According to a recent study coauthored by a Brigham Young University business professor, found that minorities seeking small business loans were treated differently than their white counterparts, despite having identical qualifications on paper.
Researchers discovered the minority mystery shopper loan-seekers were offered less information on loan terms, were questioned more about their personal finances, and given less application help by loan officers.
Aware of this unfortunate reality, a variety of federal, state, local and private loan programs have been created to address some of the challenges that minority small business owners seemingly face.
1.) SBA 8(a) Business Development Program / 7(a) Loan Program – The 8(a) Business Development Program helps small, disadvantaged businesses thrive in a competitive business environment. The program also offers specialized business training, counseling, marketing assistance and high-level executive development provided by the SBA and their partners.
The 7(a) loan program, SBA’s primary loan program, helps start-up and existing small businesses get financing guaranteed for a variety of general business purposes. Business owners who participate in the SBA’s 8(a) Business Development Program have a better chance of qualifying for a 7(a) loan.
2.) Minority Business Development Agency – Last year, MBDA’s Business Centers (MBCs) helped their clients acquire more than $800 million in financial packages, including working capital, bonding and equity investments. These centers help minority businesses with access to markets, contracts, capital and other strategic business consulting services.
3.) SBA Microloan Program – SBA’s Microloan Program is tailored for small businesses looking for short-term loans for working capital or for purchasing inventory, equipment and most other business-related supplies. Though not specifically designed as a minority business loan solution, the SBA Microloan Program can help minority-owned businesses access capital provided from thir-party lenders. The average loan size is approximately $13,000, and eligible borrowers can acquire up to a maximum of $50,000.
4.) Union Bank’s Diversity Lending – Union Bank offers small business loans and lines of credit to minority-owned businesses, providing them competitive interest rates and flexible underwriting on their financing programs. Qualifying business owners can apply for loans and lines of credit up to $50,000.
Let one of our funding specialists help guide you through the process: See Your Loan Options