Best Business Loans for Minority Business Owners
These lenders offer features like services in multiple languages, accelerator programs and diversity initiatives.
| Lender | Starting rate | Amount | Term | Time in business | |
|---|---|---|---|---|---|
|
9.99% (interest rate) |
$5k – $250k |
Up to 36 months | 12 months | |
|
Not specified |
$5k – $250k |
Up to 84 months | Not specified | |
|
4.66% | Up to $250k | 3 – 12 months | 3 months | |
|
9.75% (interest rate) | Up to $5M | Up to 300 months | Not specified | |
|
9.99% (interest rate) |
$1k – $50k |
Up to 24 months | None | |
|
35.26% (APR) |
$5k – $250k |
Up to 24 months | 12 months | |
|
8.75% (interest rate) |
$1k – $150k |
60, 84 or 120 months | None |
Best minority business loan lenders at a glance
Best for: Spanish-speaking business owners – Accion Opportunity Fund
- Starting rate (interest rate)
- 9.99%
- Offers free business coaching to its borrowers with bilingual advisors on staff
- Offers various business accelerator programs
- Short time in business requirement
- Doesn’t disclose its minimum credit score requirement
- Not available in all states
- Requires a blanket lien on loans over $50,000
Accion Opportunity Fund(AOF) is our top pick for Spanish-speaking business owners because it offers access to valuable resources like free business coaching with bilingual advisors on staff. It also provides bilingual customer support if you have questions during the application process or need help applying for a loan.
But these loans aren’t available in Montana, North Dakota, South Dakota, Tennessee, Vermont or the District of Columbia. In addition, you’ll have to agree to a blanket lien if you intend to borrow more than $50,000 from the organization.
Learn more about Accion Opportunity Fund.
In order to qualify, you’ll need to meet Accion Opportunity Fund’s criteria of:
- Minimum credit score: Not specified
- Minimum time in business: 12 months
- Minimum annual revenue: $100,000
Best for: Traditional bank loans – Citi
- Starting rate
- Not specified
- Aimed at funding minority-, women- and veteran-owned businesses
- Option to choose between a term loan and a line of credit
- Has physical branches
- Not very transparent about its eligibility requirements
- Doesn’t disclose interest rates
- Only available in certain locations
Citibank’s Small Business Diversity Lending Program aims to help minority-, women- and veteran-owned businesses get the funding they need. The program’s unique strengths are that it offers the choice between a long-term business loan or a more flexible line of credit. Plus, it also offers physical branches for those who prefer to apply for financing in person.
Keep in mind that, like many traditional banks, Citi isn’t very upfront about its eligibility requirements or interest rates, which can make it hard to tell if you’ll qualify and how much you’ll pay if you are approved for a loan. Plus, it’s only available in certain locations and those are disclosed clearly — you can put your zip code into Citibank’s website to find out if it’s available in your city.
Learn more about Citibank’s Small Business Diversity Lending Program.
Citibank doesn’t disclose any of its loan eligibility criteria. You’ll need to contact the bank directly to find out if you qualify. Be sure to ask about time in business, annual revenue and minimum credit score requirements.
Best for: startup businesses – Fundbox
- Starting rate
- 4.66%
- Lenient eligibility requirements
- Lowest starting rate on this list
- Relatively fast funding — potentially within 2 business days
- Short repayment terms
- Weekly payments required
- May require a personal guarantee
Newer businesses that are considering taking out a startup business loan to help cover common startup expenses may want to consider using Fundbox. This lender boasts especially lenient eligibility criteria, requiring just three months in business, $30,000 in annual revenue and a 600 minimum credit score. Plus, it offers a low starting rate for well-qualified borrowers.
At the same time, though, Weekly payments are required, so you’ll want to make sure to plan for those in your business budget. What’s more, you may be required to sign a personal guarantee, which puts you on the hook for repayment if your business defaults.
Read our full Fundbox review.
In order to qualify, you’ll need to meet Fundbox’s criteria of:
- Minimum credit score: 600
- Minimum time in business: 3 months
- Minimum annual revenue: $30,000
Best for: Mandarin- and Cantonese-speaking business owners – East West Bank
- Starting rate (interest rate)
- 9.75%
- Provides services in Mandarin, Cantonese, Spanish and English
- Offers personal, business and international banking services
- Has several branch locations
- All business loans are SBA loans, which can be slower to fund
- Not transparent about its eligibility requirements
- Branch locations not available in all states
If you need a lender who speaks Mandarin or Cantonese, East West Bank could be a good fit. The bank offers services in four languages. Plus, it could serve as a one-stop-shop for your personal, business and international banking needs. It even has branch locations in some Asian food markets like 99 Ranch, and it’s pretty easy to get a real human on the phone if you need help.
At the same time, though, those branch locations are not available in every state. Additionally, your financing options may be more limited than you’d find with other lenders. This bank specializes in SBA financing, especially the SBA 7(a) and SBA 504 loans, which means you’ll be subject to long processing times.
