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*Qualification criteria, rates, and other funding terms will vary depending on the type and location of your business, and upon other factors. This is not a guarantee of funding, and it should not be relied upon as an accurate assessment of the availability or terms of the represented funding products.
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Lendio knows minority-owned businesses.
"The lending gap for minority-owned businesses is real. Minority firms with gross receipts under $500,000 experience loan denial rates three times higher than those of their non-minority counterparts.
But the numbers suggest that fintech lending and automation may have the power to level the playing field by eliminating the human bias that comes with manual review. Black-owned businesses, for instance, were 12 percentage points more likely to get their PPPloan from a fintech lender.
At Lendio, we’re dedicated to closing this gap with an online application that connects minority business owners to a marketplace of lenders where they can receive equal access to business financing."
Bridge capital during business transitions
Purchase supplies, equipment, or inventory
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What type of commercial real estate funding is best for your business?
These are the most popular types of funding that other minority-owned businesses qualify for through Lendio.
SBA Loan
Get low-interest, government-backed funding to expand your business.
Business Term Loan
Borrow a lump-sum with a set repayment schedule, and get funding quickly with online options.
Business Line of Credit
Access available funds whenever you need them, and only pay interest on what you draw.
What types of business loans are available to minority-owned businesses?
SBA 7(a) loan
An SBA 7(a) loan is a loan that is partially backed by the SBA. The 7(a) is one of the more popular SBA loan options and can be used for working capital or any other business expense.
Term Length
Up to 10 years for working capital loans.
Up to 25 years for real estate.
Up to 25 years for real estate.
Max Loan Amount
$5 million
SBA 504 loan
The SBA 504 loan program is designated specifically for the purchase of fixed assets such as real estate and equipment. One key benefit of a 504 loan is the lower down payment requirement of 10%.
Term Length
10, 20, or 25 years
Max Loan Amount
$5 million
SBA Community Advantage program
The SBA Community Advantage Program provides mission-oriented lenders access to 7(a) loan guarantees as high as 85% for loans up to $150,000 and guarantees up to 75% for loans greater than $150,000. These loans primarily support underserved markets, such as low-to-moderate-income communities and rural areas.
Note: This program was sunsetted in October 2023. Lenders under this program are now licensed as Community Advantage Small Business Lending Companies in the 7(a) loan program and will continue to provide access to financing to underserved communities.
Term Length
Up to 10 years for working capital loans.
Up to 25 years for real estate.
Up to 25 years for real estate.
Max Loan Amount
$350,000
SBA microloans
SBA microloans support small businesses, offering lower loan amounts for startups or those needing a financial boost. Managed by non-profit lenders, these minority business loans are flexible and designed to meet your unique needs.
Term Length
Up to 6 years
Max Loan Amount
$50,000
Asset- or revenue-based financing
With asset-based financing (also known as invoice factoring), a funder purchases an invoice from the borrower at a discounted rate, instead of waiting for clients to pay invoices. Then, the business pays back the funder as the business collects on the invoice. Similarly, revenue-based financing gives you an advance on expected future revenue.
Term Length
1-15 months
Max Loan Amount
$1 million (revenue-based financing);
$50 million (factoring)
$50 million (factoring)
Term loan
When borrowers think of a business loan, they are likely to think of a term loan. Borrowers receive the loan amount in one lump sum and make fixed monthly payments until the loan is paid off with interest.
Term Length
6 months-10 years
Max Loan Amount
$2 million
Line of credit
Minority small business loans can also be accessed through a business line of credit. A business line of credit is similar to a credit card in that it’s a type of revolving credit—as you pay off your balance, the funds once again become available.
Term Length
6-24 months
Max Loan Amount
$250,000
FAQs
Find answers to some commonly asked questions from minority-owned businesses.
What loans are available to minority business owners?
Let’s dive into the diverse range of loan options that are specifically tailored to support the growth and success of minority-owned businesses.
Accompany Capital Microloans
These loans provided by Accompany Capital are earmarked for immigrant, refugee, and women business owners living in NYC. The amounts can range anywhere from $1000 to $50,000.
Accion Loans
With microloans of up to $50,000, this nonprofit lender is dedicated to helping disadvantaged borrowers build their businesses up to meaningful scale. With operations worldwide, most Accion loans go to Asia, Latin America, sub-Saharan Africa, and the United States.
Business Consortium Fund
The Business Consortium Fund is a 501(c)(3) certified not-for-profit. It exclusively serves businesses certified as minority-owned, are suppliers in corporate or government supply chains, are at least three years old, and have a cash flow to debt service ratio of at least 1.25.
