We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
Best Business Loans for Minorities of 2024 of August 2024
Writer | Small business, business banking, business loans
Randa Kriss is a small-business writer who joined NerdWallet in 2020. She previously worked as a writer at Fundera, covering a wide variety of small-business topics including banking and loan products. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona College.
Christine Aebischer is an assistant assigning editor on the small-business team who joined NerdWallet in 2020, originally as a copy editor. Previously, she held editing roles at Fundera, Northwestern Mutual and LearnVest, where she covered a variety of personal and business finance topics. Christine earned bachelor's degrees in English and journalism from The College of New Jersey. Email: <a href="mailto:caebischer@nerdwallet.com">caebischer@nerdwallet.com</a>.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Minority business loans are intended to increase access to capital for Asian-, Black-, Hispanic- and Native American-owned small businesses. In 2023, minority-owned businesses were nearly half as likely to be approved for financing than white-owned firms, according to findings from the Federal Reserve’s 2023 Small-Business Credit Survey
Many alternative lending sources, like nonprofit organizations and online lenders, offer small-business loans specifically to minority-owned businesses. Such products tend to have more flexible qualification requirements than traditional loans, and may require you to submit a certification stating your business is minority-owned.
Below, compare some of the best business loans for minority business owners, plus learn more about other financing options and resources, including grants and certifications.
A business is typically considered to be minority-owned if it’s at least 51% owned and operated by people of specific ethnicities. For example, the National Minority Supplier Development Council (NMSDC), defines a minority business owner as an American citizen who is at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic or Native American.
Determine your funding needs. Start by deciding how much capital you need and how you’re going to use it. You’ll also want to consider the loan type that might be best for your needs — a term loan vs. line of credit, for example — as well as how much debt you can afford.
Evaluate your credentials. Consider your personal credit score, time in business and annual revenue to get a sense of where you stand before applying. Also think about your cash flow, sales projections and available collateral.
Get certified as a minority-owned business. Although this certification isn’t required to apply for a business loan, it may be helpful for opportunities now and in the future. You can get certified as a minority-owned business through your state, or through the NMSDC.
Research and compare lenders. As you begin your search for financing, you should compare several small-business lenders to find the right fit for your needs. You’ll want to consider factors such as loan offerings, interest rates, repayment terms, qualifications, funding speed and lender reputation.
Gather your documentation and apply. Although business loan requirements and application processes will vary by lender, you’ll generally need to provide bank statements, tax returns and other business financial documents. The more accurately you can complete the lender’s application, the faster you will be able to receive a decision. Some online lenders can fund applications within the same day, whereas others will take a few business days. More traditional lenders, like bank and SBA lenders, can take several days to several weeks.
NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
SBA 7(a) loans offer competitive rates and terms and can be used for a variety of funding needs. In fiscal year 2024, minority business owners have received over $3 billion in 7(a) loans, to date.
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Pros
Cash can be available quickly.
Get a discount for prepaying.
No collateral required.
Low minimum credit score requirement.
Cons
Charges a factor rate that makes it more difficult to compare costs with other lenders.
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Pros
Cash can be available quickly.
Get a discount for prepaying.
No collateral required.
Low minimum credit score requirement.
Cons
Charges a factor rate that makes it more difficult to compare costs with other lenders.
Can’t build business credit.
Longest loan term is 18 months.
Qualifications
In business for at least six months.
At least $20,000 per month in revenue.
No open bankruptcies or dismissed bankruptcies within the past year.
Established businesses with strong credit may qualify for an online small-business loan with terms up to seven years. Funding can be available within two business days.
Wells Fargo’s unsecured line of credit is designed for companies with less than two years in business and may be easier to qualify for than other bank loans.
Wells Fargo Small Business Advantage® Line of Credit
If you’re just starting out, Bank of America’s cash secured line of credit allows you to pay for daily expenses while establishing a positive account history and building business credit.
