Elizabeth Warren unveiled today her plan to create a Small Business Equity Fund, which would work to even the playing field for entrepreneurs of color who are trying to start their own businesses.
According to an outline of Warren’s plan, on average Black, Latinx, Native American and other minority households have less wealth and therefore less collateral to use to gain credit than white Americans. Typically, Black entrepreneurs start a business with just $35,000, which is about one-third of the money white Americans use to start up a business.
It’s why entrepreneurs of color own less than 20 percent of American businesses, according to the plan.
How Warren’s plan would work:
- The program will have $7 billion in funding to provide grants to entrepreneurs.
- The program will have clear federal standards and accountability but operate through states and municipalities.
- Grants will be limited to entrepreneurs who are eligible for the Small Business Administration’s existing 8(a) program and who have less then $100,000 in household wealth.
“Why $7 billion in funding?” writes Warren. “That’s enough to ensure that if Black, Latinx, and Native American entrepreneurs started businesses at the same rate as white entrepreneurs, we could fully close the startup capital gap for every single one of these new minority-owned businesses for the next ten years. That means supporting 100,000 new minority-owned businesses, which together would be expected to provide 1.1 million jobs.”
Read the full plan here.
by Paige Godden
Photo by Julie Fleming