Starting and growing your own business can be incredibly rewarding, but it can also be very challenging, particularly if you have a physical or mental disability. According to the U.S. Census Bureau, almost 39 million Americans have a disability. Labor force participation and income among individuals with disabilities is lower than average.
Small business ownership can be a good way for people with disabilities to earn a living while having flexibility that a traditional day job might not offer. However, running a business can require a significant outlay of capital, and finding small business loans can be especially difficult if you struggle with a disability. Here, we’ll cover the best business loans for people with disabilities, as well as grants and other ways to get capital.
Our favorite business loan programs for people with disabilities are those that don’t add too much of a financial strain for veterans and others with disabilities. Only 20% of people with disabilities have gainful employment, compared to 69% of people without disabilities. Many of those with disabilities also rely on Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), or other forms of government assistance.
The following debt financing options are relatively affordable and versatile enough to cover a range of business needs. The loan programs are broken down by credit bracket, as credit score is the single most important factor in determining your loan eligibility.
These are the best business loans for people with disabilities:
If you have a strong credit score, here are your best options.
People with disabilities who have good credit should consider SBA loans. The Small Business Administration (SBA) does not issue loans, but guarantees loans made by private lenders. Since SBA loans are backed by the government, lenders have more freedom to grant loans to a wider swath of business owners, including those who may have been turned out for conventional bank loans.
The general purpose SBA 7(a) loan is the SBA’s most popular loan, offering up to $5 million in funding and repayment terms of up to 25 years. This loan can be used to start a new business, expand an existing business, buy commercial real estate, invest in new equipment, and much more. The SBA Express Loan program is part of the 7(a) program and offers expedited financing for loans under $350,000.
SBA Express Loans going to veteran-owned businesses have reduced fees. This is a good business loan for service-disabled veterans. Even if you’re not eligible for reduced fees, SBA loans offer some of the lowest interest rates and longest repayment terms that you can find. The SBA sets maximum interest rates that lenders can charge and maximum repayment terms, so you know you’re getting a fair deal.
Qualifying is the primary hurdle to getting an SBA 7(a) loan or SBA Express Loan. To qualify, you should have a credit score above 650. Businesses that have been established for a couple years and that are producing revenue are more likely to qualify for SBA financing. You might also be asked to put down some collateral in exchange for the loan. Expect the loan process to take several weeks.
Business loans from the U.S. Department of Agriculture are another good option for entrepreneurs with disabilities. Like the SBA, the USDA doesn’t provide business loans directly. The agency guarantees loans made by private lenders and provides funding to intermediary agencies. The USDA focuses on helping rural businesses. This can be a good source of funding for individuals with disabilities since a larger share of disabled Americans live in rural communities.
There are several USDA business loan programs, the most popular of which is the Business and Industry Loan Guarantee Program. Through this program, the USDA partially guarantees loans made lenders to businesses within rural areas. The USDA defines a rural area as a place with fewer than 50,000 residents.
Other than your business needing to be located in a rural area, you also need good credit and sufficient business revenues to qualify for a USDA business loan. You might also have to put down some collateral. The application process for a USDA loan is similar to an SBA loan.
You’ll still have good options if you have an average credit score. Here are your best.
The SBA Microloan offers up to $50,000 in funding, making it an ideal option for home-based businesses and microbusinesses. These loans can be used for a wide variety of purposes, such as hiring staff, remodeling your work space, or launching a new business location. The SBA works with nonprofits to provide microloans, many of which have a mission to help underserved groups, including disabled entrepreneurs.
An example is Accion, a nonprofit institution that lends to small businesses throughout the country. They focus on providing fairly priced loans to a diverse set of entrepreneurs, including those with disabilities. The SBA sets maximum interest rates that nonprofits lenders like Accion can charge on SBA Microloans, and the repayment term goes up to six years.
Compared to 7(a) loans, SBA Microloans are a little easier to qualify for. Accion, for instance, will work with business owners who have credit scores as low as 575, and they place more emphasis on your anticipated income during the term of the loan. Newer businesses can qualify as well, as long as the owner is in a good position to pay back the loan.
The SBA Microloan is similar to another program run by the SBA—SBA Community Advantage Loans. As with microloans, the SBA partners with nonprofit lenders throughout the nation to get these loans into the hands of small business owners. The purpose of these loans is to help small business owners in underserved groups, including the disabled population. Community advantage loans offer up to $250,000 in funding, so they can be used for pretty large business investments.
The application standards for SBA Community Advantage Loans are similar to those for SBA Microloans. You can use the SBA’s Lender Match tool to find a community advantage lender near you.
Individuals with disabilities have incomes that are less than half those of people without disabilities, often because they can’t work long hours or need work accommodations. Not having enough income can make it harder to qualify for traditional financing. That’s where business credit cards can help.
Some of the best business credit cards offer a 0% introductory annual percentage rate (APR). The 0% APR introductory period can offer a great opportunity for business owners with disabilities to borrow money interest-free. As long as you pay your balance in full by the time that the introductory period is over, any expenses that you charge to the card during that time won’t accrue interest.
Business credit cards also offer rewards that can give your business an extra boost. Some cards offer rewards on all purchases, whereas others offer rewards in specific categories, like social media advertising or shipping supplies. Business credit cards usually have higher credit limits than personal cards, so you should be able to leverage your card for startup financing or even to pay for recurring expenses. Just make sure you don’t mix business and personal expenses on the card.
Here are your best options if you have a weaker credit score.
If you have a disability, sometimes you need to invest in assistive technology to run your business more efficiently or take advantage of a new opportunity. For example, you might need a wheelchair-compatible vehicle to make deliveries, a hands-free device to make sales calls, or braille-compatible software to design web pages for your clients. Several lenders provide assistive technology loans to help individuals and businesses purchase such aids.
