8 Best Business Loans For Minorities With Bad Credit
Explore the top minority business loans available to find the best fit for your small business or startup, even with a less-than-perfect credit score.
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WRITTEN & RESEARCHED BY
Senior Staff Writer
Last updated onUpdated
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REVIEWED BY
Editor & Senior Staff Writer
Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
Business financing for minorities can be hard to come by, especially if you have bad credit. Even so, your minority-owned business can find the right loan or funding to help support your business goals.
In this article, we’ll help you find the right lender for minority-owned small businesses and startups while bearing in mind the difficulties involved in dealing with racial lending biases and disparities.
While not every loan service on this list directly targets minority-owned businesses with bad credit, they all work well with those who have less-than-stellar credit.
Learn More About Our Top Picks
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Read more below to learn why we chose these options.
Table of Contents [hide][show]
- Top 8 Minority Small Business Loans For Bad Credit
- SBA Microloans: Best For Long-Term Funding
- CDFI: Best For Low Rates
- Lendio: Best Marketplace For Comparing Loan Offers
- LoanBuilder: Best Loans For New Businesses
- Fundbox: Best Lines Of Credit For Bad Credit
- Kabbage Loans: Best Lines Of Credit For Borrowers With Fair Credit
- Accion: Best Loans With Business Coaching & Support
- Accompany Capital: Best For Businesses In NYC
- Can You Get A Minority-Owned Small Business Loan With Bad Credit?
Table of Contents
- Top 8 Minority Small Business Loans For Bad Credit
- SBA Microloans: Best For Long-Term Funding
- CDFI: Best For Low Rates
- Lendio: Best Marketplace For Comparing Loan Offers
- LoanBuilder: Best Loans For New Businesses
- Fundbox: Best Lines Of Credit For Bad Credit
- Kabbage Loans: Best Lines Of Credit For Borrowers With Fair Credit
- Accion: Best Loans With Business Coaching & Support
- Accompany Capital: Best For Businesses In NYC
- Business Loan & Funding Products Review Methodology
- Can You Get A Minority-Owned Small Business Loan With Bad Credit?
Top 8 Minority Small Business Loans For Bad Credit
Obtaining a minority small business loan is difficult but not impossible. The following list covers lenders and loan types that offer some combination of accessibility, competitive rates, and transparent funding outside the traditional bank lending system.
- SBA Microloans: Best For Long-Term Funding
- CDFI: Best For Low Rates
- Lendio: Best Marketplace For Comparing Loan Offers
- LoanBuilder: Best Loans For New Businesses
- Fundbox: Best Lines Of Credit For Bad Credit
- Kabbage Loans: Best Lines Of Credit For Borrowers With Fair Credit
- Accion: Best Loans With Business Coaching & Support
- Accompany Capital: Best For Businesses In NYC
How The Top Bad-Credit Loans For Minorities Compare
| Funding Type | Max Borrowing Amount | Repayment Terms | APR | FICO | |
|---|---|---|---|---|---|
| SBA Microloans | Term loans | $50K | Up to 6 years | Typically 8% to 13% | 620 (recommended) |
| CDFI | Installment loans, microloans, startup loans | Varies by lender | Varies by lender | Varies by lender | Varies by lender |
| Lendio | Term loans, STLs, LOCs, MCAs, equipment financing, MCAs | $5 million | Varies | Varies | N/A |
| LoanBuilder | Short-term loans | $150K | 13 to 52 weeks | Undisclosed fees | Undisclosed |
| Fundbox | Lines of credit | $150K | 12 or 24 weeks | Fees start at 4.66% | 600 |
| Kabbage Loans | Lines of credit | $250K | Up to 24 months | Undisclosed | 660 |
| Accion | Term loans | $250K | 12 to 60 months | Starts at 8.49% | Undisclosed |
| Accompany Capital | SBA loans, microloans, LOCs | $350K | Up to 25 years | Starts at 8% | N/A |
SBA Microloans: Best For Long-Term Funding
SBA Microloans |
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Pros
- Low interest rates
- Long repayment terms
- Flexible credit requirements
- Available to small businesses & startups — no time-in-business requirement
Cons
- A lengthy application & funding process
- Low maximum borrowing amounts
- May require a down payment or collateral
Why We Chose SBA Microloans For Best Long-Term Funding
The Small Business Association Microloan program is designed for small businesses and startups to obtain smaller loans for business purposes. While this microloan program isn't explicitly targeted at minorities, it is intended to provide equitable access to business credit for all small business owners, including those with credit challenges.
