In 2021, Arkansas certified 33 minority- and women-owned businesses through the Arkansas Economic Development Commission’s (AEDC) Minority- and Women-Owned Business Enterprise (MWBE) Certification Program.
The AEDC announcement ran the total of MWBE certified businesses in the state to 326.
But for such businesses it’s been an uphill struggle to secure capital. According to the U.S. Small Business Administration Office of Advocacy 2021 small business profile of Arkansas, small businesses make up 99.3% of all businesses in Arkansas and hire 47.1% of the local workforce.
Women make up 47.3% of workers and own 43.1% of businesses. Racial minorities make up 20.6% of workers and own 12.8% of businesses.
Yet in recent years, minority business owners in Arkansas applied for lending at a much lower rate than white owners and were denied financing at a higher rate. A study by the Winthrop Rockefeller Foundation and Winrock International shows, in Arkansas, nearly 75% of minority entrepreneurs depend on personal cash and resources for business financing compared to 55% for white entrepreneurs.
“You don’t know your business credit is tied to your personal credit,” said Jimmy Warren, a political communications specialist, community engagement officer at the Conductor and member of the Arkansas Women and Minority Owned Business Council.
Women pursued startup capital at a 10% lower rate than men, despite the fact that Arkansas’ percentage of women-owned businesses is higher than the national 31%.
Traditional sources of capital may not be available in minority communities because potential borrowers have insufficient collateral or equity. Hispanic entrepreneurs may not have the connections their white counterparts do because of language barriers.
Lack of confidence, information gaps, geography and age-old institutional prejudices and chauvinism keep good business ideas by minorities and women from getting financial support.
The Arkansas Small Business and Technology Development Center (ASBTDC), the Arkansas Economic Development Commission (AEDC) and the U.S. Small Business Administration (SBA) offer services and assistance programs for women and minority entrepreneurs seeking a capital source that best fits their business.
Small business support organizations like the ASBTDC, the FORGE Community Loan Fund, Communities Unlimited, Alliance for Rural Impact and the Women’s Foundation of Arkansas, provide support through technical advice, business development training and/or loan products.
Mentorship, networking, community engagement, idea development and more can be found at entrepreneur support organizations like the Conductor in Conway, EforAll in northwest Arkansas, Little Rock SCORE, Northwest Arkansas SCORE, Startup Junkie in Fayetteville, the Arkansas Regional Innovation Hub in North Little Rock, Innovate Arkansas in North Little Rock and the Venture Center in Little Rock.
“We have programs where we try to provide information about the differences between traditional loans and commercial loans and SBA loans,” said Ericka Gutierrez, outreach and engagement manager at the Conductor. “Who are the SBA lenders we have in our area? Who can help them?”
Community Development Financial Institutions (CDFI) — like Southern Bancorp, Encore Bank or U.S. Bank in Arkansas — are banks, credit unions or loan funds that extend access to capital and services to local residents and businesses in low income communities. There are 40 CDFIs in Arkansas.
There are also resources available to connect a minority or woman borrower with a CDFI. Those include the CDFI Fund, the Community Development Bankers Association (CDBA) and the Opportunity Finance Network.
Cassandra Kidd, business access adviser at U.S. Bank, said help in making connections is invaluable.
“If you have those individuals who have already basically broken down the barriers, so to speak, and they’re able to connect you to the people you need to be connected to to give you access to the capital, access to the information, that makes it that much easier to get you through the door of entrepreneurship.”
Warren recommends establishing relationships with local banks long before you need it and to lean on local business leaders and people you know, using word of mouth and social media, to find help and advice.
“Don’t overlook your community of support,” he said.
There are also nontraditional programs and loans.
The SBA 8(a) Business Development Program is a program for small, disadvantaged businesses. The 8(a) Program has a broad scope of assistance to firms owned and controlled at least 51% by socially and economically disadvantaged individuals.
The AEDC’s Minority Business Loan Mobilization Guaranty Program helps Arkansas state-certified minority businesses with loan guarantees from $10,000 up to $100,000. The business must be a state-certified minority business, in business for at least two years.
Kiva Loans are short-term business loans up to $10,000 with repayment terms between three and 36 months. They carry 0% interest rates and also differ from traditional short-term loans in that they are set up similar to crowdfunding.
Arkansas Business Publishing Group
114 Scott St.
Little Rock, AR 72201
Toll free: (888) 322-6397
Main line: (501) 372-1443
Customer Service: (501) 455-9333 or email