SBA microloans offer smaller loan amounts and more flexible qualification requirements compared to other SBA loan programs. In the 2024 fiscal year, so far, 49% of SBA microloans have gone to underserved communities, including Black- and Asian-owned businesses.
SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.
Pros
Can be used for a variety of funding purposes.
Designed to finance traditionally underserved businesses.
Startups and business owners with bad credit may be able to qualify.
Competitive interest rates, low fees and long repayment terms.
Intermediaries typically offer business training and educational resources.
Cons
Loan amounts max out at $50,000.
Can’t be used to pay existing debt or purchase real estate.
Personal guarantee and collateral likely required.
Specific financial qualifications determined by individual lender.
Max loan
$50,000
Min. Credit score
620
Apr range
8.00-13.00%
SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.
Pros
Can be used for a variety of funding purposes.
Designed to finance traditionally underserved businesses.
Startups and business owners with bad credit may be able to qualify.
Competitive interest rates, low fees and long repayment terms.
Intermediaries typically offer business training and educational resources.
Cons
Loan amounts max out at $50,000.
Can’t be used to pay existing debt or purchase real estate.
Collateral is likely required.
Slow funding timeline.
Qualifications
Be a U.S. business.
Show your ability to repay the loan.
Personal guarantee and collateral likely required.
Specific financial qualifications determined by individual lender.
Accion is a nonprofit lender that primarily issues loans to business owners in traditionally underserved communities, including women and people of color.
Accion Opportunity Fund - Small Business Working Capital Loan
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
Pros
Loan amounts from $5,000 to $250,000.
Customized loan terms.
No prepayment penalty.
Cons
Slower processing speed compared to online lenders.
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
Pros
Loan amounts from $5,000 to $250,000.
Customized loan terms.
No prepayment penalty.
Cons
Slower processing speed compared to online lenders.
Huntington Bank’s Lift Local Business Program offers loans between $1,000 and $150,000 to minority-, women- and veteran-owned businesses at any stage of growth.
Huntington National Bank - Lift Local Business Program
Huntington National’s Lift Local Business loan program is designed to support minority-, woman- and veteran-owned small businesses from startup and on.
Pros
Loans starting as low as $1,000.
No origination fees.
SBA loans offered with SBA fees paid by Huntington.
Free financial entrepreneurial courses.
Cons
Low maximum loan amounts.
Program only available in certain U.S. states.
Limited information on terms and fees available online.
Requirements for credit score, time in business and business revenue not disclosed.
Max loan
$150,000
Min. Credit score
Undisclosed
Huntington National’s Lift Local Business loan program is designed to support minority-, woman- and veteran-owned small businesses from startup and on.
Pros
Loans starting as low as $1,000.
No origination fees.
SBA loans offered with SBA fees paid by Huntington.
Free financial entrepreneurial courses.
Cons
Low maximum loan amounts.
Program only available in certain U.S. states.
Limited information on terms and fees available online.
Qualifications
No bankruptcies in the last 4 years.
Requirements for credit score, time in business and business revenue not disclosed.
Details on our picks for the best minority business loans
SBA 7(a) loans
Best for SBA loans for minority entrepreneurs
Notable features:
$5 million loan maximum.
Flexible uses.
Who should consider it: SBA 7(a) loans are a good option for minority-owned businesses that are fairly established, and are not in a rush to receive financing. If you can qualify with an SBA lender and you can afford the time it takes to process an SBA loan, the high loan amounts, flexible uses and low rates make this a great option.
In the 2024 fiscal year, close to 32% of SBA 7(a) loans have gone to minority business owners (those who identify as Black, Asian, Hispanic, American Indian or Alaska Native), totaling more than $5.5 billion in funding. SBA 7(a) loans can be used for a wide array of business purposes, and offer low rates and favorable terms to those who qualify. Over the past four years, funding going to minority-owned businesses has increased nearly 10%, with the number of SBA-backed loans for Black-owned businesses more than doubling.
