Top minority business loans

The Small Business Administration (SBA), community lenders and other nonprofits are a great place to look for minority business loan programs. These programs can be particularly helpful if you’ve struggled to find affordable financing at a bank — or just want a loan that’s tailored to members of your community.

Because minority isn’t a well-defined term, it doesn’t necessarily include the same marginalized groups across all programs. Carefully read the eligibility requirements for the loan or program before applying. And because some programs require it, look into certifying your business as a minority business enterprise (MBE) with your state or local government.

Where to get a minority business loan

Have a minority-owned business? You might want to consider the following types of loan programs and lenders.

SBA Community Advantage loan program

SBA Community Advantage loans, or CA loans, offer government-backed business loans up to $350,000 with businesses in underserved communities in mind. CA lenders typically have lower credit, revenue and time in business requirements compared to other SBA programs. And they often only serve their local community.

CA loans aren’t exclusively available to minority-owned businesses. But they’re designed to make it easier to overcome hurdles that minority business owners have faced due to discrimination. And many CA lenders specialize in serving BIPOC communities.

Accompany Capital microloans

3.6

★★★★★

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Formerly the Business Center for New Americans (BCNA), Accompany Capital is a good example of a local SBA CA lender nonprofit lender. It specializes in serving immigrant communities in New York City, with representatives speak languages that include Hindi, Kannada and Spanish. You can find microloans if you're just starting out, or SBA CA loans if your business needs funding to grow. CA loans range from $75,000 to $350,000 with interest rates set at the Wall Street Journal Prime Rate plus 3% and a term as long as 10 years.

• Pros and cons

  Pros

  • Rates fixed at 3% for microloans
  • No minimum credit score
  • No fixed revenue requirements

  Cons

  • Borrowers must be 21 years old
  • Might require a guarantor
  • Only available in New York City

• More details

  Loan amount	$500 – $50,000
  APR	3%
  Min. Credit Score	350
  Loan term	6 to 36 months

Loan amount	$500 – $50,000
APR	3%
Min. Credit Score	350

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SBA microloans

The SBA microloan program offers up to $50,000 through nonprofit intermediary organizations that offer loan, as well as management and technical assistance. These may be easier to qualify for than other types of SBA loans — though harder than your typical microloan. And they may have higher interest rates than other SBA loans, depending on the intermediary.

These can be a good alternative to SBA CA loans if your business doesn’t need much financing, and may be available to startups. But the SBA CA loans aren’t exclusively available to minority-owned businesses.

SBA 7(a) loans

The SBA 7(a) program gives established small businesses low-cost funding if they’ve struggled getting a bank loan in the past, thanks to government backing. You can borrow as much as $5 million through this program, which comes with federally-mandated caps on interest rates and fees.

It’s harder to qualify for than a CA loan or SBA microloan — and requires more paperwork than your average lender. For example, many lenders require a 620 credit score or higher. But it can be a good next step after receiving a loan through one of these SBA loan programs.

SmartBiz business loans

4.5

★★★★★

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The SBA has a wide variety of loan options for minority-owned businesses, and Smartbiz can connect you to a lender that will guide you through the process. It takes only a few minutes to fill out its form, and it could cut the processing time down from a few months to a few weeks. But you'll still need to pay referral and packaging fees to Smartbiz for connecting you to a lender.

• Pros and cons

  Pros

  • Reduces turnaround time by weeks
  • SBA and non-SBA options available
  • Simple form to start

  Cons

  • SBA referral and packaging fees
  • Must borrow at least $30,000
  • Requires 650 credit score

• More details

  Loan amount	$30,000 – $500,000
  APR	Prime Rate, plus 2.75% to 3.75%
  Min. Credit Score	650
  Loan term	10 to 25 years
  Requirements	650+ credit score, 2+ years in business, $50,000+ in annual revenue, no bankruptcies or foreclosures in past 3 years

Loan amount	$30,000 – $500,000
APR	Prime Rate, plus 2.75% to 3.75%
Min. Credit Score	650

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Microloans

Microloans are small-dollar business loans, usually from local nonprofits. You can usually borrow up to around $50,000 with bad credit and little or no time in business. While rates are often higher than your average business loan, they’re cheaper than other bad-credit alternatives, like merchant cash advances or factoring.