Learn more about East West Bank.
East West Bank doesn’t disclose the minimum credit score, time in business or annual revenue you’ll need to qualify. Apply online or contact the lender directly to learn if your business qualifies for a loan.
Best for: Lines of credit – DreamSpring
- Starting rate (interest rate)
- 9.99%
- Lenient qualification criteria
- Unsecured funding available in some cases
- Provides dedicated support to help with the application process
- Not available in all states
- Requires collateral in some cases
- Charges an annual fee for its line of credit
Since DreamSpring is a Community Development Financial Institution (CDFI) aimed at promoting economic inclusion in underserved communities, it boasts more lenient qualification criteria than more traditional lenders, alongside dedicated support to help with the application process. For those who qualify, this lender offers up to $50,000 in a line of credit that will give you flexible access to funding as you need it.
Unfortunately, DreamSpring isn’t currently able to service every state. You’ll need to be located in Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, Nevada, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Washington or Wyoming.
Plus, its line of credit comes with a fairly steep origination fee (4% to 10%) and, depending on the loan amount, you may be required to put up collateral to secure the loan.
Learn more about DreamSpring.
Instead of the traditional qualifying criteria. DreamSpring mandates that its applicants:
- Have a credit score of at least 600
- Be over the age of 18
- Have a Social Security number (SSN) or individual tax identification number (ITIN)
- Want to grow or start a business
Best for: Same-day funding – OnDeck
- Starting rate (APR)
- 35.26%
- Same-day funding available
- Fair credit accepted
- Shorter time in business requirement than some other lenders
- Higher interest rates
- May charge an origination fee
- Term loans require a blanket lien and a personal guarantee
If you need same-day funding, OnDeck has the capacity to fund your loan in less than 24 hours. As an added bonus, its qualification criteria are fairly flexible, requiring only a minimum credit score of 625 and a 12 months business history to obtain up to $250,000 in financing.
That said, there are some trade-offs to that flexibility. For one, OnDeck’s interest rates are fairly high, not to mention that you could be charged an origination fee. Plus, each of its term loans is secured by both a blanket lien on your business assets and a personal guarantee.
Read our OnDeck business loan review.
In order to qualify, you’ll need to meet OnDeck’s criteria of:
- Minimum credit score: 625
- Minimum time in business: 12 months
- Minimum annual revenue: $100,000
Best for: SBA loans – Huntington
- Starting rate (interest rate)
- 8.75%
- Partners with Operation HOPE to offer free business courses to participants
- Huntington pays the SBA fees
- As an SBA preferred lender, Huntington can offer faster funding times than other banks
- Low maximum loan amount ($150,000)
- Website doesn’t offer eligibility criteria, meaning you may have to contact the lender directly
- No ability to apply online
If you’re considering a Small Business Administration (SBA) loan, take some time to learn about Huntington Bank’s Lift Local Business Program because it has some unique advantages. To start, Huntington will pay your SBA fees for you. Plus, the bank also partners with Operation HOPE to offer qualified borrowers access to free business courses. Not to mention that this program also boasts lenient qualifying criteria and generous loan terms.
On the other hand, though, its maximum loan amount is only $150,000, which is lower than other lenders on this list and may not suit every borrower’s needs. Plus, the website is a little light on information, which means you may have to contact the bank directly if you’re interested in learning more.
Learn more about the Huntington National Bank Lift Local Business program.
In order to qualify, you’ll need to meet Huntington National Bank’s criteria of:
- Minimum credit score: 140+ SBSS score
- Minimum time in business: None
- Annual revenue requirement: Under $3 million
What’s considered a “minority business” for loans?
A minority-owned business is typically defined as a firm either wholly or equally (at least 51%) owned and run on a daily basis by one or more members of an ethnic or racial group.
For example, the following ethnic and racial groups may be eligible for an SBA loan for minorities:
- Black
- Hispanic
- Asian-Pacific
- Asian-Indian Subcontinent
- Native American
- Alaskan Native
However, the term “minority businesses” can also include other underserved communities, such as women-owned businesses, veteran-owned businesses or businesses run by people with disabilities.
If you’re applying for a business loan that is only offered to, or has specific benefits for, minority business owners, you’ll need to find out how that specific lender defines the term. Often, this information will be available on the lender’s website.
Where to get funding for your business
If you’re a minority business owner, it’s important to understand that you can get a business loan from any financial institution that offers them, including online lenders, banks or credit unions. However, keep in mind that the eligibility requirements you’ll face will vary, so be sure to do your research before applying.
However, if you’re having trouble qualifying for a loan from more traditional sources, there is another option that may be able to help you secure the small business financing you need: Community Development Financial Institutions (CDFIs). CDFIs are mission-driven, privately owned financial institutions that provide economic opportunities for minority-owned businesses.