Who should consider it: Minority business owners who need to access fast capital, or are struggling to qualify with a traditional lender will find OnDeck’s streamlined applications and potential same-day funding a good option. Business owners who prefer to limit in-person interactions with bankers may also opt for OnDeck’s fully online process.
OnDeck is an online business lender that offers a streamlined application, and same-day funding can be available. Its qualifications are relatively flexible — 625 credit score and $8,333 in monthly revenue — however, a general lien and a personal guarantee are required.
Can borrow more money after 60% of your loan is repaid.
Flexible uses.
Low minimum credit score requirements.
Who should consider it: Fora Financial’s use of factor rates makes its loans fairly expensive compared to other options, which means these loans are best for minority business owners who can’t qualify for other options because of personal credit.
Fora Financial combines flexibility in funding qualification requirements with high maximum loan amounts. It’s the only online lender on our list with a minimum credit score requirement below 600, and has a high loan maximum at $1.5 million. Make sure you are diligent in planning and purpose though — Fora uses factor rates rather than APRs, which can be expensive and difficult to compare with other lending options.
Who should consider it: Funding Circle offers long-term business loans compared to other online lenders, which makes it a good online option for established minority-owned businesses that are looking to make larger, long-term purchases. Extending your term can make your monthly payments more affordable, and with no prepayment penalties, you can pay your loan off early to save on interest.
For businesses that have been operating for at least two years, Funding Circle’s business loans offer flexible terms up to seven years, which can be more affordable for larger business purchases. For the favorable terms, competitive rates and the loan amounts, the minimum qualifications (660 credit score and no specific revenue requirement) are fairly flexible.
Who should consider it: Wells Fargo’s Small Business Advantage Line of Credit is designed for early-stage businesses to help them build credit. This option is best for minority-owned startups for entrepreneurs with strong personal credit who could use a revolving source of funding to cover gaps in cash flow, have small urgent needs or simply want to build business credit.
If you have good personal credit (a score of at least 680), you may qualify for a Wells Fargo Small Business Advantage Line of Credit — even with less than two years in business. The maximum limit is $50,000; however, the credit line can be helpful to build your business’s credit at a low rate for future lending needs.
Minimal length of time in business and revenue requirements.
Can transition to an unsecured line of credit after two years.
Who should consider it: If your credit prevents you from qualifying for an unsecured bank line of credit, you may opt for a secured credit line to help build business credit. Bank of America’s cash-secured line is great for minority business owners who are still in the startup phase and have a small amount of cash on hand to secure the line.
Bank of America’s cash-secured business line of credit has relatively flexible requirements if your business is less-established, and can help you start to build business credit. The minimum deposit to secure the line of credit is $1,000, and your limit is based on the total amount you’ve deposited. After one year of good standing, your account can be reviewed to graduate to an unsecured credit line, at which time your original deposit will be refunded to you.
Who should consider it: Minority-owned businesses that need minimal capital to get started, or for ongoing expenses. You may find low loan amounts with some online lenders, but they will likely be more expensive than an SBA microloan.
Many larger lenders don’t find it lucrative to lend in small amounts; however, if your business is forced to take more money than it needs, it can end up doing more harm than good. SBA microloans fill that gap. They are typically offered through nonprofit, community lenders, and have more flexible requirements than other SBA loans.
Who should consider it: Accion is a great option for early-stage minority-owned companies that could benefit from additional personalized support alongside funding. If you need guidance navigating the business funding space, Accion will help even if it is not able to provide funding.
Accion is a nonprofit community development financial institute that is dedicated to addressing financial inequity in underserved communities. Its specialists work with your business to provide personalized offers and options that work best for your unique needs. After funding, Accion provides a resource library plus free mentoring and coaching to its borrowers.
