Businesses run by women or minorities can face special challenges, but they are also the fastest-growing business segment.
One reason: special opportunities in the form of tax breaks, financial aid, and other forms of assistance designed to level the playing field and encourage a larger representation in business ownership. But navigating these opportunities and identifying and leveraging the assistance that makes the most sense for your business takes research and strategy.
The government helps foster growth for women and minority business owners in part by offering tax breaks to companies that work with these businesses. Make sure you thoroughly understand these programs, and take the steps necessary to qualify for them.
“In my role as an attorney working with small and minority-owned businesses, one of the things that surprises me the most is how many businesses don’t know about the various programs that their federal, state, and local governments have put in place to help them,” says Maria L. Panichelli, Esq, associate in the Federal Construction Group of Cohen Seglias Pallas Greenhall & Furman, P.C. Panichelli helps small and minority-owned businesses achieve the certifications necessary to participate in the federal small business programs run by the Small Business Administration (SBA) and the Department of Veterans’ Affairs (VA).
Programs include:
- The SBA 8(a) Development Program, aimed at helping small, disadvantaged businesses compete in the marketplace
- The SBA’s Historically Underutilized Business Zone (HUBZone) program, which helps small businesses in urban and rural communities gain preferential access to federal procurement opportunities
- The SBA’s woman-owned and economically-disadvantaged woman-owned programs
- The veteran-owned small business and service-disabled veteran-owned small business programs
“Many states and localities also have analogous programs designed to assist small and/or minority-owned businesses in growing,” notes Panichelli. “Many of these programs offer participants in the program special benefits, such as access to loans or mentors in their field,” she explains.
Getting a minority-owned business certified as such also allows you to compete for new business. “In the federal sector, in particular, more and more contracts are being set aside for minority-owned businesses. That means that you can only bid for these programs if you participate in the applicable program. In effect, contractors who are eligible for, but unaware of, these programs are throwing potential business away,” says Panichelli.
Private programs
Additionally, there are programs run by non-profits, business alliances, and even Fortune 500 companies aimed at supporting the growth of minority-owned businesses. Many private banks have expressed a commitment to expanding their loan programs for these demographics. You may also be eligible for unique grants and venture capital funding programs. For example, the Business Consortium Fund, a business development program overseen by the National Minority Supplier Development Council, runs the Loan Participation Program, which helps minority-owned business firms obtain financing when funds are not available through conventional channels on reasonable terms. The Minority Business Development Agency also provides comprehensive information on available funding opportunities, including private equity and venture capital sourcing options.
Joining an organization or alliance can help you navigate these opportunities. Popular communities include The National Minority Supplier Development Council, the U.S. Hispanic Chamber of Commerce, the U.S. Pan Asian American Chamber of Commerce, and the National Black Chamber of Commerce.
After you have a thorough understanding of all of the programs available to you, consider which are most likely to generate the biggest value to your business. “A mistake we see often is contractors who go from knowing nothing about these programs to applying for certification from every single imaginable program for which they are qualified. That is not necessarily a good use of their time,” cautions Panichelli. “But when you choose the programs best suited for you, the benefits will be worth it.”
