Being a small business owner is already challenging enough, but a minority owner faces other challenges. Despite these challenges, minority entrepreneurship is rising, and they have played a big role in the United States economy. However, since minority entrepreneurs face several challenges in the business community, we are going to share several tips for acquiring business financing.
As a minority business owner, you might qualify for financial assistance. To start your research, you can search for grants online where there are thousands of programs available. In order to apply for these grants, you will need a DUNS number and must register to do business with the federal government.
Connect with the Minority Business Development Agency
According to the website at MBDA’s business centers, minority owned businesses who are pursuing growth can work with business experts. These individuals help business owners secure capital, compete for contracts, and develop strategic partnerships. Using the MBDA’s website, you can locate a business center near you.
SBA 8(a) Loans
The SBA 8(a) program helps minority business owners acquire SBA-backed business loans. Additionally, as an 8(a) business, you are granted special access to certain government contracts that you can win without having to participate in a competitive bidding process. Be prepared to work on government contracts.
Understand Your Options
You should be aware of your other options besides grants or SBA 8(a) loans. Traditional loans can be hard to qualify for if you do not own an established business or have poor credit. Consider researching microloans, cash advances, lines of credit, or other types of SBA loans too.
Regardless, you should understand the requirements of the business financing you are interested in before you spend too much time pursuing it.
Refine Your Business Plan
Having a solid business plan can improve your chances of getting approved when you are pursuing business financing. Even if you’re confident in your business plan, it can be beneficial to get a second opinion. In addition, as a minority, you also have access to the MBDA business centers (mentioned earlier) where you can seek expert advice.
Build Your Credit
There are times when a business owner does not qualify for a traditional loan. For example, you may not meet the credit score requirement. If this is your case, you should focus on improving your credit score to apply again. It is recommended that you pay all your bills early or on time, track your personal and business credit score going forward.
If you can’t operate without some additional capital, we suggest applying for a business credit card. This way, you can build your credit history while having access to short-term financing. If you charge too much to your business’s credit card, you could end up with significant interest fees. In addition, if you aren’t diligent about paying off your credit card debt, your credit score could be lowered.
The Bottom Line
Minority owned businesses tend to provide jobs in the most impoverished areas of the country. While minority entrepreneurs are a small group, they play a key role in the economy. Hopefully these tips play a small role in continuing to push minority business owners to prominence.