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Loans from minority-focused lenders
In recent years, a number of lenders that exclusively fund disadvantaged business owners have emerged. Some of these financiers include:
- The Business Center for New Americans (BCNA) funds small businesses owned by immigrant and refugee entrepreneurs based in New York City. They offer microloans that need to be repaid within six months to three years, range from $500 to $50,000, and come with interest rates falling between 8.25 percent and 10 percent, depending on how big the loan is. The BCNA tends to favor businesses that haven’t been able to secure financing through traditional lenders due to bad credit or a lack of business history. To date, the organization has provided more than 3,250 loans totaling over $21.6 million.
- The Minority and Women Revolving Loan Trust Fund Program was created by the state of New York in 1995 to help minority and women entrepreneurs get the funds they need to grow their businesses. The program provides working capital loans up to $35,000 and fixed asset loans up to $50,000. Find more information here.
- Union Bank’s Business Diversity Lending Program is designed to help minority business owners secure up to $2.5 million for their companies. To qualify, a minority needs to own at least 51 percent of the business seeking funding. The company also needs to have been open for at least two years and must have annual sales below $20 million. Find out how to qualify here.
- The Business Consortium Fund Loan (BCF) helps minority entrepreneurs who haven’t had luck securing financing through traditional channels. Loans of up to $1.125 million are available, with interest rates not exceeding 3 percent above the prime rate and terms of seven years or less.
Resources and grants for minority-owned businesses
Not interested in taking on debt? There are also a number of grants and other resources available to minority small business owners:
- The Minority Business Development Agency operates under the U.S. Department of Commerce. While the agency doesn’t provide its own grants, it does help minority entrepreneurs secure grants through other programs.
- The Operation HOPE Small Business Development Program provides minority entrepreneurs and those in underserved communities with the knowledge, resources, and support they need to overcome funding challenges and grow their businesses.
- The First Nations Development Institute Grant is available to Native American, Alaskan, and Hawaiian entrepreneurs. To date, more than $31.7 million has been given to nearly 1,500 small businesses.
- The National Minority Business Council provides minority entrepreneurs with the resources they need to grow their businesses. This includes specific programs for women, executives, veterans, and entrepreneurs. Some of these programs offer education, training, technical assistance, workshops, and access to business leads and funding opportunities.
Loans from the Small Business Administration
If you don’t need funds right away and you’re feeling up for the challenge of trying to secure money through the government, the Small Business Administration (SBA) also offers a number of different funding options to small business owners, some of which are explicitly available to minority entrepreneurs and businesses that operate in underserved communities:
- SBA 7(a) loans, ranging from $30,000 to $5 million, are available to entrepreneurs who have at least $120,000 in annual revenue and credit scores of at least 680. Recent data revealed that 26 percent of these loans go to minority business owners.
- SBA 8(a) Business Development loans are available to entrepreneurs who are socially or economically disadvantaged. The program aims to award at least 5 percent of available dollars to minority-owned businesses.
- SBA microloans of up to $50,000 are also available to minority entrepreneurs. Interest rates fall between 8 and 13 percent and loans must be repaid within six years.
- SBA Community Advantage loans are available to entrepreneurs in underserved communities who need up to $250,000 in financing.
Find more information or learn how to apply to any of these grants or loans here.