Small Business Loans for Minorities

Throughout the last several years, there has been a huge increase of minority owned small businesses in the United States. This has grown by over 50% in the last decade and these businesses generate almost $2 trillion in revenue and employ 6.3 million workers. However, minority owned business struggle to access capital because they are less likely to receive loans. Those that are successful in receiving loans, have lower dollar amounts and high interest rates. Securing capital for any small business is crucial for the growth and expansion of the business.

Minority owned businesses is a business whose owner is Asian, Hispanic, Black, or Native American. Minority business owners usually have low credit which is a barrier for many when applying to receive a loan. Fortunately, today it is getting easier for minority owners to get funding as the United States is becoming more diverse. If you are a minority business owner and need financing to help expand and grow your business, the following options are available for you.

SBA 7(a) Loan Program 

SBA 7(a) loans are not specific to minorities but nearly one-third of SBA 7(a) loans go to minority applicants. The maximum amount for the SBA 7(a) loan is $5 million with a minimum of $50,000. Terms are up to 25 years on real estate and up to 10 years on business equipment and acquisition and 7 years for working capital. The down payment is negotiable but typically a minimum of 10%-15% which is some of the lowest rates available which allows minority business owners to invest more profits in growth.

SBA Microloan Program

The microloan is for those who are looking for smaller capital for your business or if you run your business as a sole proprietorship. This program offers up to $50,000 and have low interest rates like the 7(a) loan. The SBA makes these loans through third-party nonprofit lenders and these help minorities get funds for their small businesses.

SBA Community Advantage Loans

This program is for businesses that are in underserved communities that need anywhere between $50,000 to $250,000 in financing. The community advantage loan is structured similarly to a term loan meaning they have a specific repayment schedule and either a fixed or variable interest rate.

SBA 8(a) Business Development Program

The SBA 8(a) is not a loan but a certification program that helps minority owned businesses get access to federal contracts. Some of the basic requirements for this program are you must be 51% owned by someone from a socially and economically disadvantaged background. The owner’s personal net worth must be $250,000 or less and their assets need to be $4 million or less for the last three years.


Unlike loans, grants don’t need to be paid back and are interest free. One grant that you can apply to is the Minority Business Development Agency (MBDA). The MBDA helps minority business owners and have many programs that are specifically designed to help minority businesses.

Another grant is the First Nations Development Institute grant. First Nations is a program dedicated to the Native America, Alaska native and Native Hawaiian communities which provides financial and technical resources. The Minority Chamber of Commerce assists the Black, Hispanic, and Asian entrepreneurs as well as offering resources and networking opportunities for them.

State and Local Loans for Minorities

Community Development Financial Institutions were created to provide affordable credit, capital and other services to minority communities in low-income or disadvantaged areas. Over 400 CDFIs exist and have loaned billions of dollars to minority businesses since 2003. One of them known as The Business Center for New Americans offers loan services that focus on minorities and includes microloans, business lines of credit, and credit-building loans.

Nonprofit Loans

Nonprofits also make loans to minority owned businesses. For example, Accion has a program that targets low income business owners who struggle accessing funds through traditional programs which makes it a viable option for a minority small business. Kiva is another nonprofit lender to check out. They offer up to $10,000 and no interest financing for those businesses who are eligible.

The loans on this list can help you get approved for funding your small business as a minority owner. These are all better suited than traditional loans for minority owned businesses as they have less requirements making it easier for approval.