Usually, these lenders are based locally and have slightly different eligibility requirements, loan amounts, and terms. For example, the National Disability Institute offers assistive technology loans of up to $30,000 in New Jersey and New York at below-market interest rates of 4% to 6%. Credit history can impact your eligibility, but even people with low credit can qualify if they show a sufficient income stream to pay back the loan. For more information, contact your state’s commerce or business department.
The loss of income that you can experience after an injury or disability can seriously harm your credit, making it difficult to qualify for traditional business loans. One way around this is to use a crowdfunded loan. Debt crowdfunding relies on small loan amounts from a large number of people, which together can add up to the amount of capital you need to get your business off the ground.
In some cases, debt crowdfunding is similar to getting a bank loan, where you’re expected to pay back the principal plus interest over a fixed period of time. However, some platforms do things a little differently. Kiva offers interest-free, three-year loans of up to $10,000. Kiva relies heavily on an entrepreneur’s own network of family and friends. Depending on the size of the loan and other factors, loan applicants must invite between five to 35 people from their own network to lend to their business. Then, applicants can pitch their business to a wider network of Kiva lenders.
In the U.S., 70% of people with disabilities rely for assistance on family and friends, and this includes financial assistance. The people closest to you might be happy to help you launch a business. Think beyond your immediate network as well. If you use a crowdfunding platform, you should create a compelling narrative around your business to encourage members of the public to lend to your company.
A final option for disabled entrepreneurs with challenged credit is short-term business loans. Even if your credit is on the low side, you can qualify for these loans if your business is at least a few months old and generating decent revenues.
StreetShares is a short-term lender that focuses on providing business loans to veterans and service-disabled veterans. You can qualify for up to $200,000 in financing and three- to 36-month terms. To qualify for a StreetShares loan, your business should be operating for at least six months and generating some revenue.
Short-term loans are available online through a variety of lenders, and they have a quick and easy application process. Proceed with caution because these loans are significantly more expensive than the other types of financing we’ve mentioned so far. If you’re willing and able to pay more, these loans can be ideal for buying inventory, stocking supplies, and for other short-term needs.
In addition to these small business loans for the disabled, don’t forget options which might be unique to your state or locality. For example, Illinois has a loan program called Advantage Illinois that targets minorities, women, disabled, and veteran-owned businesses. The Iowa Able Foundation offers credit builder loans and business assistance loans for individuals with disabilities.
According to Joel Ohman, a certified financial planner and founder of InsuranceProviders.com, “Business owners with disabilities should explore both loan and state grant options for assistance with their business, and evaluate resources public and private. Depending on one’s state of residence, there can often be both state and local options for businesses owned by those with disabilities. Also, don’t stop your search short at governmental agencies and programs, because nonprofits and for-profit companies can also have programs worth exploring, particularly those focusing on former military members.”
The only thing better than a business loan is a business grant. While you have to pay back a loan with interest, business grants don’t need to be paid back. Russell says, “If you’re struggling to find a loan to start your business or just don’t know where to begin, be aware that there are grants available for people with disabilities who want to start a small business. Rather than dealing with a loan, you might consider putting your work into qualifying for a grant. Even if you don’t get the grant, you’ll have your paperwork in order and can then apply for loans.”
Government agencies, nonprofits, and private companies all provide business grants, some of which target entrepreneurs with disabilities. For instance, the National Arts and Disability Center offers grants to artists with disabilities who need money to promote their creative work. Veterans of Foreign Wars provides grants to veterans who have service-related disabilities. Grants.gov is the biggest repository of federal government grants, and is a great place to check for grants if your business is in a technology or science field.
The thing to remember with grants is that they are highly competitive. Grant agencies often receive thousands of applications for a small handful of grants. However, if you have a compelling story to share and a promising business idea, then you should exhaust grant opportunities before turning to loans.
Besides loans and grants, there are a variety of business resources for people with disabilities. Some of these resources focus on financial assistance, and others provide networking opportunities, training, and mentorship.
The Social Security Administration’s (SSA) PASS Program is a federal program designed to help disabled individuals become more financially independent. It’s open to individuals who receive or are eligible to receive SSI or SSDI. Under PASS, you can set aside money from your monthly SSI or SSDI paycheck to reach a stated goal, such as starting a business. You’ll then receive more money in your monthly paycheck to offset your contributions.
If you have a fast-growing startup, then you might be interested in equity financing. Kaleidoscope Investments is an investment fund that invests exclusively in businesses owned by individuals with disabilities. They are based in London, but plan to soon start investing in businesses all over the world.
Additional resources include organizations like SCORE, where you can access networking and training opportunities. Your local Chamber of Commerce might also host networking events. Local Small Business Development Centers, which are affiliated with the SBA, provide free or low-cost training and business consulting services.
Running a small business can be challenging for anyone, but especially if you have a disability. Fortunately, there are several business loans for people with disabilities, as well as other resources. Start close to home, and check whether family and friends would be willing to lend to or invest in your business. Then, branch out and look at more structured loan and grant programs, including those at the state and local levels. And of course, always focus on running a lean business and providing the best product or service. That will keep customers coming back and business booming.
Priyanka Prakash is a senior contributing writer at Fundera.
Priyanka specializes in small business finance, credit, law, and insurance, helping businesses owners navigate complicated concepts and decisions. Since earning her law degree from the University of Washington, Priyanka has spent half a decade writing on small business financial and legal concerns. Prior to joining Fundera, Priyanka was managing editor at a small business resource site and in-house counsel at a Y Combinator tech startup.