5 Funding Moves Every Woman of Color Entrepreneur Should Know

This guide is written for women of color entrepreneurs building durable, independent companies. No gimmicks. Just options that work—and how to use them well.

1) Grants (non‑dilutive money you don’t repay)

What it is: Cash awards from private orgs, corporations, or governments. Competitive; you’ll submit a short narrative, budget, and plan.

How it works (typical): You apply → judges evaluate impact, feasibility, and story → winners announced monthly/quarterly. Many programs are industry- or identity‑specific.

Quick reality check: Grants are real—but scarce and competitive. Treat them like a supplement to your broader funding plan, not the whole plan. (More on avoiding scams at the end.)

Example:

• Visa She’s Next: Corporate‑sponsored grants for women entrepreneurs; programs recur in cycles. According to Visa, initiatives include funding plus mentorship. (Y Combinator)

Steps to take:

1. List 5 grants aligned to your stage/sector/identity.
2. Draft a crisp 300–500 word narrative: mission, the problem, customers, traction, and what the money unlocks in 6–12 months.
3. Add a one‑page budget (line items, timeline, milestones).
4. Collect proof (screenshots of sales, letters of support, early press).
5. Calendar the deadlines + reminders to follow up.

2) SBA 7(a) Loans (flexible working capital)

What it is: Government‑backed loans issued by banks/approved lenders; can fund working capital, equipment, refi, even buying a business.

How it works: The SBA guarantees a portion so lenders can approve more small businesses at reasonable rates/terms. According to the U.S. Small Business Administration (SBA), 7(a) loans cover broad uses, with lender‑set rates within SBA caps.

Steps:

• Nail the basics: EIN, business bank account, clean bookkeeping, last 2 years of returns (or projections if newer).
• Write a short plan: what the funds buy and how they pay back (cash‑flow story).
• Apply through an SBA lender; compare at least 2 offers.

Good for: Stable/revenue‑positive businesses that need multi‑purpose capital at fair terms.

3) SBA 504 Loans (buying real estate or big equipment)

What it is: Long‑term, fixed‑rate financing for major assets (buildings, heavy equipment). Issued via Certified Development Companies (CDCs) + a bank.

How it works: Bank funds ~50%, CDC/SBA funds ~40%, you put ~10% down. According to the SBA, 504 is designed for fixed assets and often offers lower, fixed rates with longer amortization.

Steps:

• Talk to a local CDC early (they pre‑screen projects).
• Line up financials, quotes, and an appraisal/inspection if buying property.
• Compare 504 vs. conventional mortgage—504 wins on down payment + fixed rates in many cases.

Good for: Owning your storefront/warehouse or purchasing big machinery.

4) SBA Microloans (up to $50k, community lenders)

What it is: Smaller loans delivered by nonprofit intermediaries; often bundled with coaching.

How it works: According to the SBA, microloans go up to $50,000; many borrowers are startups or very small businesses. Intermediaries may require a lean plan and basic collateral.

Steps:

• Find microloan intermediaries in your state.
• Prepare a 1‑page plan, 12‑month cash‑flow, and a use‑of‑funds list.
• Ask about technical assistance—they’ll help you succeed.

Good for: First business capital, inventory, equipment, or marketing sprints.

5) Business Lines of Credit (use, repay, reuse)

What it is: A revolving credit limit; draw only what you need and pay interest on what you use.

How it works: According to NerdWallet, LOCs work like credit cards with higher limits; draws act like mini‑loans with separate repayment schedules.

Steps:

• Apply with your primary bank (often best rates) and one fintech for comparison.
• Start smaller, prove usage/repayment, and request increases.

Good for: Seasonal cash gaps, purchase orders, and emergency buffers.

6) Business Credit Cards (tactical—handle with care)

What it is: Revolving credit with rewards and expense controls.

What to know: According to NerdWallet, business cards are flexible tools for managing expenses and building business credit if paid in full each month. (NerdWallet)
Consumer protections differ on business cards; per the CFPB, rules aren’t identical to personal cards, so read terms closely. (Consumer Financial Protection Bureau)

Steps:

• Choose a card aligned to your top spend (ads, shipping, travel).
• Use for planned expenses you can repay monthly.
• Turn on employee limits/alerts; keep utilization <30%.

Good for: Short‑term float + rewards, not long‑term financing.

7) Revenue‑Based Financing (RBF) & Payment‑Processor Loans

What it is: You receive capital now and repay as a fixed percentage of future revenue—payments flex with sales.

How it works: According to NerdWallet, MCAs/RBF provide fast cash tied to card or online sales; costs can be high, so compare the total payback (factor fee), not just speed.
Mechanically: Stripe Capital deducts a percentage of your daily sales until you’ve repaid principal + a flat fee; PayPal Working Capital works similarly with a 90‑day minimum repayment requirement. (Stripe, Stripe Docs, PayPal)

Steps:

• Ask your platform (Shopify/Stripe/PayPal) for an offer; note repayment rate + fixed fee + any milestones.
• Model “slow month” scenarios to avoid a cash crunch.