U.S. Bank Diversity Lending Program
U.S. Bank offers a Diversity Lending program designed specifically for businesses owned by women, veterans, and minorities. This program provides flexible financing with competitive interest rates, making it an excellent option for minority entrepreneurs seeking financial support to grow their businesses. Their range of loan options includes SBA loans, lines of credit, and equipment finance loans, all tailored to meet the unique needs of diverse-owned businesses.
Huntington’s Lift Local Business Program
Huntington’s Lift Local Business Program is designed primarily to help minority, women, and veteran-owned businesses get the financial assistance they need. Huntington offers loans from $1,000 to $150,000 with lowered underwriting standards, allowing companies to access necessary funds without the typical restrictions.
Tampa Bay Black Business Investment Corp
The Tampa Bay Black Business Investment Corp provides lower-interest loans of up to $50,000 to Black businesses in the Tampa Bay area.
Minority and Women Business Multiplier Loan Fund
The Minority and Women Business Multiplier Loan Fund helps residents of Kansas and can provide amounts from $10,000 to $150,000.
Northern Initiatives Program
The Northern Initiatives Program provides funding to underserved residents in Michigan. It emphasizes a desire to provide micro and small business loans in amounts from $5,000 to $250,000 to minority- and women-owned businesses that have been negatively impacted by the coronavirus pandemic.
Minority Business Micro Loan Program
The Minority Business Micro Loan Program is administered by the Mississippi Development Authority’s Minority and Small Business Development Division and is available for residents of the state. The maximum loan amount is $35,000.
Small Business Fund
The Small Business Fund, sponsored by the New Jersey Economic Development Authority, is for creditworthy small businesses in the state that are minority-owned or women-owned. The business must have been in operation for at least a year and have no more than $3 million in total revenue. Applicants can receive up to $500,000.
Ohio Minority Business Direct Loan Program
The Ohio Minority Business Direct Loan Program, sponsored by the Ohio Development Services Agency, provides fixed low-interest loans to certified minority-owned businesses. However, the businesses must be purchasing or improving fixed assets that result in creating new jobs for fellow Ohioans.
Indian Loan Guarantee and Insurance Program
The Indian Loan Guarantee and Insurance Program provides guarantees on loans to American Indian and Alaskan Native individuals, groups and corporations. This program is separate from the SBA loan guarantee program.
Mālama Business Loan
The Office of Hawaiian Affairs offers business loans of up to $149,999 with an APR of 4% to native Hawaiians.
What grants are available to minority small business owners?
There are several grants available to minority small business owners.
Grants.gov
One of the easiest places to find them is through Grants.gov—a large listing of active and upcoming grants and a great resource for any business owner having trouble getting approved for minority startup business loans.
USDA Grant
If your business is in a rural area or an area deemed in need of economic development, you may qualify for a USDA grant. Your business must have 50 or fewer employees and make less than $1 million each year.
National Association for the Self-Employed
If your business is new, you may qualify for a $4,000 grant through the National Association for the Self-Employed. The money can be used for any business-related expense, and there are multiple deadlines throughout the year.
NuLeaf Project
NuLeaf Project provides funding to cannabis businesses in Portland, OR, that are owned by POC. The NuLeaf Project has annual grants up to $100,000 and COVID-19 relief grants up to $15,000. In addition, NuLeaf also provides 0% interest loans for up to $15,000.
Glossier Grant
The Glossier Grant Initiative for Black-Owned Beauty Businesses offers six $50,000 grants to Black-owned beauty businesses. Applicants need to explain how their business broadens the conversation about beauty, how the brand is different from other companies, and how the grant will help the business grow.
National Black MBA Pitch Challenge
The National Black MBA Association Scale-Up Pitch Challenge is a pitch competition that encourages its members to create scalable startups. Three finalists compete at the NBMBAA’s (virtual) annual conference and career fair to win the top prize of $50,000, a second-place prize of $10,000, or a third-place prize of $7,500. In addition, the audience votes on the People’s Choice Award winner, which receives a $1,000 award.
San Diego Black Chamber of Commerce Grants
The San Diego Black Chamber of Commerce offers a grant to any business that completes one of its free business development courses.
What other resources are available to minority small business owners?
The SBA has a network of Small Business Development Centers throughout the U.S. that offer both counseling and training opportunities. Even once you get funding, running a business is hard, and it can be beneficial to correspond with other business owners who have undergone similar trials.
The Minority Business Development Agency also offers similar services. In addition to helping business owners connect with other professionals, it also helps minority entrepreneurs get small business loans.
The National Minority Supplier Development Council acts as a network for minority business entrepreneurs to help connect them with contract opportunities and potential partners.
SCORE offers one-on-one mentoring and other free resources to small business owners. As part of the mentor selection process, business owners can request a mentor who speaks their preferred language.
