But for Terry the loan denial was not an impediment. She turned to her 401(k) and maxed seven credit cards to get the $150,000 she needed for her business.
Terry's risk is now paying off. Her lingerie line, two years young, is being sold at major retailers such as Macy's and jcpenney.com.
Other challenges that minority businesses face is profitability and survival rate. About 50 percent of all small businesses survive five years or more, and only one-third survive 10 years or more. And according to an SBA report, "Women and minority-owned firms tend to be smaller and less profitable … and they carry lower survival rates than their male or nonminority counterparts."
"Smaller loan sizes seem to be linked to higher failure rates. Access to credit is a big barrier," Lisa D. Cook, an associate professor of economics at Michigan State University and a former member of President Obama's Council of Economic Advisers. "Most of minority-owned businesses are located in their local communities, and if their local communities are poorer than other communities, they're going to have a lot less growth potential."
Another challenge that could hamper business growth among blacks and Hispanics is the lingering effect of the housing crisis, Cook said.
"A lot of their wealth for 2008 was tied up in housing," she explained. "It's not easy to get a mortgage anymore. ... Home-equity loans can't be counted on as they were before to finance start-ups."
A study found that minority homeowners were disproportionately affected by the foreclosure crisis.
Home ownership often serves as collateral for those who want to start their business and can also help decrease the probability of loan denials.
"Home equity can serve as a relatively low-cost financing alternative," the SBA says. "Absence of home ownership may also serve as a barrier to entry for prospective women and minority entrepreneurs."
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Another challenge Cook sees among blacks and Hispanics—whose businesses are mostly in the service and manufacturing industries—is their lack of representation in the innovative economy, or science and technology economy, which she says is the fastest growing economy.
Asians, however, fare well in the STEM (science, technology,engineering) industry holding 15 percent of all stem jobs, according to the Census.
Blacks held 6 percent of STEM jobs, while Hispanics held 7 percent.
The Obama administration hopes to alleviate some of the hurdles small-business owners face—in particular, among minority—with the appointment of the new SBA administrator, Maria Contreras-Sweet, who was born in Mexico.