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The Best Minority Business Loans & Financing Resources

There are many loan and financing resources specifically aimed at minority businesses. Check out this list of our top choices to see which one is right for you.

    Chris Motola
  • UPDATED

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Those seeking minority business loans can face not only the typical challenges of financing, but biases and language barriers that make it harder to get access to the best small business loans.

The good news is there are now many programs and lenders that explicitly aim to improve access to minority business loans. Below, we’ll delve into a few great sources of minority business loans and resources for finding additional financing.

 

Learn More About Our Top Picks

CompanyBest ForNext StepsBest For
SBA Microloans

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  • Term loans & lines of credit
  • FICO: 600+
  • APR: 5.56%+
  • Term loans & lines of credit
  • FICO: 600+
  • APR: 5.56%+

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Accion

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  • Term loans
  • FICO: N/A
  • APR: 5.99%+
  • Term loans
  • FICO: N/A
  • APR: 5.99%+

Visit Site

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CDFI

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  • Term loans, lines of credit, equipment financing, & real estate financing
  • FICO: Varies
  • APR: Varies
  • Term loans, lines of credit, equipment financing, & real estate financing
  • FICO: Varies
  • APR: Varies

Visit Site

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Union Bank

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  • Term loans, lines of credit, equipment financing, & real estate financing
  • FICO: Unknown
  • ARP: Unknown
  • Term loans, lines of credit, equipment financing, & real estate financing
  • FICO: Unknown
  • ARP: Unknown

Visit Site

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Kiva U.S.

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  • Crowdfunded loans
  • FICO: N/A
  • APR: 0%
  • Crowdfunded loans
  • FICO: N/A
  • APR: 0%

Visit Site

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Fundbox

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  • Lines of credit
  • FICO: 600+
  • APR: 4.66%+
  • Lines of credit
  • FICO: 600+
  • APR: 4.66%+

Apply Now

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Lendio

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  • Term loans, short-term loans, SBA loans, merchant cash advances, lines of credit, & equipment financing
  • FICO: 550+
  • APR: Varies by lender
  • Term loans, short-term loans, SBA loans, merchant cash advances, lines of credit, & equipment financing
  • FICO: 550+
  • APR: Varies by lender

Apply Now

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Read more below to learn why we chose these options.

Table of Contents

The Best Minority Business Loans

Minority business loans aren’t fundamentally different than any other type of loan. Instead, the underwriting process takes into account obstacles and practices commonly encountered by minority business owners. Here are some of the best minority business loan options we’ve come across.

 

1. SBA Loans: Best For Businesses And Entrepreneurs With Good Credit

SBA Microloans


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Pros

  • Good rates
  • Long repayment terms
  • Suitable for startups

Cons

  • Long application process
  • Slow time to funding
  • Partial down payment may be required for startups

Why We Chose SBA Loans For Best Minority Loans

One way to deal with the dysfunctions of the private lending market is to step around them entirely.

The federal Small Business Administration (SBA) exists largely to help businesses that would otherwise be denied funding by guaranteeing 50%-85% of loans underwritten by third parties. These loans — the 7(a) and 504 are the most popular —  generally have better rates and longer terms than the applicant would normally be able to access on their own.

Of particular interest to minority business owners, however, might be the SBA microloan program. A microloan is defined as a loan that is $50,000 or less. Many microlenders specialize in lending to underserved communities. These loans can be used for almost any business-related purpose, including starting a business from scratch. And unlike many microloans offered without an SBA guarantee, you can take up to six years to pay off your balance.

Merchant Maverick recommends SmartBiz to borrowers who need help navigating the SBA loan application process.

SBA Services

Though the SBA doesn’t generally lend directly, it offers the following services through its SBA-approved lenders:

  • Term loans up to $5 million
  • Lines of credit up to $5 million

SBA Rates & Fees

With regard to SBA loan rates, SBA 7(a) loans have rates between 10.25% and 12.75%, while SBA 504 loans have rates between 5.56% and 5.59%. Disaster relief loans like EIDL or PPP may have lower rates. Repayment term lengths can be up to 10 years.

SBA loan eligibility requirements

  • Time in business: 1 year
  • Credit score: 600+

Loans over $25,000 generally require collateral.

