August is Black Business Month, a time to celebrate Black-owned businesses and their contributions. While I love this time dedicated to elevating and embracing our Black entrepreneurs, we at Intend Indiana know that this support is needed all year round. We see business owners who struggle to get the funding needed to make their dreams a reality, which is why we created the Build Fund.
The Build Fund is a mission-driven lender certified by the Department of Treasury and designed to provide flexible, affordable, and responsible access to capital for small businesses in underserved markets. According to Intuit QuickBooks, over 50% of Black business owners reported that they were denied bank loans at least once when starting out, making it difficult for many to build a legacy for themselves and their families. Not only is this an issue for current business owners, it’s also an issue for aspiring Black entrepreneurs who struggle to find faces like their own that can remind them that their dreams are attainable. As a Community Development Financial Institution (CDFI), I appreciate the flexibility we have that allows us to provide small businesses the capital needed for growth.
Some of the major challenges with providing business funding that I’ve seen are related to awareness, trust and accessibility. Many Black businesses are not aware of the resources available or how to access those resources. The challenge surrounds communicating the availability of funding and gaining the trust of the Black business community. The Association for Enterprise Opportunity in its report on Wealth and Black Business Ownership reported that implicit and explicit bias experienced by Black business owners sometimes leads to Black-owned businesses never applying for financing because they don’t believe they will be approved. As a result, many Black entrepreneurs reflect on those biased experiences and may be less trusting and unwilling to share information related to their business. They also may be more reluctant to collaborate with other businesses or network, so they do not hear about the funding opportunities available.
Intend has been deliberate in our efforts to engage with the Black community to not only build awareness of the products and services we have but also explain the documentation requirements and address questions and concerns. Many Black-owned businesses are very successful at what they do, but may not be prepared to present documentation the way a lender requires. For example, when we use lending terminology, it often causes hesitation and has the potential to create a barrier. While a lender may request a profit and loss statement or balance sheet, a business owner may be tracking their financials in a different way. Though the numbers may be accurate, lenders must teach business owners not to discount their record keeping and aid in their growth and development.
In my work with Intend, I’ve come to see that support beyond the lending process is also something that many Black business owners lack. Lending needs to come with compassion. Borrowers need to feel supported by people who understand the importance of their dreams and push them to reach their business goals. That’s why Intend’s process doesn’t end once funding is received. We continue to check in and make sure that the business is moving forward and if it’s not, we try to offer support. We also work with traditional banks and other CDFIs who help provide guidance and additional resources.
While I am beyond proud of what we have accomplished at Intend, my hope is that more lenders start making the borrowers’ comprehension and business goals a priority throughout the lending process. Representation matters in all sectors, including business ownership, so it’s imperative that lenders understand the importance of building a relationship with borrowers in order to see diversity in entrepreneurship.
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