CDFIs usually offer more lenient qualification criteria than traditional lenders. Plus, they often provide additional resources for business owners, such as business coaching or mentorship. At the same time, though, their funding limits may be lower than those of other funding sources.
If you think a CDFI could be a good fit for you, you can search the CDFI Fund’s database to find an organization that suits your needs.
While it may be challenging to find small business loans for minorities with bad credit, it’s still possible. Some lenders — especially alternative online lenders — will provide bad credit business loans.
Some options include accounts receivable financing and merchant cash advances, which can be accessible to borrowers who can’t obtain loans elsewhere.
If your financing options are limited due to a poor or bad credit score, consider ways to boost your credit score before applying.
Small business grants for minorities
In addition to loans for minority-owned businesses, minority grants are available for small businesses. Here are a few starting points:
Federal grants
Federal grants — many of which are available to minority-owned businesses — are listed on Grants.gov. These grant opportunities are very specific and might not fit your business’s specific needs, but keeping an eye on your options is useful.
Several federal agencies sponsor these grants, including the Department of Agriculture, Department of the Interior, Environmental Protection Agency and NASA.
Other small business resources for minorities
Consider these resources as a way to stay connected with upcoming opportunities and support for minority-run businesses.
The SBA’s 8(a) Business Development program is designed to benefit small, disadvantaged businesses, including those owned by minorities.
The federal government aims to award 5% of federal contract dollars on a yearly basis to businesses that are considered to be a “small disadvantaged business.” Having an SBA 8(a) designation allows you to compete for these contracts and the funding that comes with them.
To qualify, you must get certified as a socially disadvantaged business through an online application with the SBA. The application process is very thorough, so you may want to start by visiting MySBA Certifications to take an initial eligibility assessment and spend some time researching the program’s resources page to learn more about the application process before you apply.
However, once approved, the designation lasts up to nine years, depending on your business’s standing. Qualified applicants can also access business counseling and technical support.
In its definition, the SBA defines being “socially disadvantaged” as “socially disadvantaged individuals … who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities.”
However, be aware that there are other caveats to this definition, such as needing to provide evidence of a social disadvantage. Be sure to read the definition carefully and to make use of the available resources to determine if your business qualifies.
As its name suggests, the Minority Business Development Agency (MBDA), part of the U.S. Department of Commerce, works to promote the growth of minority-owned businesses.
Business owners can get advice from experts at MBDA Business Centers nationwide, including how to find capital. The MBDA also advocates for the interests of minority-owned businesses while administering public and private sector programs.
The National Minority Supplier Development Council (NMSDC) focuses on boosting minority-owned suppliers’ opportunities and market access. From its national office in New York and 23 affiliate regional councils nationwide, NMSDC helps its 1,700 corporate members integrate into supply chains, access programming and educational opportunities and network with others in their fields.
The Service Corps of Retired Executives (SCORE) is a valuable source of free business mentoring and education for minority-owned and non-minority-owned businesses. A resource partner of the SBA, SCORE has offered mentoring, workshops and educational resources to more than 17 million entrepreneurs since 1964 via 10,000-plus volunteers across the U.S.
The organization also provides webinars and courses specific to minority-owned businesses, including options in Spanish.
The Office of Small Business Development Centers (SBDC), part of the SBA, makes a special effort to reach minority members of socially and economically disadvantaged groups. It is dedicated to supporting entrepreneurship, small business development and the U.S. economy through funding and overseeing a nationwide network of development centers.
Alternative funding options for minority-owned small businesses
Minority business grants often have specific criteria and strict eligibility requirements, making it hard to qualify. Additionally, small business loans typically require a minimum FICO Score or a certain number of years in business to apply.
If neither a grant nor a loan feels like the right fit for your business, you can also consider:
-
Small business credit cards
Although funding your entire business with credit cards is not a good practice, using them for a few low-cost expenses can be helpful. Some business credit cards offer incentives and rewards, which can help offset the cost of the high interest rate. -
Crowdfunding
You can raise money from friends, family and other supporters via platforms such as Kickstarter. Crowdfunding can be a great way to fundraise for a specific purpose, such as purchasing new equipment, since you don’t need to repay the funds. -
Bootstrapping
If you have an idea for a business but don’t want to take on debt, you can start with a smaller version and scale up as you become profitable. For example, if you plan to start a restaurant, you can start with a table at a local farmer’s market and use your profits towards a food cart, scaling up from there to a full restaurant. -
Peer-to-peer business loans (P2P lending):
With P2P lending, you can connect with individual investors via P2P lending platforms. Rates and terms vary, but it can be a great way to access the funds you need to push your business to the next level.
Our methodology: How we chose the best minority business loans
We reviewed more than 22 lenders to determine the overall eight best minority business loans. To make our list, lenders must meet the following criteria:
- Minority business focus: We focus on selecting lenders who cater to minority business owners in the services they offer, whether that’s through solely working with underserved communities or by offering essential services, like access to multilingual lending agents.
- Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide unique perks to customers, like free business coaching.