Microlenders also typically offer advice, technical assistance and training to small business owners, sometimes as a requirement for receiving a loan. And many have a mission to serve BIPOC communities — though they aren’t explicitly business loans for minorities.

Kiva business loans

3.7

★★★★★

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Kiva is a nonprofit with the aim of helping entrepreneurs in underserved communities — though your business doesn't need to be minority-owned to qualify. Kiva offers 0% APR microloans that are partially crowdfunded. There are no credit or revenue requirements, but your business won't qualify for funding if you can't raise donations from between five and 35 individuals first.

• Pros and cons

  Pros

  • No interest or fees
  • No minimum credit score or residency requirement
  • Loans start at $25

  Cons

  • Requires strong social network
  • Loans capped at $15,000
  • Can take 45 days to receive funds

• More details

  Loan amount	$1,000 – $15,000
  APR	0%
  Loan term	6 months to 3 years
  Requirements	Have at least ten friends and family members willing to contribute to your loan, live in the US, ages 18+, not in bankruptcy or foreclosure, not under any liens, not engaged in: multi-level marketing, direct sales, pure financial investing or illegal activities

Loan amount	$1,000 – $15,000
APR	0%

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Camino Financial small business loans and microloans

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Camino Financial is a nationwide CDFI that specializes in the needs of the Latinx business community, with services in Spanish and English. It offers microloans from $5,000 to $75,000 and small business loans starting at $10,000. And it's one of the few microlenders — or CDFIs — that can provide funding within two days. But while interest rates for business loans are relatively low for a bad credit lender, microloan rates start at a high 25.5% APR. This, combined with terms as long as three years, can make for a high loan total cost.

• Pros and cons

  Pros

  • Services in Spanish
  • Online application
  • Two-day turnaround

  Cons

  • High starting APR for microloans
  • Long terms can lead to high total cost
  • No funding to start a business

• More details

  Loan amount	$5,000 – $400,000
  APR	18.75% to 24.75%
  Min. Credit Score	550
  Loan term	24 to 60 months
  Requirements	$2,500+ in monthly revenue or $30,000+ in annual revenue, 9+ months in business, current on all debts, 550+ credit score

Loan amount	$5,000 – $400,000
APR	18.75% to 24.75%
Min. Credit Score	550

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CDFIs

Community development financial institutions, or CDFIs, are nonprofits certified by the US Treasury Department with a mission to offer affordable products and services to traditionally under-banked communities. CDFIs often have access to funds from federal programs that are reserved for minority-owned businesses — including USDA and SBA loans. These tend to be hyper local, so you’ll need to find one in your area.

Grameen America business loans

4.15

★★★★★

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This CDFI and microlender specializes in financing minority women who own businesses — or have plans to start one — and live below the poverty line. In addition to offering loans, this nonprofit offers training to its borrowers and reports repayments to Equifax and Experian to build your credit. But it's only available in 15 cities in 10 states, has a long turnaround and is better suited as a tool to build a business than fund a one-off expense.

• Pros and cons

  Pros

  • Offers money to start a business
  • Offers training and credit-building programs
  • No fees

  Cons

  • No online application
  • Only available in 15 states
  • First-time loan capped at $15,000

• More details

  Loan amount	$2,000 – $15,000
  APR	15% to 18%
  Requirements	Entrepreneur or business owner, live below the poverty line, live near a branch

Loan amount	$2,000 – $15,000
APR	15% to 18%

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Accion Opportunity Fund business loans

3.6

★★★★★

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Accion Opportunity Fund offers a combination of funding and training to its borrowers, but it's focused on a broader group of entrepreneurs than Grameen America. Even so, Accion claimed that more than 60% of its borrowers come from minority communities before its merger with Opportunity Fund. Its revenue requirements are lower than your average term loan provider and it works with bad credit borrowers. But both Accion and Opportunity Fund receive mixed reviews when it comes to the quality of customer service.

