Small businesses are essential to economic growth. But when it comes to launching or expanding a business, access to capital can be a major hurdle—especially for minority entrepreneurs. Disparities in funding opportunities and lending practices often make it harder for underrepresented business owners to get the financial support they need to thrive.

This is where grants can make a meaningful difference. Grant programs—offered by government entities, nonprofits, and private companies—provide funds that don’t need to be repaid. For minority-owned small businesses, they can be a lifeline to help grow, scale, or simply survive in a competitive market.

The Pros and Cons of Grant Funding

Grants come with several advantages. The most obvious is that the money is free—you don’t have to repay it. In addition, receiving a grant brings credibility to your business and can open the door to future opportunities. Many entrepreneurs also leverage their grant awards in marketing and public relations.

However, there are drawbacks. The application process can be time-consuming and complex. Grants often require detailed business plans, financial statements, and strict reporting standards. In some cases, businesses must meet ongoing eligibility requirements, such as remaining located in a particular region or continuing a specific type of work. And once the funding ends, future rounds aren’t guaranteed.

Defining a Minority-Owned Small Business

In most cases, a minority-owned business is defined as one that is at least 51% owned and operated by individuals who identify as part of a historically underrepresented group. This may include individuals of specific racial or ethnic backgrounds, women, veterans, LGBTQ+ business owners, or those with disabilities. These businesses are usually small by industry standards, often employing 50 or fewer people.

Understanding Grant Opportunities

Finding the right grant takes research. It’s best to begin locally—your city or state may offer grants that are less competitive and easier to apply for than national programs. Local grant providers may also prioritize businesses that contribute to the local economy by hiring from within the community or locating their operations in underdeveloped areas.

That said, there are also nationwide opportunities available. Some are exclusively for minority-owned businesses, while others are open to all small businesses with strong proposals.

Before applying, make sure to read the fine print. Find out if the funds are dispersed in a lump sum or in installments. Understand what the money can be used for and whether follow-up reports or benchmarks are required. This helps you avoid surprises and align your grant strategy with your broader financial plan.

Examples of Grant Programs Supporting Minority-Owned Businesses

There are several established programs and organizations that offer grants particularly relevant to minority entrepreneurs. Some examples include:

Minority Business Development Agency (MBDA)
The MBDA provides funding through cooperative agreements to support minority-owned firms. These grants are often tied to specific projects and may be renewable.

Native American Business Development Institute (NABDI)
This program offers planning and feasibility funding to help Native American and Alaskan Native entrepreneurs grow businesses that serve their communities.

Community Programs for Minority Health
Backed by federal health initiatives, this program supports businesses and organizations focused on improving health outcomes in underserved minority populations.

McInerny Foundation
A regional fund that supports projects designed to improve the well-being of Native Hawaiian families through education, health, and community empowerment initiatives.

FedEx Small Business Grant Contest
An open competition offering funding to small businesses across the U.S. Each year, only a select few win, but past recipients have often experienced transformative growth.

Asian Women Giving Circle
This fund supports projects led by Asian American women using arts and culture to advance social justice or create community impact.

National Association for the Self-Employed (NASE) Growth Grants
Although not limited to minority applicants, this program awards funding to entrepreneurs looking to grow a specific area of their business. A new recipient is chosen regularly.

Native Language Immersion Initiative
Focused on preserving Indigenous languages, this program supports organizations that blend business and education to keep cultural traditions alive.

Why Grants Matter for Minority-Owned Businesses

Despite making up nearly a third of all U.S. businesses, minority entrepreneurs still face significant disparities in access to traditional funding. Loans are denied at a much higher rate, and many startups in underserved communities lack access to the networks that typically support business growth.

Grants offer a powerful alternative. By injecting capital directly into promising ventures—without the burden of repayment—they help level the playing field. They support innovation, empower job creation, and strengthen communities.

And the impact isn’t just local. Broadening support for minority-owned businesses has the potential to create millions of jobs and generate billions in revenue, boosting the national economy as a whole.