By Craig R. Everett

Owning a small business is a dream for many Americans. You get to be your own boss, build something from the ground up, and provide a service to your local community. But for women and minorities, achieving this dream presents a unique set of challenges when it comes to raising capital and growing their businesses.

Rapid Growth

According to the National Association of Women Business Owners (NAWBO), more than 9.4 million firms nationwide are owned by women, and the number of women-owned firms increased by 68 percent in the U.S. between 1997 and 2014. More than 8 million businesses are also majority-owned by minorities, according to the U.S. Small Business Administration, and there is considerable growth in businesses owned by women of color. Comprising just 17 percent of women-owned firms 17 years ago, the NAWBO reports that firms owned by women of color now account for one in three (32 percent) women-owned firms in the U.S.

Capital Challenges

Unfortunately, it’s no secret that women and minority business owners are at a competitive disadvantage. While more small and medium-sized U.S. businesses (66 percent) are reporting working capital challenges in the last three months than during any other period in the last five years, according to the second quarter 2017 Private Capital Access (PCA) Index report from Dun & Bradstreet and Pepperdine Graziadio School of Business and Management*, the capital crunch is felt even more acutely by women and minorities. Both women-owned (72 percent) and minority-owned (80 percent) respondents cited working capital challenges as the lead reason for seeking capital last quarter. Slower accounts receivable payments also disproportionately impacted women- and minority-owned businesses, with 47 percent of women-owned and 44 percent of minority-owned businesses reporting that their ability to grow was impeded. It’s clear that something needs to change, but in the meantime here are a few of my tips for women and minority business owners to get the funding that they may need to start or grow their business.

Funding Tips

Have a solid business plan in place: It seems like a given when you have an existing business or are just starting out, but many business owners fail to think of their plan as a living document. The SBA can help– they offer free and low-cost events through their local partners, many of which are aimed at women and minority small-business owners, and even an online business guide that offers tips on what to consider.

Evaluate your funding needs: Have you already exhausted your network of friends and family? Have you considered whether you want to take out loans, seek venture capital, and/or find an angel investor? There are many options for finding funds- you just need to figure out what combination works for you and create a plan of attack. You can subscribe to publications such as Black Enterprise, that provides financing tips for women and minority-owned small businesses, or join a local chapter of a business organization, such as the NAWBO, which provides networking opportunities and resources for its members. You may even find a mentor or friend that can offer advice for your particular situation.

Find lenders that have a history of granting loans to women- and minority-owned businesses:  One option is SBA’s microloan program— which 90 percent of minority-owned businesses use– that provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000, but it can be a good way to inject some capital into your business. Visit the SBA website to see if you are eligible to apply.

Be ready to make your case: Lastly, and most importantly, make sure you have all of the appropriate documentation, and be ready to present your case to your potential funder. And if you don’t achieve funding the first time, try, try again! As entrepreneurs, you have to get comfortable with rejection. But if you have faith in your business, and are persistent, I do believe that you will eventually succeed.

In closing, I’d like to leave you with this parting thought- what lies ahead is not all doom and gloom. Women and minority-owned businesses are “extremely confident” they will grow in 2017 (51 percent and 61 percent respectively), according to the PCA Index, despite the challenges they may face. They believe in themselves, and so should you. Now go out and get it!

*Note: The PCA Index is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University with the support of Dun & Bradstreet. The Q2 2017 Index report was derived from 1,167 completed responses collected April 26 – May 3, 2017.

Craig R. Everett is the Assistant Professor of Finance and Director, Pepperdine Private Capital Markets Project, Pepperdine Graziadio School of Business and Management.