Minority Small Business Loans: 30 Top Options

Find the top business loans for minorities and apply online with this free guide.
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What are Minority Business Loans?

Minority small business loans are an opportunity for minority business owners to find financing and grow their businesses. Business loans for minorities might come from the SBA lenders via SBA microloans, private microlenders, or non-profit companies specifically offering funding for minority-run businesses.

While there is no one type of minority business loan, this kind of financing generally helps minority business owners access the credit and capital needed to run and grow their businesses.

While small business loans for minorities might seem hard to find, there are actually more business loans available specifically to minority entrepreneurs than you might think.

Here’s a quick list of the best minority small business loans available:

  1. SBA 7(a) and 8(a) Development Program. Best for business owners who participate in the 8(a) program and need up to $150,000.
  2. SBA Community Advantage Loans. Best for businesses operating in underserved markets and communities.
  3. SBA Microloan Program. Best for newer businesses with smaller capital needs.
  4. Accion US Network. Best for low-to-moderate income business owners.
  5. Union Bank. Best for minority business owners with large capital needs.
  6. Minerals and Mining on Indian Lands. Best for businesses operating in Native American tribal lands.
  7. The National African American Small Business Loan Fund. Best for minority business owners in New York, Los Angeles, or Chicago.
  8. Business Center for New Americans. Best for immigrant, female, or minority-owned businesses that have been turned down by a bank.

Read on for more details on these small business loans for minorities, along with alternative sources of funding for minority-owned small businesses:

All Your Minority Small Business Loan Options, Explained

Searching for the best small business loans for minorities could take hours, if not days or weeks. We’ve saved you time by compiling great resources for minority small business loans and other types of funding. You can start your search here, or with any small business lender.

Because many lenders and programs that provide minority small business loans operate on the state or local level, it’s a good idea to work with a local organization that knows the terrain and can help you find lenders suited to your needs. (How else would you find out about ultra-niche programs like the loans to help political refugees start businesses that are offered by WESST, a nonprofit organization to assist small business owners in New Mexico?)

Obviously, there are lots of different types of options, so you have to figure out which is best for you. Use the below list as a starting guide.

The 8 Best Minority Small Business Loans Available to Entrepreneurs

There are many different types of business financing available to entrepreneurs these days.

If you think debt financing is a smart move for your business, then here are the 8 best minority business loans to consider.

1. SBA 7(a) Loans & 8(a) Business Development Program

7(a) loans guaranteed by the Small Business Administration, a federal entity created to foster small business growth, are not exclusively for minorities.

However, minority or disadvantaged business owners who participate in the SBA’s 8(a) Business Development program for small disadvantaged businesses have a better chance of qualifying for a SBA loan.

Some 80% of SBA loan applications from black and Hispanic business owners are for $150,000 or less, according to the agency. Generally speaking, lenders don’t make as much money from smaller loans than on larger loans. As a result, federal small business loans for minorities, like SBA 7(a) loans, are often hard to secure.

In October 2018, in an effort to encourage lenders to make more small loans, the SBA waived the 2% fee for loans of less than $150,000. Hopefully this incentive will, in turn, encourage SBA lenders to provide more federal small business loans for minorities.

2. SBA Community Advantage Loans

Run by the SBA, The Community Advantage loan program works to meet the financial needs of small businesses in underserved markets.

This program encourages local, mission-based lenders such as nonprofit organizations to make loans of up to $250,000 by guaranteeing up to 85% of the loan amount. The program is designed to service small business owners who might not qualify for traditional financing, so it is a great option if you are looking minority small business loans.

Plus, it’s a solid option for those looking for federal small business loans for minorities and need a large amount of capital.

For details, contact your local SBA district office.

3. SBA Microloan Program

Minority small business owners seeking loans of $50,000 or less should investigate the SBA Microloan program.

Although they don’t specifically provide small business loans for minorities,  these federal small business loans provide up to $50,000 to help small businesses start and expand. Microloan funds are provided from third-party lenders—usually nonprofit community-based organizations that offer management and technical assistance to small business owners along with the loan. SBA microloans can be a particularly good small business startup loan for minorities. If you have a new business, check these federal small business loans for minorities out.

To find local microlenders, contact your local SBA District Office.

Or, learn more about your microloan options in general to see what you might qualify for.

4. Accion U.S. Network

International microloan organization Accion has a U.S. microlending program targeting low- to moderate-income business owners who have difficulty accessing capital through traditional channels, making it a great option for loans for a minority small business.

While not minority-specific, Accion’s U.S. member organizations offer loans from $200 up to $300,000 in all 50 states.

5. Union Bank

If you’re looking for minority-specific business funding, then Union Bank does provide business loans and lines of credit exclusively for minority-owned businesses.