Get Started With SBA Microloans

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2. Accion Opportunity Fund: Best For Businesses With Poor Credit

Accion


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Pros

  • Lower qualifications than banks
  • Monthly repayments
  • Suitable for startups

Cons

  • Rates can be expensive
  • Some additional fees charged
  • The application process may require a lot of information

Why We Chose Accion Opportunity Fund For Best Minority Loans

In addition to the specific challenges faced by minority business owners, there are also some obstacles that can keep any borrower from getting access to capital, credit being one of the most common. Luckily, there are lenders such as Accion that are willing to work with people whose credit has fallen below the 600 mark.

Accion is a nonprofit organization specializing in lending to underserved communities and borrowers. Around 60% percent of its borrowers are based in minority communities. You can borrow up to $100 with Accion’s small business loans, contingent on your income-to-debt ratio. While the organization de-emphasizes credit, Accion does want to see that you’re not behind on any of your bills and that you don’t have any bankruptcies within the last 12 months. Startups will also have to produce a business plan and a partner referral. Be prepared to offer up a lot of information during the application process.

Accion Services

Accion Opportunity Fund offers term loans up to $100,000.

Accion Rates & Fees

Accion’s rates range between 5.99% and 16.99%.

Accion Eligibility Requirements

  • Time in business: 12 months
  • Credit score: No minimum given
  • Revenue: $50,000/ year

Get Started With Accion

Read our in-depth review

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3. Community Development Financial Institutions (CDFIs): Best For Businesses In Economically Distressed Communities

CDFI


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Pros

  • Full spectrum of banking services
  • Rates are competitive with other community banks
  • Great for businesses operating within economically distressed areas

Cons

  • Availability is contingent upon your location
  • May need to meet high qualifications
  • Not targeted specifically at minority-owned businesses

Why We Chose CDFIs For Best Minority Loans

To qualify as a CDFI, banks have to apply to the federal Community Development Financial Institutions Fund and prove that they’re primarily lending to under-served markets. CDB can have either a national or a state charter and serve low-to-middle income communities. While not explicitly targeted at minority communities, they do often work in and with them. The Bank Enterprise Award Program, in particular, is targeted to communities where at least 30% of residents have incomes that are less than the national poverty rate and where unemployment rates are at least 1.5 times the national unemployment rates.

CDFI Services

CDFIs usually offer the full-service spectrum of bank-based lending products, from checking accounts to home mortgages, lines of credit, and, of course, business loans. You can find some of these institutions through the Community Development Bankers Association.

CDFI Rates & Fees

CDFI rates and fees will vary by bank.

CDFI Eligibility Requirements

Eligibility requirements for CDFI loans may vary by institution. While banks generally prefer to work with borrowers with good-to-excellent credit, CDFI’s may be more lenient in some cases.

Get Started With CDFI

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4. Union Bank: Best For West Coast Businesses Looking For High Borrowing Amounts

Union Bank


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Pros

  • High borrowing amounts
  • Multiple lending products available
  • Monthly repayments

Cons

  • Diversity lending program limited to the West Coast
  • Banking products have a lot of fees
  • Funds can take awhile to disburse

Why We Chose Union Bank For Best Minority Loans

While Union Bank’s services and rates are fairly typical for a big bank, the institution does have a well-developed diversity lending program. This program offers up to $2.5 million in funding for businesses owned at least 51% by Hispanic, American Indian, Asian and other groups defined by the Equal Employment Opportunity Commission and businesses owned by women and veterans. The program is available only on the West Coast — California, Oregon, and Washington.

Union Bank Services

Union Bank offers minority-focused financing in amounts up to $2.5 million. General financing is also available in amounts up to $1 million. Repayment terms range between 12 and 84 months.

Union Bank Rates & Fees

Union Bank does not divulge its rates publicly. You can apply for a fixed-rate loan, either unsecured or secured, with variable repayment terms.

Union Bank Eligibility Requirements

Here are the qualifications for the Business Diversity Lending Program specifically:

  • Time in business: 2 years
  • Credit score: No minimum given
  • Revenue: Less than $20 million/year

The business must be at least 51% minority-owned, operated and controlled and managed by U.S. citizens. The business must also be located in CA, OR, or WA.

Get Started With Union Bank

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5. Kiva U.S.: Best For Businesses Looking To Raise Small Amounts Of Money At 0% Interest

Kiva U.S.


