Like peanut butter and jelly, minority business loans and grants make for a powerful combination.  On their own, each can be a phenomenon, but put them together, and you have a match made in small business funding heaven.

Use Minority Business Loans and Grants Together for a Powerful Combination

Minority loans and grants can be great tools when paired with other funding sources. But how do you get them? How do you use them together?  Which ones are best for you? We know how to find the answers to all of these questions and more. 

Find out why so many companies use our proven methods to get business loans. 

Minority Business Loans and Grants: Start with The Small Business Administration

It’s impossible to talk about business loans and not mention the SBA.  While they do not lend funds directly, they do handle the administration of many  loan programs that help all small businesses get the funds they need through partner lenders.   Many of their programs, though not specifically for minorities, work fabulously for minority business owners. 

7(a) Loans 

This is the Small Business Administration’s most known program.  It provides federally funded term loans up to $5 million. The funds can be used for a number of purposes,  including expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions in partnership with the SBA process these loans and disburse the funds. 

504 Loans 

504 loans are also available up to $5 million.  They can be used to buy machinery, facilities, or land. Typically, business owners use them to fund expansion.  They work especially well for commercial real estate purchases. 

Microloans 

Microloans are loans for $50,000 or less. They work well for starting a business, purchasing equipment, buying inventory, or general working capital. 

SBA Express Loans 

These are fast turnaround loans, with the SBA taking 36 hours or less to give a decision. There is less paper work as well, which is part of what makes express loans great if you qualify. 

SBA Community Advantage Loans

This is a pilot program running through 2020.  It also has the potential for extension. Its purpose is to promote economic growth in underserved areas and markets. Decision makers look past such things as poor credit or low revenue if the business has the potential to create jobs or promote economic growth in underserved areas. 

These are some of their most popular programs. The Small Business Administration does so much more for small businesses in addition to this.  Get more details on the SBA, these loan programs, and additional resources offered by the Small Business Administration here.    

Minority Business Loans and Grants: Private Lenders

Though not specific to minorities, some private lenders offer products that work well when paired with grants to help a business grow and expand.  Here are just a few examples. 

BlueVine

BlueVine has several financing options.  For example, they offer term loans, invoice financing, equipment financing, lines of credit, and merchant cash advances.  As a requirement, you have to be in business for at least 6 months. If you need a term loan or a line of credit, then they require a minimum annual revenue of $100,000.  For invoice factoring, the minimum credit score is just 530! If you want a line of credit or term loan, you will need a minimum credit score of 600. They have an A+ rating with the BBB.  Find out more about BlueVine in this review. 

OnDeck

OnDeck has lines of credit and term loans with fixed interest rates.  You can get up to $500,000 with a term loan. They also have an A rating with the Better Business Bureau.  The minimum FICO they require is 600. In addition, you must have $100,000 minimum annual revenue and be in business for at least one year.  Find out more about OnDeck in our review. 

SmartBiz

SBA loans typically take a lot of time and paperwork. Still, SmartBiz found a way to speed things up.  They make it easier than ever. Unfortunately, they do have stricter requirements. For example, your credit score has to be at least 650.  Also, you have to be in business for 2 years or more. Further, annual revenue has to be $50,000 at least. There can be no outstanding liens, bankruptcies, or foreclosures in the past 3 years either. 

Funding Circle

If you’re looking for a low APR, then Funding Circle is your go-to.  They have fixed rate term loans and require a credit score of 620 or above.  Unlike BlueVine, there is no minimum revenue requirement. However, they do require you to be in business for at least 2 years.  They have an A+ BBB rating. Find out more in our Funding Circle review. 

StreetShares

This company offers invoice financing, term loans, and lines of credit.  Similar to others, there is a minimum number of years in business requirement.  However, the minimum annual revenue requirement is less than others, at only $25,000.  Additionally, the minimum credit score is 600. They also have an A+ rating with the Better Business Bureau.  Find out more about StreetShares in our review, here. 

Minority Business Loans and Grants: Improve Your Chances of Loan Approval

Just being a minority business owner does not guarantee approval regardless of the lender or loan program. There are some things a lender is looking for regardless.  Though some lenders are a little more relaxed than others, at their core, they are all looking for the same general things on some level. 

Fundability

A business that appears fundable to a lender is complete, organized, and either has solid revenue or a solid startup plan. Find out more about fundability, what it is, and what affects it here. 

To appear fundable, a business needs: 

• To be formally incorporated as an S-corp, LLC, or a corporation.
• An EIN from the IRS.  This is an identifying number for your business that functions similar to the way your SSN does for you personally.  
• A dedicated business bank account.
• Contact information that is different from the owner’s.  A separate telephone number on a toll-free exchange and a dedicated physical address are vital.. 
• A professional website and an email address that has the same URL.  Free web hosting and email services won’t do the job in this case.  