These products have less stringent lending standards and are designated for small business owners who meet the bank’s designation of “minority” (which is the same as the EEOC’s) and want loans of up to $2.5 million.

6. Minerals and Mining on Indian Lands

This Department of the Interiors grant provides funding to both tribes and individuals seeking to make use of those resources on Indian lands, called the Native American Business Development Institute grant.

7. The National African American Small Business Loan Fund

The joint effort of JP Morgan Chase and the Valley Economic Development Centers (VEDC), NASBLF serves minority-owned small businesses in low- or medium-income communities in New York, Los Angeles, and Chicago, providing access to capital, financial consulting, and technical help.

8. Business Center for New Americans

The Business Center for New Americans gives minority business loans of $5,000 to $50,000 specifically to minority business owners in the United States. The BCNA specifically works with immigrants, refugees, women, and other minority entrepreneurs.

This organization helps finance minority entrepreneurs who were turned down from traditional financing options for any number of reasons, including: The loan the borrower requested is too small, the bank won’t lend to a startup, the borrower’s credit score is too low, but there’s ability to repay the loan. Because of these loosened traditional loan requirements, this program is a great startup loan for minorities.

Check My Options

Consider Minority Small Business Grants Along With Minority Small Business Loans

Beyond minority small business loans, there are also many grant programs that focus on businesses owned by minorities, and especially entrepreneurs who belong to a Federally-recognized Native American tribe.

Even if the grant is for a community rather than a small business, check to see if you can contract for some of the work that would be involved in fulfilling the grant’s terms.

Grant seeking requires creativity, determination, and patience, but they’re one of the best ways to finance a business.

Who wouldn’t want to be awarded free money to grow a company?

Here’s a list of the best grant options for minority business owners.

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1. Community Programs to Improve Minority Health Grant Program

If you own a health-related small business, and are looking for loans for a minority business, you can use this grant to spread information and awareness of health and healthcare for minorities.

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2. Community Connect Grants

If you live or operate in a rural area lacking an Internet broadband speed of 3 Mbps or more, and are looking to fix that, then check to see whether you’re eligible for this Department of Agriculture grant.

We’ve included this and the previous grants under the “Minorities” category because the government also often groups them together—it’s all about enfranchising the disadvantaged. Indian tribes are also a major target demographic for these programs.

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3. Rural Business Opportunity Grants

Similarly, the RBOG program gives up to $100,000 to support training for business development, in order to stimulate the economies of rural communities.

If you’re looking for loans for a minority small business and think you could qualify, you should definitely check it out.

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President Obama began the Partnerships for Opportunity, Workforce, and Economic Revitalization Initiative to help communities hurt by the changing power industry.

Look into the block grants the federal government awarded to state and local institutions, and if you’re nearby, see if you can snag a contracting opportunity or second-hand grant from them!

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5. Water & Waste Disposal Loan & Grant Program

Though not explicitly targeted towards small businesses, this grant initiative—like many others—includes Federally-recognized tribes among its eligible applicants.

If you’re a business owner operating in recognized tribal lands, looking for loans for a minority business, and you’d like to invest in water or waste disposal, this cash could help out.

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6. MillerCoors Urban Entrepreneurs Series

Though not exclusively available to minority business owners, this grant program focuses on diversity in entrepreneurship, which can be a good option if you are looking for minority small business loans.

They award up to $150,000 to five winners, plus the consumer’s Choice award grant of $10,000.

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7. First Nations Development Institute Grant

The Native Arts Capacity Building Initiative gives up to six grants of $30,000 each to Native American institutions supporting arts and culture. However, to qualify you must already have programs in place supporting this goal.

The program is also limited to those initiatives that support Native American artists in Minnesota, North Dakota, south Dakota, and Wisconsin, although if you have a strong case, make it!

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8. Tribal Energy Development Capacity Grant

This program gives Federally-recognized tribes more resources to improve the economic influence of energy development in their areas.

While this grant doesn’t provide directly to small businesses, look for the “trickle down” approach of funneling this government money into your business by securing the right contracts.

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9. Rural Business Enterprise Grants

Available to small businesses, the RBEG program offers funds for rural development—including, by not limited to, infrastructural development, working capital for startup businesses, purchasing equipment, and real estate development.

Smaller requests are actually given higher priority, and grants usually range between $10,000 and $50,000.

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10. Improving Minority Health Grant Program from the USDA

The Improving Minority Health Grant program from the USDA provides grant funds for minority-run nonprofits, organizations, native tribes, faith-based organizations, and other agencies that specifically seek to improve the health of individuals in minority communities.

