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BUSINESS FUNDING FOR MINORITY OWNED BUSINESSES

BUSINESS FUNDING FOR MINORITY OWNED BUSINESSES

MINORITY BUSINESS

Life has changed drastically in a short period of time due to Covid-19, and small business owners have been hit the hardest by the pandemic. As the economic landscape is constantly evolving, small businesses still need funding more than ever, especially those owned by minorities. Minority business owners are at a bigger disadvantage when applying for loans, but there are still plenty of unique funding options available.

What challenges do minorities face while applying to loans?

1. Lower Net Worth

LATINO AND AFRICAN AMERICANS

1. The level of wealth for Latino and African Americans is 11 to 16 times less than Caucasians.

MINORITY BUSINESS OWNERS

2. White business owners typically have more working capital when they start their businesses than minority business owners.

BUSINESSES FAIL

3. The majority of businesses fail within the first 10 years.

2. Lack of Collateral

LATINO AND AFRICAN AMERICANS

1. The level of wealth for Latino and African Americans is 11 to 16 times less than Caucasians.

MINORITY BUSINESS OWNERS

2. White business owners typically have more working capital when they start their businesses than minority business owners.

BUSINESSES FAIL

3. The majority of businesses fail within the first 10 years.

3. Poor Location

TRADITIONALLY SUPPORTED

1. Minority-owned businesses in locations that have not traditionally supported new business are less likely to get funding.

4. Little to no Credit History

LOAN APPLICATIONS

1. Credit is a huge factor for banks when considering loan applications.

LOWER CREDIT SCORES

2. Minority business owners tend to have lower credit scores.

ENTREPRENEURS

3. Banks are more likely to do business with entrepreneurs whom they already know.

Small Business Funding for Women

PAYMENT EXPERIENCES

Grants are a great way to get business funding, but they are highly competitive. It is important to check loan requirements carefully and don’t apply for grants that you don’t qualify for.

Amber Grants for Women

  • Provides $4,000 monthly for qualified female entrepreneurs
  • The Amber Grant has a monthly application which requires the owner to share the story of how their business was created
  • The application fee is $15 and automatically enters the owner into a $25,000 grant at the end of the year.
  • Apply Now: ambergrantsforwomen.com/get-an-amber-grant/apply-now

Cartier Women’s Initiative Award

  • This award is designed for women running early-stage companies, approximately 2-3 years. Early stage business refers to a business that has not made profits and revenue yet, or the business may still be a concept.
  • The project must be an entirely original for-profit business creation, wholly conceived by the team.
  • The business must be incorporated in order to get approved.
  • The project leader must be a woman in the capacity of Founder, Director General Manager, or Project Leader, and the main shareholder, CEO, or Chairman must be a woman in order to get approved.
  • Up to two co-founders will be accepted, provided they are both women, and they will be expected to represent their project to the CWIA throughout the awards.
  • 7 laureates will receive $100,000, and the fourteen finalists will each receive $30,000 in prize money.
  • A standard business needs $10,000 to get their business off the ground.
  • Apply now: cartierwomensinitiative.com

Grameen Microloans for Women

  • Grameen offers microloans specifically for women, which range from $2,000 to $15,000.
  • Grameen also offers financial training and support programs for free.
  • The company also reports payments to Equifax and Experian.
  • These loans help borrowers build credit, and Grameen boats a 99% repayment rate.
  • grameenamerica.org/program

Small Business Funding for Native American Entrepreneurs

First Nations Development Institute Grants

  • The mission of this group is to offer grants that help Alaska Natives, Native Hawaiians, and native Americans.
  • This organization helps with the application process in addition to providing funds.
  • Currently there are no open grants opportunities for this year, but that could change in the near future,
  • firstnations.com/grantmaking

Rural Business Development Grants for Native Tribes

  • This program offers technical assistance and training as well as funding for small rural businesses.
  • Federally-recognized tribes are eligible.
  • Opportunity grants are limited to up to 10 percent of the total company’s annual funding.
  • rd.usda.gov/programs-services/rural-business-developmemt-grants

Small Business Funding for African American Entrepreneurs

National Black MBA Association Scale-Up Pitch Challenge

  • This association’s purpose is to help newer businesses that have an African founder who maintains equal ownership.
  • $50,000 grand prize
  • Second prize is $10,000
  • Third prize is $1,500
  • People’s choice prize is $1,000
  • nbmbaa.org/scale-up-pitch-challenge

Small Business Funding for Latinx Entrepreneurs

Camino Financial

  • This organization specializes in loaning to Latinx-owned businesses.
  • Get up to $400,000
  • Get instant quotes and funding within 24 hours.
  • caminofinancial.com

Small Business Funding for Members of all Minorities

Ownership

If you bought a business, the ownership automatically changes on the actual credit report, which triggers a red flag where lenders immediately start going off your bank account start date instead of the start date that the entity was founded.

Longer Business

Longer business history is better, so you want to get that business bank account opened because it will be used as a reference.

Balance

You want to keep a $10,000 balance in your business bank account if you are ever going to apply for a SBA loan.

Small Business Funding for Members of all Minorities

Union Bank

  • Union Bank’s products are meant for small businesses that are looking for loans of up to $2.5 million
  • Your business cannot have annual sales of over $20 million
  • Fixed rate, unsecured or secured term loan with terms of up to 7 years for UCC- and equipment-secured loans.
  • Loans for up to 25 years for owner-occupied commercial real estate financing.
  • Variable-rate, unsecured, or secured lines of credit subject to annual renewal.
  • unionbank.com/business/lending/diversity-lending

Accion

  • Accion is a micro-lending program that offers small businesses loans from $300,000 to $1,000,000 for pre-existing businesses and start-ups.
  • Accion loans to minorities, veterans, females, those with disabilities, and low to medium income business owners.

SBA Community Advantage Loans for Members of All Minorities

  • This program is designed for small business owners who might not qualify for traditional financing.
  • This organization encourages local, mission-based lenders like nonprofit organizations to make loans of up to $250,000
  • The SBA guarantees up to 85% of the loan and the interest is prime+6%
  • This is a good option for minority entrepreneurs who need a large amount of capital.
  • sba.gov/funding-programs/loans

SBA Bailout Funding Under the CARES Act for All Entrepreneurs

  • The CARES Act addresses economic impacts of the COVID-19 outbreak.
  • The bill authorizes emergency loans to distressed businesses.
  • The bill establishes and provides funding for, forgivable bridge loans and provides additional funding for grants and technical assistance.
  • Congress is currently discussing whether to add more money to the program. For the latest information, visit:
  • info.creditsuite.com/paycheck-protection
  • congress.gov/bill/116th-congress/senate-bill/3548

Recap

Entrepreneurs

Entrepreneurs who are members of minority groups can have trouble getting the funding they need, but there are tons of unique options for females, Native Americans, African Americans, and Latinx business owners.