Since 2007, more than 8 million minority-owned businesses have started small businesses in the United States. In fact, minority small business owners are represented in every industry sector, according to the US Department of Commerce.
Lenders have taken notice. Financing options abound for minority businesses ready.
What defines a minority-owned business?
How can a minority-owned business qualify for a loan? What if the companies are sole proprietors, owned by minority entrepreneurs?
Here is the definition:
A minority-owned business is a business owned or controlled at least 57% by one or more persons belonging to a minority.
What are minority business loans?
This is another simple definition. Minority business owners can get small business financing designed specifically for them. Lenders want to foster the growth of small businesses, especially among minority-owned businesses. Thus, they offer minority-specific business financing.
What are the best business loans for minorities? It depends on the type of loan that best suits your business. We have a list for you.
Best Minority Small Business Loan Options
Minority small business loans are very varied. They vary by type of lender, as well as minimum requirements for financial eligibility and credit score. Some have a maximum loan amount and interest rates may be lower or higher than those currently available from banks and other traditional lenders.
As you can see, minority loans run the gamut in the lending world. They include small business start-up loans, online small business loans, small business loan programs, nonprofit third-party lenders, and even business grants.
No matter what type of minority business venture you are looking to finance, you will find the right option for you. We have included the links so that you can easily further your research.
1. SBA 7(a) Loan Program
The Small Business Administration has long been the go-to for small businesses seeking loans, especially for working capital. The SBA 7(a) Loan Program Perfect for moderate income business owners, whether or not they are minority business owners.
2. SBA 8(a) Business Development Program
Minority-owned small businesses may find a good fit with this small business administration program. The SBA 8(a) Business Development Program seeks to promote underserved business owners, including minority-owned businesses. SBA loans have competitive interest rates and are a great way to build business credit.
3. Community Development Financial Institutions — Best for Bad Credit
Community Development Financial Institutions (CDFI) are some of the best small business loans for minorities and other underserved business owners. CDFIs are best for those with low personal net worth and/or bad credit.
4. Accion USA – Microcredit Program
Minority-owned businesses can turn to a microcredit program such as the one offered by Action USA. A microloan can be a small sum of money, with the loan proceeds supporting a business idea.
5. SBA Community Advantage Loans:
Underserved communities in underserved markets are at the center of SBA Community Advantage loans.
6. Fundbox — Loans for Minority Startups
Box is the site for minority business owners looking to fund a startup.
7. OnDeck – Online Term Loans
If you meet the minimum personal credit score requirement, you should consider a term loan from On the bridgewhich aims to finance minority-owned small businesses.
8. SBA Microcredit Program
Again, the Small Business Administration has long since set the standard. The SBA Microcredit is a good choice for an eligible small business owner.
9. SBA Express Loan
Apparently, this small business loan from the SBA is in the fast lane.
10. USDA Commercial Loans
The USDA seeks to fund small businesses operating or seeking to operate in rural communities. Loan applications must be made by USDA desks.
11. National Funding – Working Capital Loans
If your small business is already in operation and you need a loan for a special project or expansion, try National funding.
12. Business Consortium Fund Loan
The Loan from the business consortium fund can be a source of venture capital funds as a group of business owners seek to build a diversified business.
13. Union Bank Business Diversity Loan Program
14. Non-profit organizations
If you’re a minority-owned nonprofit, one of your best bets for a loan is a Community Development Financial Institution, or CDFI (see #3 above).
15. SBA Patriot Express Loan Program – Startup Extensions
If your small business start-up is ready to grow, check out the Patriot Express Small Business Administration Loan Program. This SBA program has already lent more than $633 million to support startup expansion.
16. Business Center for New Americans
It is a community development financial institution that focuses on lending to minority business owners who are newcomers to the United States. The Business Center for New Americans strives to create community wealth.
17. Backstage Capital
It seems, the Behind the scenes capital the minority business loan focuses on small businesses involved in the arts.
18. National African American Small Business Loan Fund
Minority-owned entrepreneurs involved in Black-owned businesses should approach the National African American Small Business Loan Fund. Funds are available through the National Black Chamber of Commerce.
19. Wells Fargo Community Development Banking and Lending Division
Wells Fargo Community Development Banking and Lending Division focuses on commercial real estate loans.
20. Bank of America’s Merrill Lynch Entrepreneurial Finance Group
The Bank of America Merrill Lynch program focuses on entrepreneurs.
21. Microcredit business loans from online lenders
Online lenders can offer microloans to minority owners. Lenders include Kiva, Lift Fund, Grameen and others.
Other Resources for Minority Business Owners
Minority businesses may also seek grants or other funding from agencies. Keep in mind that it’s not free money, but the conditions are generally generous.
Small Business Grants
Small business grants are often transfer funds. For example, a local entity such as a city or a college receives a government grant. The funds are passed on to local small businesses.
This is the basis of how small minority business grants are obtained through the USDA Rural Business Development Grant (RBDG) program. You can apply for loan funds and get technical assistance from your local USDA office.
Minority Business Development Agency
There are a few steps to apply for a government grant through this Minority Business Development Agency program. For example, you need to create an account on Grants.gov and you will need an EIN to create an account. Once you have done this, you will be able to keep an eye on available grants.
Small Business Development Centers
Small Business Development Centers can be established through the Small Business Administration and/or local universities. Small business owners can earn money by joining the center.
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