Wunderfund is an investment crowdfunding portal in Cincinnati, OH, dedicated to raising capital for underserved communities. “We leverage the power of community to help entrepreneurs and business leaders unlock their potential,” explains Jonathon Whaley, Esq, compliance officer at Wunderfund.
What venture capital funding is available to minority-owned businesses?
Some notable VC funding options specifically designed to support and empower minority entrepreneurs include the following.
Black Angel Tech Fund invests in next-generation innovators. It provides startup and early-stage capital to entrepreneurs in technology. BATF also assists founders in developing market strategies and connecting to co-investors.
Harlem Capital Partners is a venture capital fund that was launched in Harlem in 2015 and has a goal of investing in 1,000 diverse founders over the next 20 years. Harlem Capital Partners is currently investing out of its $40m Inaugural Fund and will lead, co-lead, or participate in $250,000 to $1 million seed or Series A financings.
Reign Ventures is an early-stage fund that invests in minorities and women. Monique Idlett-Mosley founded the company in 2017. She’s committed to building a portfolio that reflects at least 50% minority or female founders and says that women should support and invest in each other.
Backstage Capital invests in women, POC, and LGBTQ founders in tech—and its founder, Arlan Hamilton, is the first Black queer woman to start a venture capital firm. Backstage Capital, which was launched in 2015, has invested almost $7 million in more than 150 companies that have underrepresented founders, providing seed funding that ranges from $25,000 to $100,000. Backstage Crowd is the firm’s crowdfunding platform, which allows investors to contribute up to $5,000 to diverse business owners.
What is the SBA’s 8(a) business development program?
The U.S. Small Business Administration runs the 8(a) Business Development Program, which is intended to “help provide a level playing field for small businesses owned by socially and economically disadvantaged people or entities.”
In a nutshell, the government plans to award at least 5% of its contracting dollars to disadvantaged businesses. Other offerings include development assistance, training, and technical guidance. Qualifying businesses must be more than 50% owned by a citizen who has experienced prejudice and is disadvantaged due to race or ethnicity.
How do I get certified as a minority-owned business?
To be certified as a minority-owned business, here’s what you need to know:
- The business must be at least 51% owned and operated by a minority individual or individuals. These individuals must be U.S. citizens.
- The minority owner(s) must be involved in day-to-day operations and also make long-term decisions for the company.
- The business must be a for-profit enterprise that is physically located in the U.S. or its trust territories.
- The minority owner(s) must have a personal net worth that does not exceed $1.32 million.
- The business and its owner(s) must demonstrate good character and must meet creditworthiness requirements.
- The business must show potential for success, demonstrated by two full years of operation prior to application.
- The minority owner(s) must belong to a designated minority group. This includes, but is not limited to: African Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans. Others who can demonstrate that they’ve been subjected to racial or ethnic prejudice or cultural bias may also qualify.
Minority small business owners can get certified through the following agencies:
- SBA 8(a) Business Development Program
- National Minority Supplier Development Council
- State Offices for Minority and Women Business Enterprises
If your business is one that would compete for federal transportation contracts, you can also get certified through the Disadvantaged Business Enterprise program, which is run by the U.S. Department of Transportation.
Who are Community Advantage Program lenders?
Community Advantage Program lenders are a significant resource for minority business loans. Here is a short list.
Hope Credit Union – Hope Credit Union is a community development financial institution (CDFI) with a mission of strengthening communities, building assets, and improving lives in economically distressed areas across Alabama, Arkansas, Louisiana, Mississippi, and Tennessee.
CDC Small Business Finance – CDC Small Business Finance is a not-for-profit lender providing capital to small businesses in California, Arizona, Nevada, Detroit, Michigan, or Washington, D.C. Metro.
DreamSpring – This nonprofit organization offers small business loans to entrepreneurs in Arizona, Colorado, New Mexico, Nevada, and Texas.
Justine Petersen – Based in St. Louis, Missouri, this lender provides Community Advantage loans and other microloans to small businesses.
LiftFund – This is a non-profit organization that helps small businesses in the Southern and Western United States.
Excelsior Growth Fund – Excelsior Growth Fund is a not-for-profit Community Development Financial Institution, headquartered in New York, that believes in fostering business growth and creating job opportunities for underserved communities. They provide Community Advantage loans to small businesses in New York, helping them to grow and succeed.
Are there business loans available for minorities with bad credit?
For business owners with lower credit scores, there will be fewer financing options to choose from. However, you may still qualify for invoice factoring, a business cash advance, or equipment leasing with a poor credit score.
Ready for funding?
See what you can qualify for on the Lendio Marketplace.