Editor's choice: SmartBiz
- Large network of SBA lenders
- Low potential APR
- Loans from $30,000-$5 million
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Many lenders, nonprofits and government programs offer funding designated for minority-owned businesses and owners under-represented in the business world.
But minority isn’t a well-defined term, and so it doesn’t necessarily include the same under-represented groups across loans.
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.
Many of these lenders are community-based and don’t offer funding nationwide. You may find more options by reaching out to a local business or government organization.
Our team reviewed more than 150 business loan providers to narrow down the best lenders for minority-owned businesses. We selected lenders that either offer financing exclusively to minority-owned businesses or additional services focused on under-represented communities.
We also weigh such factors as cost, transparency and service focused on a range of business owners.
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.
|Min. Loan Amount||$25|
|Max. Loan Amount||$15,000|
|Interest Rate Type||N/A|
|Minimum Loan Term||1 months|
|Maximum Loan Term||3 months|
But it's only available in 15 states, has a long turnaround and is better suited as a tool to build a business than fund a one-off expense. And there's no online application.
|Min. Loan Amount||$2,000|
|Max. Loan Amount||$15,000|
|APR||15% to 18%|
|Interest Rate Type||Fixed|
Accion offers a higher maximum loan amount than other microlenders. But it also charges higher rates and fees, and customers online complain of a lengthy turnaround.
|Min. Loan Amount||$300|
|Max. Loan Amount||$250,000|
|APR||10.99% to 22%|
|Interest Rate Type||Fixed|
|Min. Credit Score||575|
|Minimum Loan Term||6 months|
|Maximum Loan Term||60 months|
To qualify as a minority-owned business by Union Bank 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. Get started on an application by reaching out to a banker near you.
|Max. Loan Amount||$2,500,000|
|Interest Rate Type||Variable|
You can find microloans if you're just starting out, or SBA Community Advantage (CA) loans if your business needs funding to grow. It's limited to New York City's five boroughs, but business owners in other immigrant communities might find something similar by reaching out to a local business organization.
|Min. Loan Amount||$500|
|Max. Loan Amount||$50,000|
|Interest Rate Type||Fixed|
Application processes vary by business and lender but start with general steps:
Document requirements depend on the loan or grant program you’re applying for, but you’ll typically need:
The federal government supports several programs for business owners from under-represented groups.
The SBA 8(a) program sets aside federal contracts and offers training to business owners from what it refers to as economically and socially disadvantaged groups. To qualify, you’ll first need to become certified as 8(a) eligible, which starts with registering on the government’s System Awards Management website.
Through the 8(a) Mentor-Protege Program, your business might be able to access loans or equity investments — in addition to training on applying for and handling government contracts.
SBA Community Advantage (CA) program sets aside access to SBA 7(a) loans to business in underserved markets. While loans are not available to all minority-owned businesses, you can often find them through nonprofit lenders like BCNA that specialize in serving a specific community.
You can apply for up to $250,000 with rates fixed at the prime rate plus 6% and up to an 85% SBA guarantee. CA lenders also typically offer training programs to help your business grow and access more capital in the future.
The USDA sets aside a portion of its Farm Service Agency loan programs specifically for historically underserved farmers and ranchers. It doesn’t offer specific loans, but it increases the odds of approval by setting aside funds specifically for underserved farmers — meaning you won’t have to compete with all applicants.
Some states and local governments offer funding programs specifically for minority-owned businesses. You can find out what’s available to you by reaching out to your state’s office for minority business enterprises.
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:
MBE certification is required for some government and private financing programs focused on minority-owned businesses. And it can 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.
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, anti-discrimination 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.
A first step is to reach out to your creditor and confirm why your business was denied a loan. If you’re unable to get answers — or feel you aren’t being told the truth — reach out for help:
A wide range of nongovernmental resources and programs can help you start or grow your business.
In addition to offering grants, the MBDA provides a wide range of resources for minority-owned businesses, which you can find at your local MBDA business center. They can help connect you with capital and other programs designed for supporting your local community.
Local programs are often easier to qualify for, because they attract fewer applicants than national programs.
The National Minority Supplier Development Council offers MBE certification, networking events and training to its members. In the past it also offered business loans, though that program appears to be discontinued.
Minority Women Business Enterprise Enterprises specializes in helping minority and women-owned businesses owners qualify for:
It also offers resources to help your business grow after it’s certified, like marketing plans and targeted business development.
Most business lenders require a personal credit score of 670 or higher, at least one year in business and annual income of around $100,000. But many programs for minority-owned businesses come with more flexible requirements and are available to entrepreneurs.
If you’re not sure if your business can qualify, reach out. Many online lenders allow you to preapply to see rates, terms and loan amounts your business is eligible for. And it usually doesn’t affect your credit score.
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. But they typically don’t offer the levels of funding you’ll find at a bank or even an online lender, and they usually have a longer turnaround.
Read our guide to business loans to learn about other financing and funding options available to your business.
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