Spreading the Wealth: Helping minority-and women-owned businesses thrive.

• Author: Barbour, Tracy
• Position: FINANCE

For thirteen years, Purrfect Purr Cat Hotel has offered pet sitting and boarding services for felines in Anchorage. Guest pets can indulge in a variety of activities, including socializing with other fur babies in a stimulating and safe environment. The facility provides the cats with constant observation, high-quality food, plenty of space to lounge and play, and even a trip to the vet if they get sick. "We provide everything; you just drop the cat off," says owner Elaine Parry, a Navy veteran and former air traffic controller. For Parry--who has always loved cats-operating Purrfect Purr Cat Hotel is a labor of love. But in 2020, the successful enterprise was threatened when the COVID-19 pandemic forced non-essential businesses to temporarily close. Purrfect Purr Cat Hotel was shuttered for two months, and it nearly devastated the business. To stay afloat, Parry applied for a loan from a local credit union, which proved to be extremely problematic. The problem wasn't a lack of creditworthiness on her part, according to Parry. She owned her own home, had ample retirement income, and even offered to collateralize the requested $45,000 loan with her rental property, a condominium worth $98,000 and owned free and clear. But her loan request with the credit union was unfruitful. "They really treated me poorly," says Parry, a thirty-year Alaska resident. "They didn't refuse the loan; they just drug it out, dropped me, and wouldn't respond anymore... I had to file a complaint against them."

Ultimately, Parry was able to obtain a $37,000 Economic Injury Disaster Loan, which she used to pay her lease, employee, and other expenses. "Between that and my own personal funds, I managed to stay open," she says.

Parry's experience is an example of the challenges some minority business owners face while pursuing financing to launch, maintain, or grow their business. However, minority business owners--which include women as a minority group due to their relative disadvantages--play a vital role in supporting the US economy. In 2019, almost 19 percent of all US employer businesses (1.1 million) were minority-owned and about 21 percent (1.2 million) of all businesses were owned by women, according to the US Census Bureau's 2020 Annual Business Survey. Businesses that are owned by women and other minority groups-including Blacks/African Americans, Asians, Hispanics, Alaska Natives, Native Americans, Native Hawaiians, and other Pacific Islanders--employ millions of workers and generate billions of dollars in annual payroll and receipts. According to the survey, their 2019 annual receipts were $874.6 billion for Asian-owned businesses, $463.3 billion for Hispanic-owned companies, $133.7 billion for Black- or African American-owned enterprises, $35.8 billion for American Indian and Alaska Native-owned businesses, and $8.5 billion for Native Hawaiian and Other Pacific Islander-owned businesses.

Despite their substantial economic impact, it is often more difficult for companies that are owned by minority groups to satisfy their business capital needs. That's why it's essential for minorities--and other socially and economically disadvantaged entities--to have access to sufficient funding and support through government-backed loans, traditional bank financing, and creative funding options.

SBA Loans and Other Funding Options

The US Small Business Administration (SBA) is a primary facilitator of funding for minorities and other disadvantaged groups. The SBA provides loan...