Additional Resources for Minority Small Business Owners

Every entrepreneur needs resources, mentors, and a community behind them. Doing so will help you be the best business owner you can be, and position yourself for success.

There are many business resources out there designated specifically for minority entrepreneurs. And though they don’t specifically offer financial help like minority small business loans and grants, the following resources for minority small business owners could seriously up your small business’s chances at success.

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1. The U.S. Department of Commerce's Minority Business Development Agency

The MBDA operates MBDA Business Centers nationwide that help minority small business owners start and grow their companies.

The Centers are located in areas that have the largest concentration of minority populations and the largest number of minority businesses.

Their advisors can refer you to local sources that provide small business loans for minorities.

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2. National Minority Supplier Development Council

The NMSDC helps minority-owned businesses get certified as MBEs and then connects them to contracting opportunities with its network of corporate partners.

Once you are MBE-certified and have a supplier and/or vendor relationship with one of NMSDC’s national or regional corporate members, you can access working capital loans, specialized financing and long-term financing through the NMSDC’s partner companies.

It takes a little work to get there, but is a great source for small business loans for minorities.

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3. Small Business Development Centers

Your local SBA District Office or Small Business Development Center (SBDC) can help you find and work with potential lenders who have experience providing small business loans for minorities.

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4. Small Business Administration 8(a) Certification Program

This program is definitely not a grant—however, it is a federally-funded initiative aimed towards helping minority-owned small businesses capture more clients and work, so we decided to include it.

The SBA’s 8(a) program helps “socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society”—or in other words, it guarantees minority-owned businesses special government contracts that they might otherwise not have special standing for.

A great way to bring money into your business, just like a minority small business loan.

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5. Operation HOPE Small Business Empowerment Program

Designed for entrepreneurs from low-income communities, Operation HOPEoffers workshops, counseling, templates and guides, and connections to networks of lenders (and the SBA).

If you’re looking for small business loans for minorities, don’t lose HOPE!

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6. Minority Chamber of Commerce

The Minority Chamber of Commerce is a National Business Association non-profit that helps minority-run small business owners educate themselves, network with like-minded individuals, and connect with specialized suppliers.

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Officially the Service Corps of Retired Executives, SCORE mentors small business owners for free, and provides more specialized workshops and seminar classes for an additional fee (and should be able to provide excellent advice on finding minority small business loans). They have special programs for minority small business owners as well, so make sure you explore everything they offer nearby!

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8. EPA SDB Certification

The Environmental Protection Agency isn’t the only organization that gives special contracts to certified Small Disadvantaged Businesses—from the SBAor the Department of Transportation, for example—but it is a popular one. It also offers special resources and, of course, those all-too-elusive business grants.

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9. Local Government Centers

Don’t forget to look through your state and city business programs and centers: many will have minority-oriented financial education and networking programs that you can take advantage of. For example, the city of Cleveland has an especially robust resources page, as does the state of Georgia.

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10. National Minority Business Council

Different from the National Minority Supplier Development Council we wrote about above, the NMBC also offers contracting opportunities, equity funding networking, free resources, and minority-owned small business news updates to its members. They also offer an entrepreneurship bootcamp in New York City!

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11. Entrepreneurial Assistance Program

Though this initiative is located in New York, the Entrepreneurial Assistance Program has analogs in many other states. Whether you’re looking for business counseling, business plan development, financial education, networking opportunities, or something else, EAP centers can help—and with a focus on minority-owned businesses, they fit our list very well. Be sure to ask specifically about their knowledge on any minority small business loans.

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12. Minority Business Development Agency

The MBDA is yet another governmental organization offering tools and education to minority entrepreneurs. (According to their reports, minority-owned businesses are responsible for $1.4 trillion in annual gross receipts.) Don’t bemoan the existence of so many similar councils, committees, centers, and agencies for you to look at—it only takes one good connection to get the help your business needs, after all. The more, the merrier!

Minority Business Loans for Bad-Credit to Strong-Credit Borrowers

There are some fantastic loan and grant programs available to minority business owners. Check to see if you qualify for any of these programs based on your status as a small business owner.

Some of these options can be challenge to score due to high demand and limited capital resources. So, if you don’t qualify for these options, try checking to see what you qualify for with general small business loans available to all small business owners.

You might find the perfect loan for your business from one of the many lenders working in the small business financing space.

Here are the lenders we recommend based on where your credit score stands.

Getting Minority Business Loans with Bad Credit

Having stellar credit can be hard for many people. And not all small business owners have perfect credit.

But as you’re looking for minority business loans, bad credit (think a FICO score anywhere from 500 to 650) could prove to be an obstacle to qualifying for capital.

