) was established. For new businesses, especially those that are minority-owned, having access to working capital–which is used to keep operations going and to pay bills–could mean the difference between the success and failure of that business.

Other minority-owned firms need capital to fund their growth and, consequently, their ability to perform contracts. This financing could mean hundreds or even thousands of new jobs. And for other companies, primarily construction firms, capital is needed for bonding in order to fulfill contractual requirements. In fact, access to capital is one of the most important challenges business owners face.

In a recently released study from the MBDA, “Disparities in Capital Access between Minority and Non-Minority-Owned Businesses: The Troubling Reality of Capital Limitations Faced by MBEs,” authors Robert Fairlie, Ph.D. and Alicia Robb, Ph.D. reviewed both national and regional studies over several decades and found that limited financial, human, and social capital, as well as racial discrimination, were primarily responsible for the disparities between non-minority and minority businesses