Minority-owned businesses needing $50,000 or less will stand to benefit from the low interest rates and long repayment terms (up to six years) of an SBA Microloan. Though the application process is long (generally around 3+ months), it's a good option to consider, particularly for those who have had trouble obtaining a bank loan. Microloans can be obtained through an SBA intermediary lender.
Choose SBA Microloans If...
- You have time to wait for a long-term, low-interest loan
- You only need to borrow $50K for your business expenses
Get Started With SBA Microloans
CDFI: Best For Low Rates
CDFI |
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Pros
- Multiple types of financing available to underserved communities
- Lower rates & fees than most alternative lenders
- With over 950 CDFIs nationwide, you should find some in your area
Cons
- Lengthy application process
- Loan types on offer will vary by location
Why We Chose CDFIs For Low Interest Rates
A CDFI is a not-for-profit institution that facilitates community growth by financing businesses and consumers in low-income or disadvantaged areas. CDFIs operate on the local community level and include banks, credit unions, loan funds, and venture capitalists.
CDFIs are particularly friendly toward women and minorities, having been established to support business activity in underserved communities. Additionally, these lenders have lower rates, fewer fees, and flexible borrower requirements than most sources of accessible funding.
Choose A CDFI If...
- You want competitive interest rates but don’t qualify through traditional lenders
- You want long-term funding but don’t qualify for traditional bank loans
Lendio: Best Marketplace For Comparing Loan Offers
Pros
- Multiple types of business financing available
- Quick & easy application process
- Helpful customer service
Cons
- Rates can be expensive
- Funds may take a while to disburse
Why We Chose Lendio As Best Marketplace For Comparing Offers
Lendio is an online platform that matches businesses with loan providers in its financing network. Because it works with 75+ lenders that offer everything from long-term business loans to merchant cash advances, there are options for almost everyone, including borrowers with bad credit.
Like many options on this list, Lendio isn't aimed at minority business owners. However, it's still an excellent place to hunt for funding because it does the matchmaking for you with a single application. This lets you easily receive and compare offers to find the best rates and terms for your business.
Choose Lendio If...
- You want to easily compare multiple loan offers with a single application
- You want to explore various funding types to choose the right option for your specific business needs
LoanBuilder: Best Loans For New Businesses
Pros
- No extra fees
- Quick & easy application process
- Funds get disbursed quickly
Cons
- Not available to businesses in some industries
- No long-term financing options
- UCC blanket lien required
Why We Chose LoanBuilder Loans For New Businesses
PayPal-owned LoanBuilder delivers short-term small loans to qualifying businesses. New borrowers may receive up to $100,000, while repeat borrowers are eligible for up to $150,000.
While not explicitly directed at minorities, LoanBuilder has lower borrower requirements than many lenders. It's a great choice for newer businesses, as you only have to be in operations for at least nine months to qualify.
Choose LoanBuilder If...
- You’re a newer business that has been in business for at least nine months
- You want a short-term loan with a one-time borrowing fee
Fundbox: Best Lines Of Credit For Bad Credit
Pros
- Fast and easy application process
- Funds are disbursed quickly
- Discounts for repaying early
Cons
- Weekly repayments required
- Rates can be expensive
- No long-term financing options
Why We Chose Fundbox For Bad-Credit Lines Of Credit
If you have a credit score of at least 600, you may qualify for a small business line of credit through Fundbox. While Fundbox isn't specifically designed for minority-owned businesses, it still makes for a great option if you are struggling with iffy credit. It's also a good option for businesses that want flexible funding, as they can make multiple draws as needed up to their approved credit limits.
Fundbox is also one of the quickest ways to get funding if your application is approved by Fundbox's automated system. You can receive a credit approval decision in just minutes, make immediate draws on your line of credit, and receive funds in your checking account as quickly as the next business day.
Choose Fundbox If...
- You want a flexible line of credit to draw from as needed
- You want fast funding (as soon as the next business day)
Kabbage Loans: Best Lines Of Credit For Borrowers With Fair Credit
Pros
- No added fees
- No early payment penalty
- Relaxed revenue requirements
Cons
- Complicated fee structure
- No long-term financing options
Why We Chose American Express Business Blueprint For Fair-Credit LOCs
If you want a small business line of credit with higher borrowing limits thank Fundbox, take a look at what American Express Business Blueprint (formerly Kabbage) has to offer. Through this lender, you may be eligible for a LOC up to $250,000. You do have to have a minimum credit score of 660, and not all applicants will qualify for initial credit lines of more than $150,000.
