Inez Long was sitting with a Black customer who needed a $200,000 line of credit. Long was a commercial banker in Florida. She believed the business was viable, but the bank would not approve the request. Then a newspaper article caught her eye. It described a new Orlando organization, the Black Business Investment Fund, which guaranteed loans to Black-owned businesses.
Long called. The fund guaranteed the line, and her bank approved it. The customer got the working capital; Long’s call eventually led her to work for the fund and later lead BBIF. A guarantee had changed the bank’s decision without asking the owner to surrender a share of the company.
The need for other routes to credit has not disappeared. In the Federal Reserve Banks’ 2025 Small Business Credit Survey, 41% of Black-owned employer firms said they had applied for a loan, line of credit or merchant cash advance in the previous 12 months. Among those applicants, 32% received all the financing they sought. The survey was fielded from September 3 to November 14, 2025, and collected 6,525 responses from small employer firms nationwide. It is a convenience sample, not a random one.
Private credit is now a far larger market than the community funds Long worked with. The Federal Reserve put U.S. private-credit assets at about $1.4 trillion at the end of 2025. The figure covers a broad market for middle-market borrowers; it does not tell us how much reached Black-owned businesses.
Some lenders weigh contracts, receivables and repeat customer payments alongside property and credit history. That can help a contractor make payroll before an invoice is paid or a supplier hire to fill an order, without selling equity.
A Different Underwriting Conversation
Private-credit funds and business development companies lend directly to companies, negotiating terms outside the standard bank process. Some loans are secured by receivables or other business assets; others are structured around a company’s cash flow. A lender can look at a customer contract and the timing of payments, not only at the borrower’s property.
A company can be busy and still short of cash. The contractor has won the job but must pay workers before the client pays. The supplier has an order but needs equipment to fill it. For a service firm, reliable customers may matter more than machinery or real estate. Financing that recognizes those payment cycles can bridge the gap between doing the work and collecting for it.
The terms can be demanding: lenders may ask for guarantees, collateral or limits on future borrowing. The Federal Reserve found in 2026 that larger middle-market companies were better able to switch between private-credit and leveraged-loan markets as conditions changed. Smaller borrowers had fewer substitutes if private-credit tightened.
Revenue-Based Financing Follows the Sales
Revenue-based financing (RBF) gives a business capital in exchange for a share of future revenue until a repayment amount is met. The payment can change with sales, according to the contract. The provider generally does not take an ownership stake, though an owner should check whether an agreement includes warrants or other equity-linked terms.
A firm with repeat revenue and few physical assets may fit this model. The trade-off arrives in the operating account: even a revenue-based payment leaves less cash for suppliers, payroll and the next month’s expenses. If margins are thin or sales uneven, a flexible formula can still strain the business.
Founders First Capital Partners has built its approach around service businesses selling to companies and government agencies. The firm offers RBF, term loans and advisory services. In April 2026, it announced that Change Catalyst Fund II had reached a $12 million first close. The fund is targeting $50 million and is its third private debt fund. It is aimed at service businesses in underinvested communities, generally with annual revenue of $1 million to $10 million. The fund is not restricted to Black-owned firms.
The firm said it had deployed $20 million in growth capital and helped create more than 200 jobs. Those results are company-reported. The first close is money raised; the $50 million is a target. Founders First combines financing with coaching and growth planning, a package designed to help borrowers prepare for larger contracts and the demands that come with them.
For a revenue-generating founder, it can sit between a small working-capital loan and venture capital. Shares stay with the owner; repayment still comes from the revenue that pays the team and funds the work.
Community Lenders Can Share the Risk
CDFIs and Black-focused loan funds are another part of the financing picture. They lend directly to businesses that may fall short of mainstream underwriting, and some guarantee bank loans. The guarantee in Long’s story is a clear example: the bank made the loan after another organization agreed to absorb part of the risk.
Long described the broader case for this work in an interview with Opportunity Finance Network:
Financing Black-owned and minority-owned businesses is not just a question of justice and equity, it’s a strategy for economic growth.
— Inez Long
The borrower still has to repay. A community lender may add local knowledge, a customer contract or a guarantee to the bank’s assessment. In Long’s case, that guarantee helped the bank approve a stalled line.
There is a financing challenge before a mission-driven lender can make any loan: raising its own fund. Kim Folsom, founder and chief executive of Founders First, spoke about this in a 2022 interview with Living Cities:
It takes four times as long for fund managers of color to close a fund.
— Kim Folsom
A fund can only lend the capital it has raised. Investor commitments determine its size and how many borrowers it can serve.
When Fast Money Costs More
A quick decision may matter when payroll is due or a contract cannot wait. But speed alone says little about the price. Some small-business offers quote a factor rate rather than an APR. The Federal Reserve Board gave one example: a 1.15 factor rate amounted to an estimated APR of about 70%. Factor rates and APRs measure cost differently, and small-business financing generally does not receive the federal cost disclosures required for many consumer loans.
Before signing, calculate the total repayment and check fees, payment frequency, collateral, guarantees and default terms. Daily deductions can be difficult for a seasonal business or one waiting for customers to pay. With RBF, the owner should know the revenue share, repayment cap and what happens if sales fall. Preserving equity will matter little if repayment leaves the company short of cash.
More Choices, Still Uneven Access
Private debt funds, revenue-based finance providers and CDFIs are helping some Black-owned businesses pay for contracts, equipment and expansion. Their products differ, but each can make credit available where a conventional bank offer falls short.
The reach depends on fund size, investor backing, underwriting and the company’s ability to document revenue. The $1.4 trillion private-credit market is not a measure of Black business lending. For the owner, the relevant questions are smaller: how much will the financing cost, when must payments begin, and will the business still have cash to deliver the work?
A loan that bridges a customer’s payment delay can keep a team working and a contract on schedule. One with payments that start before the money comes in can deepen the problem. The same source of capital may be useful to one company and a poor fit for another.
Frequently Asked Questions
What Is Private Credit?
Private credit is business lending by nonbank funds and other private lenders. They negotiate directly with companies and may customize repayment, collateral or covenants. Each lender sets its own eligibility rules, so market growth does not mean every business can qualify.
How Can Private Credit Help Black Founders?
Some lenders consider contracts, receivables and recurring revenue alongside traditional collateral. That can help businesses seeking working capital or expansion financing. Access remains selective, and the broader private-credit market is not dedicated to Black-owned businesses.
What Is Revenue-Based Financing?
Revenue-based financing provides capital in return for a share of future revenue until an agreed repayment amount is met. It can preserve equity, but payments reduce operating cash. Founders should review the repayment cap, fees and any equity-linked terms.
Are CDFIs the Same as Private Credit Funds?
No. CDFIs are mission-oriented financial institutions serving underserved communities. Private credit funds are investment vehicles that lend directly to companies. Both can widen access to capital, but they differ in structure, funding source and lending goals.
What Should a Founder Check Before Taking an Alternative Loan?
Compare total repayment, fees, payment timing, collateral, guarantees and default terms. Ask how a factor rate or revenue share is calculated. Consider whether the business can manage payments during a slow period or while waiting for customers to pay.
Does Private Credit Replace Bank Financing?
No. Private credit offers another source of financing, while banks remain important lenders. Community lenders can also guarantee or support a bank loan, as they did in the $200,000 line-of-credit case Long described.
