A 2016 survey conducted by Biz2Credit on more than 1,500 minority business owners revealed that 36.3% admitted that lack of adequate funding was their biggest challenge. Historically, minority business owners have lower credit scores compared to non-minority business owners, making it difficult for them to access financing for their business. However, minority entrepreneurs are getting more opportunities to fund their businesses if they have enough information on how to get a loan as a minority.
Types of business funding for minority business owners:
Small Business Administration (SBA) Loans for Minorities
The SBA has several lending programs ideal for small businesses particularly those that are minority-owned. These loans include the SBA 7(a) loans, SBA 8(a) Business Development program, SBA Microloan program, and the SBA Community Advantage loans.
Lending Programs for Minority Business Owners
There are also lending programs specifically designed to help minorities to fund their small businesses. These programs include Business Center for New Americans, Minority and Women Revolving Loan Trust Fund Program, Union Bank’s Business Diversity Lending Program, and Business Consortium Fund loan.
Resources and Grants for Minority Small Businesses
Government agencies and other such bodies also offer resources and grants to minority small businesses to help them grow. Some of such options include Minority Business Development Agency (MBDA), Operation HOPE Small Business Development Program, First Nations Development Institute Grant, and National Minority Business Council.
In addition to the funding options mentioned above, there are several other alternatives available to small business owners that are minorities, allowing them access relatively faster financing. Modern fintech solutions providers are also embracing technology to meet the diverse needs of their customers, one of which is the use of artificial intelligence to make the lending process faster and potentially, fairer, ultimately improving the industry for all stakeholders.