Minority business funding: The loans and grants available to you

Minority business funding is for business owners from disadvantaged groups, such as ethnic minorities or women. A number of different government agencies, nonprofits, and private lenders provide this type of capital funding for small business. While there are various types of minority business funding – including loans, microloans, and grants – these types of business financing options help minority entrepreneurs to access credit and capital. Although programs might seem difficult to find, there is actually more out there than you might think. In this article, we run through the small business financing options available to entrepreneurs from minorities.

 

How to approach researching minority business funding

Researching the best small business funding for your venture can be confusing at the best of times. For instance, should you be looking for debt financing or a grant? How do you know what’s available in your area? How can you be sure you’re eligible? With this added complication of looking for grants or non-profit programs alongside lenders, sourcing minority business funding can feel like an overwhelming task. However, this need not be the case. Below we’ve compiled a basic list of minority business loans and grants which can help you start your research.

 

After reviewing these suggestions, use a tiered approach to refine your search. For example, the next stage should explore what funding is available at state or local level. Often, there will be a handful of nonprofits that run niche programs depending on local issues. For instance, WESST is a foundation based in New Mexico that assists small business owners who are political refugees. Depending on the issues that affect your locale, there is likely to be a funder that’s willing to make a contribution to your venture.

 

6 types of business loan available to minority entrepreneurs

For some small business owners, debt financing will be the funding source that best suits their needs. Below are eight small business loan programs that cater specifically to minority entrepreneurs.

 

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

OK, so Small Business Administration 7(a) Loans aren’t only for minorities – but they are a source of financing every small business owner should know about. As part of the 7(a) Loan Program, the SBA will guarantee a loan from a private lender, which improve your chances of getting approved. What’s more, your chances of being approved will increase further if you are eligible for the 8(a) Business Development Program. This program helps businesses from economically or socially disadvantaged areas to win federal contracting dollars alongside receiving business training, counseling, marketing assistance, and executive development.

 

2. SBA Community Advantage Pilot Program

The SBA’s Community Advantage pilot program has been developed to support small businesses in underserved markets. The program encourages local nonprofits to grant loans of up to $250,000 by underwriting up to 85% of the total loan amount. This allows minority entrepreneurs to access funding they wouldn’t otherwise have, enabling them to obtain more capital for their small business.

 

3. SBA Microloans

Again, this is another one that isn’t specifically geared towards minorities but remains a useful resource for small business owners. Entrepreneurs seeking a loan of $50,000 or less should look into the SBA Microloan program. This program offers funding from third-party lenders that also offer management and technical mentoring. Generally, these organizations are community-based nonprofits who are eager to help small business owners from disadvantaged communities.

 

4. The Business Center for New Americans

The Business Center for New Americans works with immigrants, refugees, women, and ethnic minorities to help their businesses thrive. The BCNA grants loans between $5,000 and $50,000 to entrepreneurs who have been denied funding from traditional lenders. However, their assistance does not only cover those with bad credit; it also helps entrepreneurs whose funding request was too small, or if the creditor won’t finance startups.

 

5. Accion

Accion is America’s largest nationwide nonprofit lending network. Their programs target low- and middle-income entrepreneurs who have difficulty accessing funding through traditional means. Although not minority-specific, their criteria often give minority business owners an edge, allowing them to access funds of anything from $200 to $300,000 in all 50 states.

 

6. The National African American Small Business Loan Fund

NASBLF is a joint venture between JP Morgan Chase and the Valley Economic Development Centers. The program aims to serve minority-owned businesses in low- or middle-income communities in Chicago, Los Angeles, and New York. The project gives African American business owners access to capital, consultation, and technical development.

 

 

8 minority small business grant initiatives

However, debt financing isn’t the only option for minority small business owners. Entrepreneurs from disadvantaged communities can also access grant funding. This is particularly the case for federally-recognized Native American tribes and rural business owners. Although applying for this money requires determination, creativity, and a bit of patience, who doesn’t want free money to help your business grow?

 

1. First Nations Development Institute Grant

The Native Arts Capacity Building Initiative awards up to six grants of $30,000 each to Native American-run organizations that support the arts. However, the program only covers Minnesota, North Dakota, South Dakota, and Wisconsin. Furthermore, it’s important to note that you must already have programs supporting this objective up and running.

 

2. Tribal Energy Development Capacity Grant

The Tribal Energy Development Capacity Grant is another program aimed at Native American entrepreneurs. This fund gives federally-recognized tribes resources to develop the energy industry in their area. Although the fund doesn’t give directly to small business owners, there are likely to be “trickle down” government contracts available through the initiative.

 

3. Water and Waste Disposal Loan and Grant Program

Although this program isn’t specifically aimed at small businesses, federally-recognized Native American tribes are eligible to apply. Therefore, if you’re running a business in a recognized Native American territory and you need to invest in infrastructure, these grants could come in handy.

 

4. Rural Business Opportunity Grants

The RBOG initiative awards business development grants of up to $100,000 to stimulate the economy in rural areas. Check out the terms and conditions to see if your small business qualifies.

 

5. Rural Business Enterprise Grants

The RBEG program is another program aimed at rural areas. This program offers funds for infrastructural development, small business startup financing, equipment, and real estate. Grants range from $10,000 and $50,000, and unusually, smaller requests are given higher priority.

 

6. Community Connect Grants

If you run a business in a rural area and your broadband speed is under 3 Mbps, you may be eligible for the Department of Agriculture’s Community Connect Grant. Although not specifically geared towards minorities, these types of rural development funds tend to prioritize minorities as a target demographic.

 

7. Community Programs to Improve Minority Health Grant Program

If your business is related to healthcare, you can apply for the Community Programs to Improve Minority Health Grant Program. The purpose of this fund is to spread information about health and wellbeing amongst minority communities.

 

8. Improving Minority Health Grant Program

The Improving Minority Health Grant program from the USDA provides minority business funding nonprofits, Native American tribes, faith-based organizations, and other organizations that specifically seek to improve healthcare in minority communities.