Loan and grant options available for minority-owned businesses

Get the funding and support you need with specialized programs for minority-owned businesses.

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What types of minority business loans are available?

You’ll find many solid options for business loans and among them specialized offerings for minority-owned businesses that you may be able to take advantage of. Government options include the Small Business Administration’s 8(a) Business Development Program, which assists small disadvantaged businesses with a broad scope of access to government contracts, and the US Department of Commerce’s Minority Business Development Agency that links minority-owned businesses with the capital, contracts and markets they need to grow.

Outside of government agencies, you’ll find nonprofits, online lenders and traditional banks that provide customized assistance — including loans and grants — to minority business owners. By tapping into these resources, you can get the information to be well on your way toward business funding.

Who is eligible for a minority business loan?

Loan qualifications for minority-owned businesses vary by lender and program. To be considered a minority-owned business, your business typically must be majority owned by a minority group member. Minority groups can be classified by race — for example, Black, Asian, Hispanic or Native American — gender, physical disabilities or other social and economical designations.

Programs like the SBA require significant documentation to show proof of a disadvantage, but it extends its eligibility to those who are economically disadvantaged. Nonprofits may focus on assistance to specific smaller groups that include Hasidic Jewish Americans or those who are deaf or hard of hearing.

You’ll need to confirm that you meet basic business requirements when it comes to applying for a minority business loan. Most often your business will need to prove that at least 51% of is owned by a person who identifies as a minority. You may also need to meet regulations on size and revenue, and some lenders will even require checks on your personal credit.
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What small business grants are available for minorities?

Loans aren’t the only option when it comes to financing your business. Grants can help you grow your business without the burden of paying back the money. Both private and government grants are available, all with varying eligibility standards and requirements.

Grants.gov, run by the US Department of Health and Human Services, houses a full database of federal grants available. National organizations like the National Association for the Self-Employed offer grants, though they may require membership before you can apply.

How to apply for a minority business loan or grant

You’ve done your research, compared your offers and are now ready to apply. Before you walk into the lender’s office or log in online, you’ll want to ready a few basic documents to increase your chances of approval.

One is a well-developed business plan. You will need to show your lender that you’ve built a solid plan for success as well as demonstrate your financial need in getting there. You’ll also need to gather copies of your personal finances, especially if you’re applying for a loan under economic disadvantage. Anticipate a hard check on your personal credit too.

One last thing to keep in mind: Depending on the type of funding you’re applying for, you may need to prepare a presentation of your business plan to go along with your information.

Once everything is ready, take a deep breath and dive in.

Application checklist

Here’s a quick guide to the minimum documentation you’ll need when you apply:

• Your business tax returns.
• Financial statements for your business for the past three years.
• A balance sheet for your business for the past three years.
• Lease agreements.
• Proof of business ownership.
• Business asset transactions.
• State filings.
• Your personal financial information.
• A detailed long-term business plan.
• A prepared presentation that goes over your business plan and statement of need.

Frequently asked questions about minority business loans

• Do minority business loans come with stronger eligibility requirements than those for traditional business loans?

  Yes, loans for minority-owned businesses tend to come with extra requirements. Depending on the lender or program you go through, you may need to provide evidence of that there’s been a negative impact on your business due to your minority status, especially if your status is not included as part of a prequalified category.

• Where can I find additional resources on minority-owned business loans?

  The Small Business Administration is a good place to start. You can also look into whether your state has an office of minority enterprises and explore organizations that focus on the group you most closely identify with, such as the Minority Business Development Agency, Black Business Association, Women’s Business Enterprise National Council and National Minority Supplier Development Council to name a few.

• Are lines of credit offered for minority-owned businesses?

  Yes. You can find business lines of credit customized for minority-owned businesses with some lenders.

• How long does it take to receive a decision on my application?

  Approval processes vary by lender and loan, but you can receive a decision within as little as 48 hours with some programs. Be sure to ask about specific turnaround times when you apply.