Women, people of color need fairer access to capital

We are in an extraordinary time — one that has exposed significant structural inequities throughout society. But times of crisis provide opportunities for reimagining “norms” and initiating large-scale change.

As many as 7.5 million small businesses are in danger of closing during the next five months as a result of the pandemic according to a survey by Main Street America. And, as with the pandemic, the brunt of the economic crisis is being borne disproportionately by minorities and people of color. A poll from Color of Change and UnidosUs found nearly half of all Black and Hispanic business owners say they anticipate having to close permanently before the year is out.

To help address some of the long-standing inequities plaguing our financial ecosystem, I recently launched TMC Community Capital, an online, nonprofit microlender dedicated to providing capital to underserved entrepreneurs across California. TMC Community Capital is focused primarily on assisting women of color, providing safe, affordable, and convenient access to capital critical to growing their businesses.

Study after study shows women business owners, particularly women of color, face inequities accessing needed capital. According to a report from the Senate Committee on Small Business Entrepreneurship, less than 5% of small business lending finds its way to women entrepreneurs, a mere $1 for every $23 lent.

The soil in which entrepreneurship will flourish requires two fertilizers: culture and capital.

The statistics demonstrate the strength of the former. Women have become a driving force behind U.S. entrepreneurship. According to the 2019 State of Women-Owned Businesses Report, women now make up 42% of new entrepreneurs — up 21% since 2014. Last year, women started 1,817 new businesses per day. Even more revealing: Women of color operate half of all women-owned businesses. Collectively they employ more than 2 million workers and generate $422 billion in revenue.

Without access to capital, women small business owners continue to struggle to grow to their full business potential.

As founder and CEO of TMC Financing, an SBA 504 Certified Development Company that provides affordable financing for small businesses to own their facilities, this disparity is clear. In our portfolio of approximately 1,800 businesses, only 14% of our clients are women business owners, a statistic that has remained remarkably stable for more than a decade. Historically, lack of capital from traditional lenders has constrained the growth of women-owned businesses. The result is that their businesses remain too small to qualify for financing to purchase a commercial building. TMC Community Capital is focused on addressing the root cause of this inequity—providing capital in the early stages for women entrepreneurs to thrive.

The entire structure of TMC Community Capital is predicated on delivering safe, small loans at affordable interest rates using an online platform to approve and disburse loans quickly and efficiently. Our objective is to provide women entrepreneurs a responsible alternative to predatory online lenders, who often exploit desperate business owners by offering fast cash while charging exorbitant interest rates sometimes in triple digits.  We offer loans of $5,000 to $50,000 in a transparent manner – no hidden fees and reasonable interest rates. Our secure, analytic online platform enables us to get a loan approved within a week. And, right now, a week may well make all the difference.

Business owners that receive funding from TMC Community Capital also become part of the TMC “community,” an online secure network where they can exchange best practices and learn from each other. Our objective is to position these women not to just survive, but to thrive.

With targeted assistance, women business owners can achieve greater success and an even more significant impact on our economic recovery.
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Editor’s Note: Barbara Morrison is the founder and president of TMC Community Capital and founder and president of TMC Financing.