That said, there are more than a few small business loans for minorities with bad credit, you’ll just have to do a bit of digging. As with any business loan available to borrowers with bad credit, with small business loans for minorities with bad credit, you’ll need to make sure your options won’t cost you an arm and a leg.

But that’s what we’re here for—we’ve compiled three of the best lenders that offer minority business loans for bad credit borrowers.

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1. Kabbage

Kabbage is a great lender to work with if you’re looking for funding while dealing with bad credit. Kabbage offers credit lines of up to $100,000 for almost all business purposes. And the best part? Kabbage doesn’t have a minimum personal credit score required, making them an accessible lender for less-qualified minority entrepreneurs

Read more Kabbage reviews.

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2. OnDeck

OnDeck is yet another alternative lender that offers minority business loans, bad credit notwithstanding. OnDeck offers both short-term loans and business lines of credit for borrowers with a minimum personal credit score of 500 and 600 respectively. Depending on what you qualify for, OnDeck’s rates start at around 8.5% for the short-term loan and 14% for their line of credit (although these rates can really go up). OnDeck is a great option for minority business owners who need capital for just about any business need.

Read more OnDeck reviews.

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3. Fundbox

Fundbox offers some of the very best startup business loans for minorities with bad credit. That’s because their invoice financing product will be the most accessible to minority entrepreneurs who are starting a new business but working with bad credit. Fundbox will only require that you have three months of business history under your belt, and they don’t require a minimum FICO score for business owners they’re willing to lend to.

At the end of the day, if you’re looking for startup small business loans for minorities with bad credit, then look to Fundbox first.

Read more Fundbox reviews.

Getting Minority Business Loans with Strong Credit

In contrast to small business loans for minorities with bad credit, the following business loans will come from lenders that require a FICO score of at least 650.

If you have a strong credit score first check to see if you qualify for bank loans or SBA loans—those will be your best financing options in most cases. However, these types of business loans are the hardest to qualify for and come with the most arduous application process.

If you can qualify, go for it—you (probably) won’t find a better interest rate anywhere else.

But you might also be interested in pursuing some of the top online lenders if you have a stellar credit score. These are the lenders that offer longer-term loans and longer-term lines of credit. Here are some of the best.

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1. Lending Club

Lending Club is a lender that offers both medium-term loans and medium-term lines of credit, so you have a couple options of loans to work with. Loans and lines of credit can go up to $300,000 at terms as long as 5 years. Lending Club sets their minimum personal credit score at 620 in order for minority business owners to qualify.

Read more Lending Club reviews.

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2. Fundation

Like Lending Club, Fundation offers both medium-term loans and business lines of credit. If you’re looking for up to $500,000 in capital at a maximum of 4 years, Fundation is a good option. Fundation also offers affordable financing, with interest rates starting at 7.9%. You can use the financing for most business needs. Qualified borrowers will need to have at least a 620 credit score.

Read more Fundation reviews.

Small Business Loans for Minorities: The Bottom Line

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The Truth About Small Business Loans for Minorities

A recent study co-authored by a Brigham Young University business professor recruited nine people—three black, three Hispanic, and three white—to act as “mystery shoppers” and apply for $60,000 small business loans.

All nine presented the same type of business, the same background, and the same reasons for wanting the loan.

However, the minority loan applicants received less information about loans and less assistance from loan officers. Plus, the minority loan applicants were asked more questions about their personal finances. This skewed focus on personal finances could very well make it even more difficult to access minority small business loans with bad credit.

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The Truth About Minority-Owned Business Finances as a Whole

And, it’s not just small business loans for minorities that show a problem.

Taking the problem to the macro level, studies show that minority entrepreneurs only make up 8.5% of all would-be business owners pitching their ideas to angel investors—and only 15% of them are successful, compared to 22% of all entrepreneurs together.

The same trend holds for small business loans, not just investing.

In a 2013 SBA study, researchers found that women and minority entrepreneurs still get much less capital compared to male and white entrepreneurs.

The average women- or minority-owned business in the United States operated with much less capital, even after controlling for factors influencing financing amounts, like credit score.

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The Trick to Securing Small Business Loans for Minorities

Given this unfortunate reality, where is the best place to seek out small business loans for minorities? There isn’t a particular lender you can go to that specializes in minority small business loans.

But there are federal, state, local and private loan programs tailored to address some of the challenges that minority small business owners often face, like seeking small loans, starting businesses in underserved communities or being economically disadvantaged.

For lending purposes, minorities are usually classified as African-American, Hispanic-American, Asian-American, Alaskan Native, Pacific Islander or American Indian individuals. A minority business is at least 51% owned by a member of one of these groups. Often, your business will need to be certified as a minority business enterprise (MBE) or disadvantaged business enterprise (DBE) to apply for the loan.