Worcester Business Journal

wbjournal.com | March 20, 2023 | Worcester Business Journal 7 When she applied to a high-profile Boston accelerator, she said she received feedback from a judge upon rejection saying the data she provided about the need for her products wasn't believable. "at kind of thinking prevents you from getting into programs that could give you access to much needed funding," said Austin. Looking for the money Traditional business acumen suggests founders start with a friends-and- family financing round, where startup founders raise money from their personal networks. is round is more challenging for marginalized groups as they historically have not had the same level of financial security, said Austin. "For systemic reasons, it's not a level playing field," she said. "ere is systemic racism even as it relates to friends and family rounds if they have less money to invest." Seeking funding from firms that can't relate to the need for her product has been a challenge, too, said Austin. "You can have all your ducks in a row, but if there's a lack of understanding of why it's important due to lack of PHOTO | EDD COTE relatability, it's a difficult leap," she said. e numbers are not in Austin's favor as a Black business starter. According to Morgan Stanley, Black- owned businesses are three times more likely to be rejected for funding as compared to white-owned businesses; additionally, 61% of businesses started by Black women are self-funded. is trend continues despite the fact that Black women are the fastest growing demographic of entrepreneurs in the U.S., according to Morgan Stanley. Beyond funding from venture capital firms and specifically tailored grants, commercial loans from local banks remain an option. At Auburn-based bank Webster Five, helping new businesses get started is a priority. When Christopher Watson, senior vice president and senior lending officer in business banking, started at the bank 5.5 years ago, a priority was to get preferred status with the U.S. Small Business Administration, which allows the bank more flexibility in approving loans for newly established businesses. "We are a community bank. We are here to support local businesses, and as a preferred lender, we get to make that decision," said Watson. Still, the bank doesn't have a method to track demographics for who is receiving loans, said Watson, though he said Webster Five offers the same loan products across the board, without specific programs for women-owned or BIPOC-owned businesses. As a safeguard for equity, no one person working at the bank is able to turn down a loan request without cosigning from another banker, Watson said. But even getting loan approval can be a challenge when starting up a business. For Curran, loan processes have not panned out as she hoped. "Being a business owner and pulling myself up by my bootstraps, my credit is not as good as it was when I was working a 9-5," said Curran. For Aguilar, pursuing loans as a means of financing Kommon Sense Co. has not been as desirable as grant funding. A small handful of $5,000- $10,000 grants sustained Aguilar and the shop through the pandemic, during which she was hesitant to apply for government loans, such as the Paycheck Protection Program. e applications have been unnecessarily confusing and specific, said Aguilar. Aguilar has been running her shop out of a location in the Worcester Public Market in the Canal District, but she ended up closing down the storefront. Kommon Sense Co. now runs out of a small space in her home. Curran is still hopeful the funding she needs to take the next leap with STEM ENRG is on the horizon. "I know it's there. It's right there. But how do I get it?" she said. W WO R C E S T E R | F R A M I N G H A M | B O S TO N | C A P E CO D FletcherTilton.com Dining Establishment? We Can Help Feed Your Success. Fletcher Tilton serves as counsel to more than 100 restaurants, breweries, pubs, and wine purveyors. We understand the demands, complexities, and requirements of running a business centered on food and drink, and the variety of challenges you face each day. Our experience allows us to help with everything from structuring new ventures and corporate formation, to commercial lending, real estate lease or purchase, permitting, workforce issues, and more. Every step of the way, our expertise remains on the table. Mark Donahue, Esq. Karen LaFond, Esq. 508.459.8029 508.459.8038 43% 32% 2020 2022 Diversity priorities in startup funding Venture capitalists who said it was a top priority for their firm to find opportunities with multicultural-founded companies Source: Morgan Stanley VC Report: Social Equity and Funding Gaps, 2022 At Webster Five, Christopher Watson prioritizes local loans for new businesses. After closing down her store in the Worcester Public Market, Katherine Aguilar runs all operations for Kommon Sense Co. from her home studio.

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