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African American Businesses Grew 400% – But They Still Need Investment

Minority-owned businesses received lower loan amounts and were forced to leverage their own cash, a survey found. Without capital, it’s tough to invest in the future.

2018 was a great year for African American small businesses.

According to a recent survey of more than 2,700 small businesses conducted near the end of last year by small business financing company Guidant Financial and online credit marketplace LendingClub Corporation, African American businesses grew by more than 400% in 2018 as compared to 2017. The pleasant surprise? That growth is being fueled by women.

The survey found that 38% of African American businesses are female-owned which is significantly higher than the 23% average among all other business owners. I guess it’s no surprise that, according to the survey, African American small businesses are not only growing their market share but opening up more health, beauty and fitness businesses than ever before.

“It’s exciting to see African American business owners increasingly confident about the state of business in today’s current climate,” said David Nilssen, CEO of Guidant Financial. “It takes confidence to open and maintain a small business and having a positive outlook will inevitably lead to increased growth and opportunity.”

Of course, those same African American small business owners face the typical challenges that any other small businesses face: finding employees, growing sales, managing overhead. But one challenge is particularly hard for this demographic: financing. That challenge was underscored by the study which found that minority owned businesses received lower loan amounts than non-minorities and as a result were forced to leverage more of their own cash to run their business.

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