The Biden administration has expanded the State Small Business Credit Initiative (SSBCI) with $10 billion in funding to promote equity and foster economic development. A significant portion of this funding is dedicated to socially and economically disadvantaged businesses. The Initiative for Inclusive Entrepreneurship (IIE) is a national effort to leverage this funding, focusing on:
The IIE seeks to unlock significant funding with a 1:1 private investment match requirement, and private investors have committed substantial resources. The IIE program is incubated by Hyphen Partnerships, one of the lead organizations. Other key organizations include:
There's a pressing need for inclusive growth capital for diverse small businesses. Data shows that only a small percentage of diverse-owned businesses have access to traditional capital products, leading to higher interest rates for businesses owned by people of color. This lack of access is particularly pronounced in the venture capital sector, where a minuscule percentage of funding goes to Black and Latino founders.
The SSBCI program was reauthorized by the American Rescue Plan Act of 2021, significantly boosting funding and emphasizing support for underserved communities recovering from the pandemic. This program includes:
Other Biden legislation, like the Infrastructure Investment and Jobs Act, Inflation Reduction Act, and CHIPS & Science Act, also creates business opportunities for small businesses.
Hyphen brings together the public and private sectors to address social issues through co-investment and collaboration. Over the past year and a half, Hyphen has been incubating the IIE, building its capacity, and sourcing matching capital. This initiative ensures diverse small business owners have the financing they need to grow.
Government and corporate contracts are crucial for small businesses to achieve significant revenue growth. However, women-owned businesses, particularly those run by Black women and Latinas, face significant obstacles in securing these contracts. Unconscious bias against women entrepreneurs, limited access to capital, and lack of networks and mentorship hinder their growth.
The first five months of 2024 have seen a disappointing decline in venture capital funding for female founders. JumpStart, a key organization within the IIE, is focused on increasing access to venture capital for diverse emerging managers and entrepreneurs of color. They are actively working to help VCs of color raise $6 billion in assets under management by 2025.
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