Why Minority and Women Owned Businesses are Denied Capital

So many ask this question but few ever get a straight answer to it.  Most are given the “old tired and true” reasons like lack of sufficient credit or lack of sufficient equity/capital or my favorite, lack of sufficient personal wealth.  Which begs the question, how can any of these be achieved if one cannot get the capital to begin that journey.

The real reason that minority and women businesses face a steeper climb up the wealth ladder than others is that program rules are set for those already there or it is designed to keep minority and women owned businesses from ever achieving this status.  I say that because the evidence of such is quite overwhelming, if you look at it honestly.

There is a recent story in our local news about a “79 year old former owner, CEO and president of a company called Rockford’s Commercial Mortgage and Finance Company who was just sentenced to 7.5 years in prison on 17 counts of mail fraud, one count of wire fraud and one count of securities fraud”.  The article continues on to say that this prominent resident of Rockford, Illinois will also get 3 years of supervised release after his stint in prison and he will also have to pay restitution of $49,350,615.95.  This gentleman “must surrender himself by July 14” of this year and it was said it all stemmed from him “raising capital for his company by selling promissory Notes and Certificates of Participation to investors”.  It said that he “used the reputation of the company to defraud investors”. 
While I take serious issue with the fact that he was allowed to surrender himself and given until July 14th to do so, I take greater issue with how he was allowed to do this to the tune of over 49 million dollars.  Either people really were unaware or they chose to turn a blind eye.  This reportedly took place “between 2003 and 2008” and by my calculations that is 5 years.  So someone please convince me how no one knew what was going on for 5 years?  This is why minorities and women owned businesses have such a hard time securing capital.

Investors wish to go with the devil they know so the new innovators and inventors who create something must now perform earth-shattering maneuvers to get the capital.  You can expect an even tougher road if you are a minority or a woman, not because they have a bad business plan or investors cannot see the enormous potential in what they are proposing but because they trusted someone that looked like them and was duped, no way are they going to trust those that don’t.  This is the honest truth.  The only problem is that this happens more than it gets reported and this fact increase, the already dwindling chance, minorities and women have at securing the cash they need to bring their dreams to reality and their products to market.  If this was a onetime thing then Bernie Madoff should have been the last of it but with this news here, we know that this will not be the final curtain as well.

It used to be that all you really needed was a solid idea and a good business plan, now you need divine intervention or to happen upon an investor closing in on their final days and trying desperately to make it into heaven.  Just my opinion, I could be wrong and if so ME CULPA.


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