Senator Elizabeth Warren on Friday proposed a $7 billion fund to help minority entrepreneurs start small businesses through grants, rather than loans.
Calling the gap between the success of black-owned and white-owned businesses part of the overall racial wealth gap in America, the 2020 Democratic presidential candidate said her plan would promote business growth and create jobs.
“Because the government helped create that wealth gap with decades of sanctioned discrimination, the government has an obligation to address it head on — with bold policies that go right at the heart of the problem,” she wrote in a post on the Medium website.
Warren unveiled her plan before an appearance Friday in the early primary state of South Carolina at a forum by the Black Economic Alliance, a coalition of business leaders and advocates focused on economic progress and prosperity in the black community .
Grants from the fund, which is another in a series of detailed proposals she’s released since launching her campaign at the start of the year, would be limited to entrepreneurs with less than $100,000 in household wealth. Like many of the plans she’s proposed, it would be paid for with her proposed wealth tax targeting the accumulated assets of richest Americans, she said.
In the Medium post, the Massachusetts senator said the big difference between her plan and existing federal government programs is that her Small Business Equity Fund would make grants to entrepreneurs instead of loans that Warren says “leave businesses in debt when they’re trying to grow.”
“Equity helps businesses thrive from the beginning without having to worry about ongoing financial obligations or the risk of default,” she wrote.
The federal program would be administered by state and local governments.
Warren says she wants to tackle disparities on the investor side of the entrepreneurship equation, too, where the vast majority of venture capitalists are white.
“This hamstrings entrepreneurs of color: studies show that investors are more likely to partner with entrepreneurs that share their gender or race,” she wrote.
If elected, Warren said she’d require the federal government to seek out more diverse asset managers for pension funds.