• Pros and cons

  Pros

  • Low rates for a microloan
  • Accepts bad credit
  • No prepayment penalties

  Cons

  • High fees
  • Slow turnaround
  • Poor reputation for customer service

• More details

  Loan amount	$5,000 – $250,000
  APR	7.49% to 18.99%
  Min. Credit Score	570
  Loan term	12 to 60 months
  Requirements	12+ months in business, $50,000+ in annual revenue

Loan amount	$5,000 – $250,000
APR	7.49% to 18.99%
Min. Credit Score	570

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MDIs

Minority depository institutions are federally-insured banks and savings associations that are at least 51% owned by BIPOC shareholders and serve areas with a majority BIPOC population. Like CDFIs, these institutions frequently offer low-cost financing with fewer requirements than your typical bank. And they are a great place to access federal loan programs earmarked for minority-owned businesses.

You can find an MDI near you on the Federal Depository Insurance Corporation (FDIC) website.

Online lenders

Online lenders offer small business loans using an algorithm to determine your eligibility and loan terms. Many have low time in business, revenue and credit score requirements compared to a bank. Instead, they rely on alternative data, such as shipping records and daily deposits.

Online lenders often claim they can avoid human biases in banking by using an algorithm to underwrite a loan. And they’re partly right. Online lenders discriminate against BIPOC borrowers around 40% less than face-to-face lenders, according to a 2019 University of California Berkeley study.

But these lenders also tend to charge more in interest and fees than any other lender. They also face fewer regulations than banks and have lower customer satisfaction among business owners, according to a 2021 Federal Reserve report.

Fundbox lines of credit

4.2

★★★★★

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FundBox is an online lender that offers short-term loans and lines of credit to small business owners. Rather than requiring paperwork, it connects with your business's accounting software to take a holistic look at its finances and fund your loan as soon as the next day. You can qualify with fair credit and as little as six months in business. But it charges a weekly financing fee. Starting at 4.66% per week, FundBox can be expensive.

• Pros and cons

  Pros

  • No paperwork
  • Fair credit OK
  • No draw fees on credit line

  Cons

  • Weekly payments
  • Long terms have higher rates

• More details

  Loan amount	$1,000 – $150,000
  APR	Not stated
  Min. Credit Score	600
  Loan term	12 or 24 weeks
  Requirements	6 + months in business, $100,000+ in annual revenue, 600+ credit score

Loan amount	$1,000 – $150,000
APR	Not stated
Min. Credit Score	600

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National Funding business loans

4.65

★★★★★

Finder score

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National Funding is an online lender that offers short-term working capital loans and long-term equipment financing. It has a higher minimum credit score on equipment loans but can connect your business with another lender if your business doesn't make the cut. It also works with industries that banks consider to be high risk. But it's not transparent about costs on its website and short-term loans can come with inflexible daily payments.

• Pros and cons

  Pros

  • Competitive interest rates
  • Easier credit requirements for short-term loans
  • Funding as soon as next business day

  Cons

  • Daily payments on working capital
  • Might not fund your loan
  • Doesn't disclose costs online

• More details

  Loan amount	$5,000 – $500,000
  APR	Starting at 6.25%
  Min. Credit Score	600
  Loan term	24 to 60 months
  Requirements	In business 6+ months and make at least $250,000 in annual sales. Other loan types have additional requirements.

Loan amount	$5,000 – $500,000
APR	Starting at 6.25%
Min. Credit Score	600

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State and local government programs

Several states and local governments also offer loan programs specifically for minority business owners. These often come with reduced rates and flexible requirements — and may work with startups or bad credit borrowers. You can find out what’s available in your area by reaching out to a local business center or your local government’s business department.