Still, if you meet the borrowing requirements, the Amex Business Blueprint line of credit may be worth it for your business. These lines of credit come with terms up to 24 months, one-time borrowing fees, and fast funding -- including instant funding if you have an American Express Business Checking account. While not directly targeted at minority borrowers, the relaxed borrowing requirements make it easier for many small business owners to access funding.
Choose American Express Business Blueprint If...
- You want a line of credit with repayment terms up to 24 months
- You want a line of credit with fast approvals and quick funding
Get Started With Kabbage Loans
Accion: Best Loans With Business Coaching & Support
Pros
- Specializes in lending to underserved communities
- Relaxed borrower qualifications
- No prepayment penalty
Cons
- Loans not available in all states
- Funds can take a while to disburse
Why We Chose Accion For Best Loans With Support & Coaching
Accion is a nonprofit company focused on lending to businesses that may not qualify for other loan options. Offering small business loans for an array of purposes, Accion works with businesses of all shapes and sizes, including minority-owned businesses, startups, and borrowers with credit challenges.
Accion's mission -- providing loan opportunities to underserved communities, including minorities -- makes it a valuable resource to minority-owned businesses having difficulty securing financing from other sources. In addition to its loans, Accion also offers coaching, support programs, and other resources for underserved businesses.
Choose Accion If...
- You want to work with a lender that also offers business coaching, mentoring, and other forms of support
Accompany Capital: Best For Businesses In NYC
Accompany Capital |
|---|
Pros
- Specializes in lending to immigrant & refugee-owned businesses
- Relaxed borrower qualifications
- Multiple types of financing available
Cons
- Only available to businesses in the NYC area
- Funds may take a while to disburse
- Some additional fees
Why We Chose Accompany Capital For NYC Businesses
Accompany Capital (formerly the Business Center For New Americans) is a CDFI based in New York City that offers a range of loan services focused on helping US immigrants, refugees, and women entrepreneurs in the New York City area gain self-sufficiency. The company offers everything from low-cost, long-term SBA loans to microloans and credit builder loans for credit-challenged borrowers.
Accompany Capital's accessible loans, lax eligibility requirements, high borrowing limits, and personal service make it an excellent option for businesses that operate in NYC boroughs. In addition to loans, Accompany Capital can help businesses connect to other resources to improve their odds of success.
Choose Accompany Capital If...
- You want to choose between several funding products with competitive interest rates
- Your business is located in a borough in NYC
Get Started With Accompany Capital
Business Loan & Funding Products Review Methodology
We spend hours researching and evaluating each business loan and funding product that we review at Merchant Maverick, placing special emphasis on key characteristics to generate our ratings.
When rating lenders and funding providers, we use a 31-point rubric that looks at rates and fees, services, eligibility requirements, application, sales and advertising transparency, customer service, and user reviews. We weigh each section differently to calculate the total star rating. This rubric is applied to traditional term loans, as well as short-term loans, start-up loans, lines of credit, online lending products, merchant cash advances, and equipment financing products.
- Rates & Fees: 20% of the total star rating
- Services: 20% of the total star rating
- Eligibility Requirements: 20% of the total star rating
- Application: 15% of the total star rating
- Sales & Advertising Transparency: 10% of the total star rating
- Customer Support: 5% of the total star rating
- User Reviews: 5% of the total star rating
Each section is further broken down into granular, weighted subsections, in which we examine specific attributes like terms lengths, conditions of repayment, credit score and revenue requirements, ease of application, length of time to funding, the ethics involved in promoting the lending product, customer support, and the overall reputation of the lender or funding provider.
Read more about how we rate small business lenders.
Can You Get A Minority-Owned Small Business Loan With Bad Credit?
As daunting as the challenges facing minority business owners with bad credit can be, there are many sympathetic agencies, organizations, and lenders seeking to help correct lending disparities.
Do your research before taking any loan offer, and be sure to check out our more general resources on how to get a startup loan when you have bad credit.
Furthermore, there are many grant programs designed specifically to fund minority business owners and entrepreneurs. Our article on minority small business grant opportunities explores some of these options.
Want more funding options? Don’t forget to check out our picks for top lines of credit for bad credit. You can also find more options with our list of best small business loans for bad credit.
Jason Vissers
Senior Staff Writer at Merchant Maverick
Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University and currently lives in Philadelphia, Pennsylvania.
View Jason Vissers's professional experience on LinkedIn.
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