Good for: Ecommerce/online businesses with steady sales who need speed and can absorb higher costs.

8) Invoice Financing & Factoring (B2B cash flow unlock)

What it is:

• Invoice financing = borrow against invoices; you keep collections.
• Factoring = sell invoices at a discount; factor collects from your customer.

How it works: According to NerdWallet, financing keeps control with you; factoring outsources collections and may be pricier but faster. (NerdWallet)

Steps:

• Confirm your customer’s credit strength (that’s what lenders price).
• Compare advance rates, fees, and notification (will your client be contacted?).

Good for: B2B companies stuck waiting 30–90 days to get paid.

9) Crowdfunding (rewards)

What it is: Raise preorders/donations from fans (Kickstarter/Indiegogo). No equity, but you must fulfill rewards.

How it works: According to Kickstarter, creators pay a 5% platform fee + ~3–5% payment processing on successful campaigns—budget for shipping and taxes up front. (Kickstarter)

Steps:

• Design a compelling product story + video.
• Offer clear reward tiers, stretch goals, and delivery timelines.
• Pre‑seed 25–30% of your goal with your own audience before launch.

Good for: Consumer products and creative projects that photograph well and have a passionate niche.

10) Equity Crowdfunding (sell small slices of equity online)

What it is: Raise up to $5M in a 12‑month period from the crowd via SEC‑registered portals (e.g., Wefunder, StartEngine).

How it works: According to the SEC, Reg CF caps raises at $5M/year and sets investor limits for non‑accredited investors; all offerings must run through a registered intermediary. NerdWallet adds that investors receive actual ownership equity. (SEC, NerdWallet)

Steps:

• Decide your valuation and amount to raise; prepare financials and disclosures.
• Choose a portal with audience fit; budget for marketing and legal.

Good for: Community‑centric brands and tech/CPG ventures seeking evangelists—not just capital.

11) Angel Investors (wealthy individuals investing early)

What it is: Individuals investing $25k–$250k+ for equity or convertible securities.

How it works: Angels fund very early; beyond money, they can open doors. The Angel Capital Association’s entrepreneur hub outlines what angels look for and how to approach them. (Angel Capital Association)

Steps:

• Build a crisp deck (problem, solution, traction, market, business model, team, use of funds).
• Warm intros via founders, accelerators, or industry groups; always send monthly updates.

Good for: High‑growth startups with a path to scale (and comfort with dilution).

12) Venture Capital (institutional equity for hyper‑growth)

What it is: Professional funds investing for outsized returns; expect board oversight and growth targets.

How it works: You’ll negotiate ownership via priced rounds or SAFEs/convertibles; align on milestones and runway. (YC’s primer is a useful orientation to SAFEs and cap tables.)

Steps:

• Target funds that invest at your stage/sector and have led rounds for founders who look like you.
• Share metrics, a hiring plan, and a 18–24 month roadmap tied to the raise.

Good for: Products with big markets, defensibility, and a credible path to venture‑scale outcomes.

13) CDFIs (community lenders who actually say “yes”)

What it is: Mission‑driven lenders serving under‑resourced entrepreneurs.

How it works: According to Opportunity Finance Network, you can locate a CDFI near you; many pair affordable loans with hands‑on advisory.

Steps:

• Use the locator to shortlist 2–3 CDFIs.
• Ask about credit‑building products, microloans, and lines of credit.

Good for: Founders shut out by traditional banks who want partners, not just capital.

Red‑Flag Check: Avoiding Grant & Loan Scams

According to the FTC, legitimate grants don’t call/text you out of the blue and never require you to pay to receive the money. The BBB echoes this: if someone promises “guaranteed” government grants for a fee, walk away. Use only official sites and known brands; report scams at ReportFraud.FTC.gov. (Consumer Advice, Better Business Bureau, Federal Trade Commission)

Action Plan (print this)

1. Pick your two: choose one repayable option (SBA microloan, line of credit) and one non‑repayable option (grant or rewards crowdfunding).
2. Gather documents: EIN, articles/LLC docs, last 3–6 bank statements, basic P&L, 12‑month cash‑flow, product photos, testimonials.
3. Write a 1‑page plan: the problem you solve, customer proof, how funds will be used, and how they pay back (for loans) or create outcomes (for grants).
4. Apply in parallel: submit 2–3 grant apps this month; pre‑qualify with your bank/CDFI for a microloan or line of credit.
5. Build a funding calendar: note deadlines (grants) + seasonality (when you’ll draw/repay LOCs).

If this guide opened your eyes to new ways of funding your business, know that it’s just the starting point. By subscribing to OVIDIA Insider, you’ll get real-time alerts on fresh grants, venture opportunities, and upcoming funding cycles tailored for women of color entrepreneurs. You’ll also receive step-by-step guidance on which loans and financing options best fit your stage of business, plus insider tips on how to position your applications to win. The free content shows you the landscape—but the Insider gives you the map, the compass, and the shortcuts.