Latest news with #minoritybusiness
Forbes
26-06-2025
- Business
- Forbes
How The Debt Trap Limits Growth For Minority-Owned Small Businesses
How The Debt Trap Limits Growth For Minority-Owned Small Businesses For many women of color, launching a business often begins with a personal investment from their savings, such as maxing out a credit card, taking on a high-interest loan, or, more recently, relying on a Buy-Now-Pay-Later (BNPL) plan to secure inventory. Over time, employing these options can create a debt trap, where the business struggles to grow due to the additional funding necessary to manage the existing debt, limiting business growth, hurting credit scores and quietly capping the potential of thousands of small businesses. Minority-owned small businesses face a disproportionately high cost of capital. A University of Washington study found that Black business owners pay 3.1 percentage points more in interest than equally qualified white peers; Latino entrepreneurs pay 2.9 points more. Over time, those differences amount to an estimated $8 billion in excess interest payments annually; resources that could otherwise be used for business growth, hiring staff, or outreach efforts. As well, the Small Business Administration shows that 17.6% of Black-owned firms and 14.9% of Latino-owned firms rely on personal credit cards for startup funding, compared to just 10% of white-owned businesses. With average interest rates over 20% and balances often carried month to month, compounding interest erodes cash flow, limiting how much can be reinvested in operations. A problem that has inspired the creation of grants initiatives to supply the gap, according to Latasha Randle, strategy and small business program manager at Block Advisors. The Fund Her Future Grant was created in response to deep disparities identified in small business funding, for example. 'As we began to talk to small business owners, we identified the funding gap between men and women. For women of color, the gap was even greater,' Randle said in our conversation in the Brown Way To Money podcast. Knowing about the effects of a debt trap sets women of color entrepreneurs at an advantageous position to analyze and understand the cycle of debt prior to applying or using it in the business context. This article will explore how those debt traps form, why they persist, especially in periods of inflation, and what strategies and systemic shifts are emerging to address them. Debt Traps In The Age Of Inflation And Fintech The economic environment of the past few years has made it harder to escape the debt trap. Between 2021 and 2024, inflation surged, prompting the Federal Reserve to raise interest rates at a historic pace. For small business owners already dependent on credit, borrowing costs increased. To bridge cash flow gaps, many turned to BNPL services or ramped up credit card use. Some opted for fintech platforms that offer faster approvals and lower credit thresholds. For many Black and Latino entrepreneurs, fintech tools provided access when traditional banks did not. But access came with trade-offs: shorter repayment periods, high effective APRs, and opaque lending terms that increased financial vulnerability. 'Buy Now, Pay Later' offers an immediate funding solution for small-ticket purchases. It's helping bring more people into the financial system,' said Amanda Estiverne-Colas, Founder of AGE Advisor, Financial Inclusion Advocate, and board member at NAFLI. 'For individuals who may not qualify for traditional credit cards or who want to avoid hard credit pulls, BNPL provides access to flexible payment options without many of the historical barriers.' Estiverne-Colas notes that when designed thoughtfully, BNPL has the potential to be an inclusive financial stepping stone. 'It can help normalize access to responsible credit for communities that have often been excluded. But there are challenges... Without clear disclosures and embedded education, it can create confusion around repayment terms or lead to unintentional debt stacking.' Recently, the credit industry has recognized this evolving role of BNPL in the financial lives of Americans. In a move that could have long-term implications for entrepreneurs, FICO recently announced it will incorporate BNPL activity into its credit scoring models for the first time. The newly launched FICO® Score 10 BNPL and FICO® Score 10 T BNPL aim to better reflect modern repayment behaviors by factoring in BNPL loans alongside traditional credit data. For business owners who rely on BNPL to manage supply purchases or short-term expenses, this shift could be a double-edged sword: responsible use may help build credit, but stacking multiple BNPL plans (or missing payments) could now have direct consequences on creditworthiness. Digital exclusion added another layer. According to Pew Research, 35% of Black adults and 29% of Latino adults lack home broadband access, making it harder to compare loan terms or access alternative funding sources. For those running businesses entirely from a smartphone, this creates an information gap that limits financial agility. Meanwhile, traditional financial tools have not caught up to the realities of modern entrepreneurs. 'Many are still built on legacy systems that don't match the needs of modern entrepreneurs, solopreneurs, or gig workers,' Estiverne-Colas added. 'As a result, individuals are forced to rely on consumer-based tools—personal checking accounts, P2P apps, and personal credit cards—to run their businesses.' The consequences of this financing burden are clear. Minority-owned businesses are more likely to delay hiring, postpone expansion, or scale back operations due to financial strain. What is often missing from the fintech or bank offerings is inclusivity by design. 'Inclusive design means building for a variety of users and realities: cash-flow-based products, alternative underwriting models, and built-in financial coaching,' Estiverne-Colas explained. Side Hustles And The Risk Of The Debt Trap Many women of color are starting businesses as side hustles. Selling products online, managing freelance work, or running a mobile service as a way to supplement income. But without clear financial tools and systems or a formal business structure, side hustlers are particularly vulnerable to falling into debt traps. As it is common to use personal credit cards to pay for supplies, advertising, or subscriptions, many side hustlers do not seek business credit early because they do not yet see themselves as business owners. Instead, they are more likely to turn to high-interest, personal financing just to keep operations running. 