Despite facing ongoing challenges, Black entrepreneurs remain resilient and are focused on growing their businesses and helping build generational wealth.

New Bank of America data showed that 79% of Black business owners believe they run a successful business. “The pandemic may have disproportionately affected Black business owners, but they’ve successfully navigated economic uncertainty and record inflation,”  Sharon Miller, Bank of America’s president of Small Business and head  of Specialty Banking, told BLACK ENTERPRISE by email. The report by the nation’s second largest bank looked into the outlook of women, Black, and other business owners nationally.

She pointed out that many Black entrepreneurs are committed to building generational wealth and supporting other Black-owned businesses. Simultaneously, the findings showed that Black business owners are hungry for advice and educational resources, two key areas with the highest potential for growth.

Still, challenges linger for Black business owners, with 46% of them saying they have dealt with issues accessing financing. Some 39% reported not feeling properly qualified or informed about applying for capital. And 38% disclosed no relationship with a lender and 21% stated not knowing where to apply for capital.

“Starting off, it’s important to gather key information, statements, and documents ahead of applying for capital. Having this together before you apply saves time and reduces the risk that you will omit anything important from your application, Miller shared. “Additionally, it’s smart to work with an outside resource, such as your accountant or business advisor, to best tell your business’ story and enhance your application to increase your loan’s approval odds.”

Regardless of the lender you may work with, there are actions to consider to help maximize your chances of obtaining grants, loans, or other types of capital. Before  seeking money, Miller indicated there are six “Cs” lenders look at to help determine the creditworthiness of a business applying for financing:

• “Capacity: Lenders will evaluate your business’ financial capacity to support the loan obligation, as well as operating expenses. Typically, a business needs to have $1.25 of income to support every $1 of debt service.”

• “Capital: Your business may own capital assets such as cash and equipment that could be used to support your credit application. The amount of capital assets and equity you have on hand will say a lot about your prospects for receiving financing.”

• “Collateral: Accounts receivable, inventory, cash, equipment, and commercial real estate are all forms of collateral — assets lenders may accept to secure loans. When estimating the value of your collateral, a lender will look for liens — existing debt owed — on that collateral. The existence of a lien may disqualify the collateral as a supporting asset for the loan.”

• “Conditions: The state of the economy, industry trends, and pending legislation relative to your business are all conditions lenders consider during their evaluation of your loan application.”

• “Character: Work experience, experience in your industry, and personal credit history are all character traits that lenders will consider. Your personal integrity and good standing — and the integrity and standing of those closely tied to the success of the business — are of the utmost importance.”

• “Communication: Your willingness to communicate candidly with your banker and your other advisors about the opportunities and challenges your business faces is key to a productive financial partnership.”

Moreover, Bank of America and Seneca Women last year launched the Access to Capital Directory for Black Entrepreneurs. The database is intended to help Black entrepreneurs learn about funding opportunities for their business, including equity, loans, and grants.

William Michael Cunningham, an economist and owner of Creative Investment Research in Washington, D.C., said that while there have been many reports offering advice to Black people on how to gain financing, there needs to be new approaches on how to achieve that goal.

For instance, he suggested one approach might be having the Commerce Department’s Minority Business Development Agency make loans to Black business owners instead of simply making grants to intermediaries to non-profit groups, colleges, and universities that counsel Black businesses.

“That would help directly address the main issue that all of these reports are citing tied to the lack of access to capital,”  he says. “Until that is done, then it means that the problem won’t get solved.”