According to a survey done by Biz2Credit in 2016, over 36% of minority business owners interviewed revealed that lack of adequate funding was their biggest challenge. A study by the U.S. Department of Commerce on the Barriers and Factors Affecting Minority Business Enterprises also showed that minority-owned businesses do not obtain contracts that are as high in number and dollar value, which can be attributed to the challenges faced with cash flow. Business owners in this category often struggle with how to get a loan as a minority. However, there are a number of funding options available to an average minority business enterprise.
Small Business Administration (SBA) Loans for Minorities
The SBA is known for offering several lending programs ideal for small businesses particularly those that are minority-owned. Some of such programs include SBA 7(a) loans, SBA 8(a) Business Development program, SBA Microloan program, and SBA Community Advantage loans.
Lending Programs for Minority Business Owners
There are also several lending programs that have been designed to help small businesses owned by minorities finance the growth and expansion of their enterprise. Some of the funding options under this category are Business Center for New Americans, otherwise known as the BCNA, the Minority and Women Revolving Loan Trust Fund Program, Union Bank’s Business Diversity Lending Program, and the Business Consortium Fund loan, popularly known as the BCF loan program.
Resources and Grants for Minority Small Businesses
Minority-owned businesses can also benefit from several resources and grants, including Minority Business Development Agency (MBDA), Operation HOPE Small Business Development Program, First Nations Development Institute Grant, and National Minority Business Council.
Alternative funding options for minority-owned businesses
While there are several grants and loans specifically designed to help minority businesses address their funding challenges, many entrepreneurs do have the luxury of time to wait for the options. Consequently, such business owners sometimes have to look for other funding options.