Community banks

While it’s not common, some banks have lending programs specifically for minority-owned businesses with lower rates than you might find elsewhere — aside from a government program — and requirements that might overlook poor credit or limited experience. These are usually available in small banks that serve a specific community. Ask around your area’s community banks to find out if there’s a program that’s right for your business.

Union Bank business term loans

4

★★★★★

Finder score

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Union Bank is among the only banks with a dedicated small business loan program for minority-, women- or veteran-owned businesses. It offers business loans in California, Oregon and Washington. To qualify as a minority-owned business by Union Bank's standards, it must be at least 51% owned by a minority as defined by the Equal Employment Opportunity Commission. Your annual sales also can't top $20 million.

• Pros and cons

  Pros

  • One of the few bank loans exclusively for MBEs
  • No minimum credit score
  • Funding of up to $2.5 million

  Cons

  • Only available in California, Oregon and Washington
  • No online application
  • Can take up to seven business days

• More details

  Loan amount	Up to $2.5 million
  APR	Not stated
  Loan term	12 to 84 months

Loan amount	Up to $2.5 million
APR	Not stated

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Farm credit services

Farm credit services are co-op lending institutions that specifically serve rural America — similar to a credit union. They can be a good resource for minority business owners in the agriculture industry. The American Rescue Plan Act set aside $10.1 billion in funds to develop the farm credit system and help support socially disadvantaged farmers when it was passed in March 2021.

You can find a farm credit service lender near you on the Farm Credit website.

The USDA FSA

The US Department of Agriculture’s Farm Service Agency (USDA FSA) offers guaranteed loans and grants for farm ownership and operations, similar to an SBA loan. The FSA guarantees 90% of these loans with interest rates set by the government. And each year sets aside a portion of funds specifically for farmers from socially disadvantaged groups.

You can apply through your local FSA office — which you can find on the USDA website.

Getting certified as an MBE

Minority business enterprise (MBE) certification is an official government status indicating that your business is 51% owned, operated, capitalized or controlled by a member of what the government calls a “presumed group,” identified as:

• Black American or any Black racial group originating in Africa
• Hispanic with origins in Mexico, Puerto Rico, Cuba, Central and South American or other Spanish or Portuguese cultures
• Native American or certified member of a federal or state recognized Indian Tribe
• Asian Pacific with origins in the Pacific Islands, China, Taiwan, Korea, Japan, Thailand, Burma, Cambodia, Vietnam, Malaysia, Indonesia, Singapore or Philippines
• Subcontinent Asian with origins in India, Pakistan, Bangladesh, Bhutan, the Maldives Islands, Nepal or Sri Lanka

The main benefit of getting MBE certification is that it’s required for some government and private financing programs focused on minority-owned businesses. It can also open you up to more training and networking opportunities.

Many state and local governments offer MBE certification programs. You can also get certified through private organizations like the National Minority Supplier Development Council. Different programs might require different types of certification — and may have different definitions of what qualifies as an MBE.

What are my rights as a borrower?

Under the Equal Credit Opportunity Act, it’s illegal for a lender to discriminate against you on the basis of race, religion, sex or national origin — among other factors. Creditors can’t discourage you from applying or set different terms if you would otherwise qualify for a loan.

You also have rights under the Fair Credit Reporting Act. When you apply for a loan or other form of credit, you have the right to know if your credit history was used to deny your application. If a creditor has submitted inaccurate, incomplete or false information to a credit bureau, you can have it removed or corrected, typically within 30 days.

Unfortunately, these rights do not extend to businesses. That said, antidiscrimination laws likely apply to you as the business owner. Contact an attorney or other legal professional with complaints of discrimination or harassment to receive the best advice for you and your business.

Bottom line

If you’re just starting out or have struggled to qualify for funding elsewhere, you might want to consider a loan or grant program specifically for minority-owned businesses.

These often have more flexible requirements and are designed to help build your business and your credit to make it easier to qualify for a low-cost bank loan in the future. Read our guide to business loans to learn about other financing and funding options available to your business.