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Pros

  • Interest-free loans
  • No credit check
  • Suitable for new businesses

Cons

  • Low borrowing amounts
  • Involved application process
  • Funds can take awhile to disburse

Why We Chose Kiva U.S. For Best Minority Loans

If you’re an entrepreneur looking to raise a small amount of money to get your business idea off the ground and you’re willing to think outside of the box, Kiva can potentially get funds into your hands—interest-free.

Kiva lends based on metrics it calls “social underwriting,” which attempts to measure your overall character and standing within your community. Kiva is a form of crowdfunding, so you’ll likely have the most success if you’re a known quantity

Kiva U.S. Services

Kiva U.S. offers small business loans up to $15,000 with repayment terms of 36 months.

Kiva U.S. Rates & Fees

Because Kiva U.S.’s loans are crowdfunded, they have a 0% interest rate and no additional fees.

Kiva U.S. Eligibility Requirements

Kiva U.S. does not require any minimum credit score, time in business, or revenue to qualify. However, you do have to be at least 18 and have a U.S. business that isn’t in bankruptcy proceedings. You’ll also need to be able to raise the capital for the loan through crowdfunding.

Get Started With Kiva U.S.

Read our in-depth review

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6. Fundbox: Best For Lines Of Credit

Fundbox


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Pros

  • Lower qualifications than bank
  • Fast and easy application process
  • Low credit requirements

Cons

  • Rates can be expensive
  • Repayments are required frequently

Why We Chose Fundbox For Best Minority Loans

Fundbox isn’t explicitly aimed at minority-owned businesses, but its method of underwriting avoids many of the dysfunctions that those businesses encounter in the lending process.

Fundbox doesn’t use the typical standards for lending. You don’t have to have been in business very long, and your credit score needs to be over 600. If applying for Fundbox Credit, you’ll need to have been using compatible accounting or invoicing software for at least two months. If applying for Direct Draw, you’ll need to have a compatible bank account that’s been open for at least three months.

Fundbox Services

Fundbox offers business lines of credit up to $150,000.

Fundbox Rates & Fees

Fundbox’s rates start at 4.66% for 12-week repayment terms and 8.99% for LOCs with 24-week repayment terms.

Fundbox Eligibility Requirements

  • Time in business: 6 months
  • Credit score: 600
  • Revenue: $100,000/year

Get Started With Fundbox

Read our in-depth review

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7. Lendio: Best For Businesses Short On Time

Lendio


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Pros

  • Lower borrower qualifications than banks do
  • High borrowing amounts
  • The application process is fast and easy
  • Multiple types of financing available

Cons

  • Rates can be expensive
  • Funds can take a while to disburse

Why We Chose Lendio For Best Minority Loans

Another strategy for getting around lending gatekeepers is simple brute force — apply to a large number at once to find the ones willing to cut you a decent deal. One of the easiest ways to do this is to use a loan aggregator such as Lendio.

Lendio allows applicants to apply to its entire network of lenders with a single application.

Lendio Services

Lendio offers a wide variety of services, including:

  • Short-term loans up to $500,000
  • Term loans up to $2 million
  • Lines of credit up to $500,000
  • Merchant cash advances up to $200,000
  • SBA loans up to $5 million
  • Equipment financing up to $5 million

Lendio Rates & Fees

Lendio’s rates and fees vary depending on the lender you’re matched with. Low-interest options like SBA loans are available, as are more expensive, subprime options.

Lendio Eligibility Requirements

Lendio recommends a credit score of at least 550, but keep in mind that each of the lenders in Lendio’s network have their own requirements. The higher your credit score, the longer you’ve been in business, and the higher your revenue, the more matches you’re likely to receive.

Get Started With Lendio

Read our in-depth review

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Why We Recommend These Lenders For Minority-Owned Businesses

While the causes are numerous and complicated, minority-owned businesses face challenges that can negatively affect their success and growth. Access to capital is one of them.

Despite higher growth in minority-owned businesses in the US relative to those that are white-owned, those businesses still appear to face challenges that threaten their stability. According to the U.S. Census Bureau, when it comes to businesses with employees, just 2.3% are Black-owned, and 6.5% are Hispanic-owned, despite being 13.6% and 18.9% of the U.S. population, respectively. One particularly worrying development is that more minority-owned firms earned less than $100,000 in revenue in 2021 than in 2020. While this trend impacted white-owned businesses as well, the impact was greater on minority-owned businesses. Low credit scores also remain an issue, particularly for Black business owners, with 23% classified as “high credit risk.”