'Today's financial tools must be designed for a modern workforce, not just for traditional 9-to-5 employees,' said Estiverne-Colas 'Solopreneurs, gig workers, and first-time business owners represent one of the fastest-growing segments of the economy, yet most financial products still cater to a narrow definition of 'stable income' and 'prime credit.'' As BNPL and credit card use become more common funding tools, it is critical to approach borrowing with a long-term lens. That means tracking repayment terms, separating side hustle and personal expenses where possible, and understanding how every transaction might affect your credit score. Building A Path Out Of The Debt Trap Escaping the debt trap begins with recognizing how it shows up in day-to-day operations not just as a balance sheet item, but as a barrier to decision-making, growth, and stability. Common indicators include relying on credit cards to cover recurring operating costs, delaying payroll or vendor payments due to loan obligations, or avoiding financing conversations due to fear or fatigue. These are not failures; they are signals that a more sustainable strategy is needed. Protection starts with financial structure and support, which includes separating personal and business finances, creating cash-flow plans that prioritize debt servicing without starving growth, building relationships with mission-aligned lenders before capital is urgently needed, and leveraging community-based financial support systems and mentorship networks. Recognizing a cultural component is needed to break the silence around money. 'The more we foster open conversations about money [...] the more solopreneurs and first-time entrepreneurs will feel empowered to engage, ask questions, and advocate for products that meet their needs,' Estiverne-Colas said. 'Financial shame thrives in silence. Financial confidence grows in community.' Ultimately, the burden of high-cost debt should not fall solely on the entrepreneur. While inflation and rising interest rates have intensified financial pressure across the board, the impact has been disproportionately severe for those already operating at a capital disadvantage, which often are women of color entrepreneurs. Until broader systems are reimagined with inclusivity at their core, and entrepreneurs gain greater awareness of how financial decisions shape long-term outcomes, the most effective defense remains clarity, strategic planning, and informed decision-making.
Yahoo
25-06-2025
- Business
- Yahoo
Universal Processing Unveils New Headquarters, Pioneering Fintech Solutions for Minority-Owned Businesses
New York, New York--(Newsfile Corp. - June 25, 2025) - Universal Processing (uP), a leading Fintech and payment solutions provider, proudly announces the grand opening of its new headquarters in the heart of New York City, Times Square. This exciting milestone marks the company's continued growth, as well as its commitment to empowering minority-owned businesses with cutting-edge financial technology. A New Era for Minority Business Empowerment With global digital payments surpassing $10 trillion in 2024, the ability to offer seamless, cashless transactions has become a crucial factor in business success. Yet minority-owned businesses continue to face disproportionate barriers in accessing advanced payment technology, which hinders customer acquisition, financial management, and long-term sustainability. As one of the few AAPI-owned Fintech firms in the U.S. and the second AAPI-owned payment processor to achieve Full-Service Provider status, Universal Processing is bridging the gap between minority entrepreneurs and next-generation payment solutions. The new headquarters represents more than just an expansion-it's a strategic investment in the future of inclusive Fintech. "In today's digital economy, small businesses need more than just a payment processor-they need a partner who understands their unique challenges and provides tailored solutions," says Saint Hung, CEO of Universal Processing. "That's why we built a company that doesn't just process payments, but helps underserved businesses compete at a global level with cutting-edge financial tools, multilingual support, and transparent pricing." Building Fintech Solutions That Matter The new headquarters will serve as a hub for continued innovation, featuring: Tap-to-Pay and Omnichannel Capabilities - Empowering businesses to accept payments anywhere, from mobile to in-store. In-Language Customer Support - Offering 24/7, U.S.-based assistance in multiple languages to serve diverse business owners. Financial Education & Resources - Providing tools and insights to help entrepreneurs scale sustainably. A Commitment to Minority Entrepreneurs Studies show that 70% of minority business owners believe that limited access to technology negatively impacts their business viability. Universal Processing is tackling this challenge head-on by ensuring that underserved businesses have access to enterprise-level payment tools-without enterprise-level complexity or costs. "The ability to accept digital payments shouldn't be a privilege-it should be a standard," added Hung. "With our new headquarters, we are doubling down on our mission to democratize access to Fintech solutions, helping more businesses move 'uP'." Join the Grand Opening To celebrate this milestone, Universal Processing invites partners, clients, and industry leaders to its grand opening event at the new headquarters on June 26th. The event will feature live demonstrations of payment technologies, discussions on the future of Fintech, and insights from industry experts on empowering minority-owned businesses in a digital-first economy. For media inquiries, event details, or partnership opportunities, please contact: Yin Yupr@ About Universal Processing Universal Processing is an award-winning Fintech and payment solutions provider, specializing in serving underserved businesses and partner channels with full-service payment processing. As a certified Minority-Owned Business, uP is committed to providing transparent, secure, and scalable payment solutions with 24/7 multilingual support. Learn more at To view the source version of this press release, please visit Sign in to access your portfolio
Washington Post
10-05-2025
- Business
- Washington Post
A Pennsylvania city bet on DEI. Can it survive the Trump era?
ERIE, Pa. — Darrell Roberts's life has never been easy. His mother raised 10 children in a three-bedroom house in this weathered industrial city on the shores of Lake Erie. A decade ago, Roberts's younger brother was shot and killed on a street corner here. Roberts bought a hot dog cart to take his mind off his loss and later opened Triple D's Tasty Grill. Then in 2023, he received a $15,000 grant from a controversial Erie program that has invested millions into 50 minority-owned businesses, helping him expand his street-front restaurant when he didn't qualify for bank loans.
