Funding: equal access to the right kind of capital

CONTEXT:

In the United States, at least 83% of entrepreneurs do not access bank loans or venture capital when launching a business, tilting the scales in favor of those who have the wealth to create new businesses.

Those disparities became even more significant during the COVID-19 pandemic as the majority of business owners lack the financial resources needed to weather the current crisis.

The Start Us Up Coalition, in its Rebuild Better advocacy guide calls for decisive action to create equal access to the right kind of capital, especially for female, minority, immigrant, and rural entrepreneurs.

This entry contains excerpts from the following resource:

SUPPORT MECHANISM:

Recommended responses to the pandemic-induced crisis: 

  • Short-term lending to businesses not eligible federal loans: State and local governments should partner with philanthropic organizations to create funding pools that reduce fees and interest of Community Development Financial Institutions’ (CDFI) short-term lending to businesses not eligible for Small Business Administration (SBA) loans.
  • Federal set-aside: The SBA should consider a set-aside for businesses with fewer than 20 employees, which make up 89% of all businesses in the U.S.

Recommended approaches to rebuild better: 

  • Federal support for states in addressing funding barriers: Request that Congress make substantial funding available to states for strengthening the private financing of new businesses by expanding capital access through patient capital, innovative investment models and technologies, financing guarantees, user-centered service design, community banking, and other means.
  • Data and metrics: Establish clear goals for all federal capital access programs, including the number of new entrepreneurs who access capital (disaggregated by race, gender, socioeconomic class, and geography), revenues generated, new jobs created and sustained, and customer experience feedback.

CURATED BY

Global Entrepreneurship Network
United States
Global Entrepreneurship Network
United States
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