Unpopular opinion: I don't think saddling a startup small business with 18% debt is a good idea.
I'm calling out here a disturbing trend I've seen a LOT of recently: DEI debt funds with VERY high interest rates.
TLDR: this is the new loan program Jennifer Lopez just put her name behind. Yep. While I applaud the efforts to further financial literacy and business education in their initiative, I've sat with this for over a week, and I'm still nauseated about it.
News flash: the IR does not come down from 18%, even after your business is evaluated for cash flow, revenues, reputation, future prospects, etc. It's really the FLOOR. Rates usually go up from there. I cannot shake the sinking feeling that we're being targeted for high-interest rate business loans. Every day I get unsolicited texts, emails, and calls offering me money for my company at obscene IRs. Mysteriously, this started happening after I applied for minority-and woman-owned small business status.
Minority-owned businesses are NOT somehow inherently "riskier" to justify such high interest rates. A high interest rate is opportunistic verging on predatory where minority owners have solid businesses but just simply don't qualify for traditional loan programs. Look, I'm a female and a minority. I understand as a Latina founder why we are being targeted for these programs, but they are not all created equal.Access to capital is a real issue causing a lack of diversity in business ownership.It's why we invest differently at Full Course in the brands we support, even supporting ways to bring capital to be inclusive and diverse in our brands' franchisees.
Business ownership and entrepreneurship is the key to improving DEI. But it starts with access to capital that is conscious, principled, and fair. I'll bet on the immigrant hustle and hard work any day, just like I bet on myself.✌️ 🇨🇺 ❤️ 🇺🇸