With these trends in mind, Merchant Maverick chose lenders that either explicitly have a mission to support minority-owned businesses and/or have more lenient underwriting practices. This is in addition to general considerations like interest rates, terms, and breadth of services.

Organizations That Help Minority-Owned Businesses Get Financing

Getting financing can be a complicated and anxiety-inducing process, especially if you’ve never done it before. In addition to the lenders/organizations above, these organizations may be able to help you get financing.

Minority Depository Institutions (MDIs)

Banks with at least 51% minority ownership can qualify as MDIs so long as they also primarily serve communities that are predominantly “Black American, Asian American, Hispanic American, or Native American.”

Working with one of these institutions — as long as your business is operating within a qualifying community — can help you circumvent some of the racial biases that plague lending. You can find them in most major and secondary cities.

State Programs & Nonprofits

Programs such as New York’s Minority and Women Revolving Loan Trust Fund offer small, low-interest loans to resident business owners. These funds are provided without a profit motive, so they tend to have lower interest rates than comparable bank loans. On the other hand, programs of this sort generally don’t have deep pockets, making them less ideal for businesses seeking large amounts of money.

The SBA 8(a) Program

You may have heard of the SBA 7(a) loan. Counterintuitively, the 8(a) program isn’t a loan at all. It’s a business development program designed to help business owners who are minorities and/or have an average gross income under $250,000 for the last three years and assets worth less than $4 million. SBA 8(a) certification qualifies businesses for a number of perks, including preferential treatment for government contracts.

Other Resources For Minority-Owned Businesses

Financial assistance doesn’t only come in the form of loans. Minority business owners frustrated with the lending scene may want to look into grants. For the unfamiliar, grants are “free money” offered by entities ranging from federal, state, and local governments to nonprofits and private corporations.

Some of these are grants targeted at minority-owned businesses.

While grants don’t have to be paid back, they are often extremely competitive, so be prepared to spend some time and effort getting your application to stand out amongst the crowd. Check out some grant writing tips to get started.

 

Minority Business Loan FAQs

Where can I get a minority business loan?

Our list above, while not exhaustive, is a great place to start. I’d also recommend looking into any organizations operating within your locality that are dedicated to helping minority-owned businesses. Failing that, try contacting your local chamber of commerce or state business development agency and asking what programs are available in your region.

Are there grants for minority-owned businesses?

Yes, and quite a few. Grants can be an excellent way to finance your businesses without accruing any debt, though they are highly competitive. Check out our guide to grants for minority-owned businesses.

Can minorities still get PPP loans?

No, the PPP loan program has ended and has not been renewed.

What is minority lending?

Minority lending refers to financing that is available either exclusively to minorities and other disadvantaged populations, or others preferential treatment for applications submitted by minority-owned businesses.

In Summary: The Best Minority Business Loans

  1. SBA Microloans:
    • Term loans & lines of credit
    • FICO: 600+
    • APR: 5.56%+
  2. Accion:
    • Term loans
    • FICO: N/A
    • APR: 5.99%+
  3. CDFI:
    • Term loans, lines of credit, equipment financing, & real estate financing
    • FICO: Varies
    • APR: Varies
  4. Union Bank:
    • Term loans, lines of credit, equipment financing, & real estate financing
    • FICO: Unknown
    • ARP: Unknown
  5. Kiva U.S.:
    • Crowdfunded loans
    • FICO: N/A
    • APR: 0%
  6. Fundbox:
    • Lines of credit
    • FICO: 600+
    • APR: 4.66%+
  7. Lendio:
    • Term loans, short-term loans, SBA loans, merchant cash advances, lines of credit, & equipment financing
    • FICO: 550+
    • APR: Varies by lender
Chris Motola

Chris Motola

Senior Staff Writer at Merchant Maverick
Chris has been writing about small business topics since 2003. In 2015, he joined Merchant Maverick, where he writes about business financing, payment processing, and demographic trends in entrepreneurship. Chris has been featured in Fox Business, ABC News, Yahoo Finance, GoBankingRates, Newsweek, BizJournals, and other publications. He has a Bachelor’s of Arts in English Writing Arts from SUNY Oswego, and a Masters of Science in Interactive Media from the University of Central Florida. He currently resides in the Hudson Valley region of New York.
Chris Motola
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