Business Funding for Minorities
$25,000 – $500,000
1 – 5 Years
$5,000 – $300,000
4 – 24 Months
$5,000 – $100,000
1 – 2 Years
Up to $250,000
Up to $200,000
1 – 12 Months
Actual offers vary based on your application information and lender.
Minority Business Loans
Minority business loans are a source of business funding offered exclusively to minority-owned businesses. For lending purposes, minorities are usually classified as African-American, Alaskan Native, American Indian, Asian-American, Hispanic-American or Pacific Islander. To be considered a minority-owned business, a member of one of these groups must own at least 51% of the company. Business loans for women are also often grouped under the rubric of minority business loans, though fewer formal programs exist that cater directly to women entrepreneurs.
Often, the minority business loans consumers seek are SBA loans, which come with very favorable interest rates and can be repaid over a long period of time. Other business owners may be looking for grants, which do not have to be repaid. Certain community organizations, microlenders and nonprofits offer loans designated for minority-owned businesses. In many instances, the business must be certified as a minority business enterprise (MBE) or a disadvantaged business enterprise (DBE) to qualify for these loans.
SBA Offerings for Minority Businesses
SBA 8(a) Business Development Program
The 8(a) Program offers a broad scope of assistance to firms that are owned and controlled at least 51% by socially and economically disadvantaged individuals. If approved, owners are eligible for no-bid government contracts, can take advantage of educational programs, and can improve their chances to be approved for SBA loans. For more information on the SBA 8(a) Development Program, visit the SBA website.
SBA Community Advantage Program
The Community Advantage Program works to meet the financial needs of small businesses in underserved areas. The program encourages local, mission-focused lenders like nonprofits to make SBA 7(a) loans of up to $250,000 with the regular 7(a) government guarantee. The program is designed to service small business owners who might not qualify for traditional financing, so it’s a great option if you are looking for minority business loans.
SBA Microloan Program
If you are seeking a loan of $50,000 or less, you should look into the SBA microloan program. Although it does not specifically provide small business loans for minorities, its small- to medium-sized loans can help small businesses start and expand. Microloan funds are provided by third-party lenders — usually nonprofit, community-based organizations that offer management and technical assistance to small business owners along with the loan. The average microloan is about $13,000.1
1 SBA. (n.d.). Loans & Grants. Retrieved January 19, 2017 from https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/microloan-program
Four Steps to Prepare for a Minority Business Loan
Weigh the Pros and Cons
Taking on debt of any kind is a matter to be taken seriously. Unless you are searching specifically for grants, it is very important that you carefully consider how much value a loan can provide for your business versus how much it will cost you.
Determine How Much You Need
If you’ve determined that the cost of a loan is worth taking on, it’s important to decide exactly how much you need. Think about what you can afford, what you need the loan for and how long you’ll need to pay it back.
Now that you’ve figured out what you need, it’s time to research and weigh some offers. Naturally, you’ll want to make sure you’re getting the right type of loan for your needs at the best possible rate.
Review Your Offer
Once you know what your options are, consider the differences between different available loans. Good metrics to look at include annual percentage rate (APR) — a measure of how much interest will accrue over a year — and the repayment period.
What Does The Business Backer Provide?
At The Business Backer, we understand that it helps to have a partner in your search for funding. That’s why we’ve offered advice and customized financing solutions for business owners since 2007. Our Funding Advisors consult with you one-on-one, online or over the phone, to evaluate your needs. Then, they help match you with the right funding solution, either through our in-house products or through our True Relationship NetworkTM of partners.
Our online application process is fast and simple, and we look at a wide range of factors to get a holistic view of your business before determining your funding options. That way, you’re getting an option that fits your unique business needs. There are no fees or down payments required for applying, so complete your application or speak to a Funding Advisor today!