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Securing capital is no easy task. For minority entrepreneurs, it’s even harder. Nearly 30% of small business loan applicants were denied or partially funded.
Minorities have even lower approval rates. They are three times more likely to be rejected.
Banks and lenders are aware of this issue have since made huge strides in offering more minority business loans.
If you’re a minority business owner who runs a small business or startup, read this guide to see your financing options.
Minority-Friendly Business Loans to Consider
Loan Amount: Up to $2.5 Million
Union Bank’s Business Diversity Lending Program is designed to help minority small business owners. Yes, minorities only!
There are less requirements than your traditional lending program. As long as:
· Your business is at least 2 years old
· You own 51% or more of the business
· You need less than $2.5 million
Business Center for New Americans
Loan Amount: $5,000-$50,000
The Business Center for New Americans giving loans to minority business owners who don’t qualify for traditional financing options.
SBA offer several loans that are friendly to minority business owners but aren’t exclusive to minorities.
SBA 8(a) Business Development Program
Loan Amount: $5,000 - $5 Million
Although SBA 8(a) Business Development Program is open to everyone, minorities or smaller disadvantaged businesses have a better chance for qualifying.
SBA Community Advantage Loans
Loan Amount: Up to $250,000
SBA Community Advantage Loans is targeted for mission-based lenders like non-profit organizations.
This is a very solid option for minority entrepreneurs who need access to large capital but may not be qualified for traditional financing.
SBA Microloan Program
Loan Amount: Up to $50,000
Small minority business owners should also consider the SBA Microloan Program, which is designed for small loans with strong credit.
This is especially friendly for minority owners who need access to working capital but struggle with securing funding via traditional financing.
Minority Grants AKA Free Money
If you’re looking for money with no string attached, grants are where it’s at!
Though the application process is typically more involved and specific than your traditional loan, the payoff speaks for itself. It’s free money! And no credit check
There are plenty of government grants at the federal and state level.
Don’t forget private grants as well. Definitely consider:
- National Association of the Self-Employed
- FedEx Opportunity Knocks Small Business Grant Contest
- The Miller Lite Tap the Future Business Plan Competition
These Are All Great, But I Have a Low Credit Score
Most traditional lending programs are not friendly to anyone who has a credit score < 650.
If you fall into this category, don’t worry! We understand that things happen outside of your control.
If so, consider our working capital program. If you have low credit with a growing business, this may be for you.
So long as you have been in business for 4 months or more, gross $10,000 per month, you should research this option too.
In the End, Remember to Do Your Research
There is a significant number of options for minority entrepreneurs. Always do your research to select the best option for your small business needs.
Feel free to contact us to see what options are best for you!