This report explores how local and statewide governmental institutions can increase access to capital among Black and Hispanic entrepreneurs and small-businesses owners. The work addressing minority business capital is in conjunction with the Partnership for Lending in Underserved Markets (PLUM), a Milken Institute and Small Business Administration initiative to develop actionable solutions to address barriers that constrain Blacks and Hispanics from accessing capital to start and grow businesses. 

Across California and the rest of the country, local and statewide governments are testing new programs to advance minority small business capital access, create jobs, and promote community development as part of broader and more long-term competitive regional strategies. New programs leverage a range of capital products and many call for the participation of private-sector partners to co-fund and help execute. Income-based, place-based, and industry-specific structures allow government entities to reach underserved populations despite legal prohibitions related to discrimination against, or preferential treatment for, protected classes—including race and ethnicity.

However, there are pitfalls that may doom even the most innovative of programs. The following recommendations for local and state government will safeguard ongoing efforts to create impactful and sustainable minority business capital access programs:

• Establish measurable impact goals and share outcomes
• Support and leverage federal programs
• Take the lead to coordinate programs across jurisdictions and sectors
• Identify and address local implementation barriers