Find out why so many companies use our proven methods to get business loans. 

A Business Plan is Necessary for Minority Business Loans and Grants

Lenders want to see a professional business plan.  Even if you are not a startup a plan is necessary. Startups need a plan so that lenders can see they know what they are doing.  Established businesses need to show how they plan to use the funds. Lenders want to see that applicants have research to support the plan as well.  Find out more about business plans here. 

Forms and Documentation

It is pretty much not possible to over prepare when applying for a loan.  Because of this, you should try to think ahead to what information lenders may want to see. Pull together forms and documentation they may ask for.  Items such as past tax returns, financials, and licenses are common. The more prepared you are from the beginning, the smoother the process will flow. 

Your Personal Credit Has to Be Strong

A solid personal credit score is important to getting the best small business loans.  You can’t escape it. As you can see above, a score of 600 or higher is necessary almost across the board with the exception of some invoice factoring and non-traditional options. 

Remember, it isn’t impossible to improve your personal credit score.  The first step is to get a copy of your credit report. You can get a free copy each year. Scan it for what may be causing a negative impact.  If there are mistakes, contact the credit agency in writing to have them removed. If late payments are the issue, start paying on time. You cannot fix a problem until you know what the problem is. 

Business Credit Counts Also

When it comes to business loans, you cannot ignore business credit either.  While it usually isn’t listed as a primary requirement, for most lenders having a strong business credit score can only help you.

If a lender sees a personal score that isn’t exactly what they need, they may consider business credit when making their decision.  In addition, if you qualify for the loan and have good business credit, you may be able to get a lower interest rate. 

Find out why so many companies use our proven methods to get business loans. 

Minority Business Loans and Grants: Find Your Loan a Grant Sidekick or Two

No super hero due is complete without a sidekick.  If Robin was the jam to Batman’s peanut butter, then maybe one of these grants, or one not listed, can help round out your business funding as well. 

The nice thing about grants is, they do not have to be repaid.  It’s free money. The drawbacks are that they are highly competitive, and they usually are not enough to fund a business alone.  They work well, but they are not superhero material, typically. Once a sidekick, always a sidekick. 

Some grants are minority specific, and some are not.  They vary in application process and eligibility requirements.  Here are some examples of each to add to your minority business loans and grants repertoire. 

First Nations Development Institute Grants

The mission of this group is to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans. Not only that, but there are a wide range of opportunities from the First Nations Development Institute.  There is a mailing list you can join to receive information about new opportunities as they become available.

National Black MBA Association Scale-Up Pitch Challenge

Also known as NBMBAA, the Scale-Up Pitch Challenge offers cash prizes ranging from $1,000 to $50,000.  The association says its purpose is to help newer businesses that have an African founder that maintains equal ownership.  

A business must be a member of the NBMBAA to compete.  There is a $10 monthly membership fee. After that, there is an online application.   If chosen, you must submit a pitch that lasts three minutes. Then, finalists go on to compete at the NBMBAA annual conference.

Other Grant Options: Non-Minority Specific 

There are grant options that can work well even though they are not exclusively for minorities. They are available to everyone, including minorities.  Some examples include the following.

FedEx Small Business Grant

This grant is how FedEx is working to strengthen small business innovation.  There are 10 grants the company awards each year. They range from $15,000 to $50,000, and if you’re a business with a cutting-edge product, this could be a great opportunity.

A business must use the FedEx website to submit entries. There are a few questions to answer about your business.  In addition, there is a requirement for an elevator pitch about what makes your business special.  Also, you have to explain how you would use the funds. A 90 second video submission is an option as well.

NASE Growth Grants

The National Association for the Self-Employed (NASE) has small business Growth Grants of up to $4,000. They are for micro-businesses, and proceeds can be used for a number of things.  They can be utilized for marketing, advertising, expansion, and even to hire employees. These grants are open to everyone. However, you do have to be an NASE member to apply. Membership fees vary based on the membership level chosen. 

USDA Value Added Producer Grant

The USDA’s Value-Added Producer Grant (VAPG) program offers grants for small businesses.  It includes minority owned business. Grants range up to $250,000. They are specifically to help agricultural producers with activities that add value to their products. As a result, grants are open to those in rural areas.  They must be operating as one of the following: 

• Cooperative
• Farmer
• Rancher
• an independent agricultural producer
• or an agricultural producer group 

Minority Business Loans and Grants: A Dynamic Duo for Your Business

You do not have to have one to have the other.  However, if you pair them, you get twice the power.  Another great thing about grants is, you aren’t limited in how many you can win.  Apply for all that you qualify for and see what happens. Minority business loans and grants combined could be just the boost your business needs to soar to new heights.