Minority Small Business Loans

By: EconomyWatch Content   Date: 9 December 2009

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Several business and government organizations offer minority small business loans to promote minority business development. The federal government has established the Minority Business Development Agency (MBDA) to foster the establishment and growth of the minority-owned businesses. A strong business plan is the single most important factor in securing small business financing. Still, minority small business owners need some help in securing the loans and investments.

 

Availability of Minority Small Business Loans

Although the MBDC does not offer any financing to minority businesses by itself, its national network of minority business development centers include the Native American Business Development Centers (NABDCs) and the Business Resource Centers (BRCs). These are located throughout the country and they offer a range of services.

 

These centers offer several advantages to minority entrepreneurs. Personalized assistance is offered to them for:

  • writing their business plans
  • marketing and technical assistance
  • financial planning to secure adequate funding for their business ventures

 

Remember, the government’s Small Business Administration does not set aside any funds separately for the minority businesses. Certified lenders such as Wells Fargo and Banc of America are sensitive to the funding requirements spanning this category. A significant portion of the SBA’s loans go to minority small businesses.

 

Another option is small business investment companies (SBICs). These privately owned investment firms offer venture capital and startup financing to small businesses. They are licensed and regulated by the SBA.

 

Numerous national organizations are working to help out the minority small business owners and offer minority small business loans. These include Accion USA, a subsidiary of Accion International, the emerging enterprise investment committee of the National Minority Business Council and various specific lending organizations. These agencies provide loans ranging from $1500 to $25,000 to minority small businesses. 

 

Eligibility for Small Business Loans

Some of the groups that can benefit from minority specific programs include:

  • the African Americans
  • the Hispanics
  • women
  • Native Americans
  • disabled individuals
  • Latinos
  • Veterans

 

The minority business loans can be used for a variety of needs including:

  • Equipment
  • Working capital
  • Inventory
  • Real estate

 

The applications for minority small business loans should be supported by a well laid out financial plan and the financial statements. The lending agency then assesses the application on the basis of the applicant’s ability, integrity and the experience. An evaluation by the lead agency is followed by either approval or rejection of minority small business loans.


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