How a More Equitable Financial System Can Benefit Diverse and Women-Owned Businesses — and the Economy, Too

Unfortunately, the dream is still out of reach for many entrepreneurs who are minorities or women. Inequality plagues the financial system and prevents these underserved businesses from accessing the bank loans and lines of credit that they need to prosper.

For the last several years, I’ve watched as diverse entrepreneurs have launched companies at a faster rate than nonminorities, creating vital jobs and opportunities in the communities where they operate. And they’re accomplishing all this while receiving a fraction of the capital available to non-diverse entrepreneurs. 

In 2021, only 15% of Asian-owned small businesses received all the financing they sought from lenders. It was 16% for Black-owned businesses and 19% for Hispanic-owned businesses, according to the Federal Reserve’s 2022 Small Business Credit Survey, a report on small employer businesses. 

Meanwhile, 35% of non-diverse businesses received everything they requested — a success rate that’s more than double or nearly double what’s experienced by other groups. 

Black women are more likely to start a business than white women are, 17% versus 10%. Yet only 3% of Black women run mature companies, compared to 7% of white women, and researchers believe that a lack of capital prevents those businesses from surviving. Roughly 61% of Black women self-fund the launch of their new businesses.

In an effort to combat these and other disparities, the Schultz Family Foundation and C2FO are launching a new partnership to offer $100 million in loans to high-potential businesses and are encouraging diverse and underrepresented businesses to apply.

Ensuring every business has the capital needed to thrive has been C2FO’s mission since the company launched in 2008. Our team has seen firsthand how quickly businesses can grow with reliable access to funding, along with all the subsequent benefits, like job growth and community reinvestment, that come with it. And we know that diverse and women entrepreneurs have a greater need for working capital — they use our platform to secure funding 3.2 times more often than others do. In 2022, the C2FO platform provided more than $4.7 billion in funding through its existing early payment programs to minority- and women-owned businesses across the United States.

C2FO is pursuing this initiative with the Schultz Family Foundation because it’s the right thing to do. The world works best when everyone, no matter their background or heritage, has a fair and equitable shot at pursuing success and happiness.

This is a challenge that we can and must overcome as a society — and there will be considerable benefits when we do. 

Creating a level playing field for all businesses could help significantly narrow the racial wealth gap, one of the most disruptive, harmful forces in modern US life. According to McKinsey & Co., eliminating the gap could unlock $1 trillion to $1.5 trillion in annual GDP. Giving equal access and opportunity to Black businesses could be a significant part of the solution.

Another analysis suggests that global GDP would grow by 3% to 6% if women entrepreneurs had the same resources and opportunities as men. It could mean another $2.5 trillion to $5 trillion for the global economy.

It won’t be easy, and it won’t happen overnight. But our partnership with the Schultz Family Foundation and other efforts like it could have a far-reaching and immensely positive impact on the world. It’s an opportunity well worth pursuing.