May 19, 2020 03:13 PM EDT
The Best Funding Options for Minority Entrepreneurs
Funding a business can be a challenge for everyone, much more for minority entrepreneurs. Nevertheless, they can get business loans and funding options from a wide list of choices, if they know where to look. Banks, the US SBA, nonprofit organizations, and online lenders are usually ready to give funding to minorities aiming to build a business.
In the present, there are more than 8 million businesses owned by the US minority, but these businesses tend to lag behind compared to the average businesses in terms of access to capital.
Business loans for minority entrepreneurs can be difficult to obtain, but yes, it is possible.
Here are some of the best funding options for minority entrepreneurs:
1. SBA Loans
These loans are granted by the US Small Business Administration, a federal department that is mainly created to support the growth of small businesses in the country. Any entrepreneur can apply for SBA-guaranteed loans and they are not exclusive only for minorities. Take note that only a third of the total SBA loans granted go to minority applicants.
SBA loans can allow you to borrow up to $5 million, regardless if you are a minority or not. The best thing is that SBA loans interest rates are among the lowest and they can be repaid for up to 25 years.
2. Nonprofit Loans
There are nonprofit lenders that offer small business loans. These organizations target small to medium businesses that have difficulty getting capital through banks and other traditional loan channels. Hence, they are also a great funding option for minority entrepreneurs.
3. Business Center for New Americans
This organization focuses on giving loans to minority business owners. The BCNA offers loans from $500 to $50,000 and works with refugees, women, immigrants, and the minority in general. Keep in mind that BCNA loans are short-term and must be repaid in six months to three years, but their interest rates are comparatively low.
This organization aims in helping minority entrepreneurs get sufficient business financing in case they were turned down by traditional lending firms because of some reasons. Some factors include too small loan request, not enough credit score, etc.
The good thing with BCNA loans is that they are easier to obtain. They have looser requirements in terms of qualifications, which make them a good funding option for minority entrepreneurs.
4. Non-Traditional Business Loans
Non-traditional loans like online loans are great options for minority entrepreneurs. There are dozens, if not hundreds of loan companies and organizations catering to many sectors, and these include the minority. While some of the funding options can be difficult to score because of high demand when it comes to requirements, there are still a number that offers business funding rather easily. Online business loans, for instance, are almost always readily available for small business owners.
5. Business Grants
There are several small business grants that can cater to minorities. These include:
- First Nations Development Institute Grant
The organization offers six grants to Native American groups that support native arts, culture, and society. The grants are $30,000 each, but your institution must have existing programs in order to avail of this.
- Operation HOPE
This organization offers business grants to low-income groups or communities, together with business development trainings, workshops, guides and templates that can help small businesses succeed.
- U.S. Minority Chamber of Commerce
The association helps small businesses that are run by the minorities in various ways. Apart from granting funds, it also offers education, connection, and network. The U.S. minority Chamber of Commerce typically has a local state or city chapter that you can easily reach.
- Rural Business Development Grants
The Rural Business Development Grants or RBDG offers grant funding for business training and development, allowing small businesses flourish in small communities. While this program does not offer grants directly to business owners, it allows Indian tribes that are recognized by the Federal Government to receive grants.
Most minority-owned entrepreneurs in the United States try to get by with less capital, and at times, even with good credit score, they are not able to get sufficient funding.
Good thing there are loan programs from the local and private sectors, as well as the Federal government, that allow them to have sufficient funds to make their small businesses grow.
It can be challenging for minority business owners to be on the pace in which they can run an enterprise cheek to cheek with other competitors. The above list should be able to help them with the capital they need.
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