Who should consider it: The Lift Local Business Program is a great option for early-stage minority-owned businesses, or those that are facing a time of business transition or expansion. In addition to accessing capital, you can take advantage of personalized planning support and resources.
Huntington Bank is one of the top SBA lenders in the country, having already closed almost 5,000 SBA loans totaling over $900 million in the 2024 fiscal year. Their Lift Local Business Program supports minority business owners through capital access, free business education and personalized business planning support. It’s available to businesses in any stage of business.
Although certification as a minority-owned business isn’t always required to apply for a business loan, it can be helpful for other opportunities such as government contracts, business grants and business resource programs. Options to get certified as a minority-owned business are often available through your city or state government as well as the NMSDC.
Typically, you’ll need to be able to show that your business is 51% owned and operated by individuals that meet specific ethnic definitions. The requirements and process to become certified, however, can vary. Some programs, like the SBA 8(a) Program, require you to renew your business’s certification on an annual basis.
Where to get a minority business loan
SBA lenders
The U.S. Small Business Administration says it is committed to supporting minority-owned businesses as well as underserved small-business owners. The SBA guarantees SBA loans, which are issued by banks and other lenders. This includes SBA 7(a) loans with maximum loan amounts up to $5 million and SBA microloans, up to $50,000, which can be a good option for startups, as well as business owners with less-than-perfect credit histories.
One of the best SBA loan options for minority-owned businesses is working with Community Advantage Small Business Lending Companies (CA SBLCs), previously Community Advantage lenders. Although the SBA Community Advantage program expired on Sept. 30, 2023, the CA SBLC license allows these lenders to issue regular 7(a) loans. CA SBLCs will continue to prioritize loans for business owners in underserved markets.
For example, Accompany Capital offers CA loans to immigrants, refugees and other underserved entrepreneurs in the New York area. Loan rates are fixed at 8% for at least the first 36 months of the loan’s term, and loan amounts go up to $350,000.
Online and alternative lenders
Alternative lenders, which include online lenders, are third-party lending companies that don’t hold deposits like banks or credit unions do. Alternative lenders may offer more flexibility in loan amounts and requirements than traditional banks, and many target funding access to minority-owned businesses or other underserved communities.
Online business lenders tend to have more flexible eligibility requirements than traditional banks. Some online lenders will work with startups or businesses with bad credit. Loan amounts can range from about $1,000 to $500,000 or more. While minority applicants have a better chance of getting approved with online lenders than banks, according to the Federal Reserve, the loan will likely cost more.
Founders First Capital is a lending company that offers financing to underrepresented businesses in the technology, SaaS and engineering industries. It has flexible requirements for approval, and offers flexible repayment terms and loan amounts up to $2 million.
Banks and credit unions typically offer the most competitive business loans, and some — such as U.S Bank, Huntington Bank, Fifth Third Bank and Native American Bank — offer lending programs dedicated to minority-owned businesses. Traditionally, minority business owners have faced difficulties in getting approved for small-business bank loans due to issues like unconscious bias, credit challenges or limited banking history. However, if you can qualify for a business loan from a bank, this will likely be your most affordable option.
Community development financial institutions
Community development financial institutions, or CDFIs, are banks, credit unions and other institutions that provide financial access, including loans, to minorities and other economically disadvantaged communities. The Business Consortium Fund, for example, is a CDFI that provides minority business loans from $100,000 to $750,000 (or more in some cases).
Many CDFIs also utilize the SBA microloan program, and provide other resources, like counseling and networking, for minority-owned businesses. Latino Economic Development Center (LEDC) offers loans to Latino- and other underserved business owners, as well as access to business advisors who provide training seminars and one-on-one coaching.
Camino Financial is an online lender that offers unsecured loans for minority-owned businesses between $10,000 and $50,000 with no prepayment penalties. You’ll need a personal credit score of 670, but only need to have been operating for 12 months with monthly sales of only $2,500.
Minority depository institutions
Minority depository institutions (MDIs) are mission-driven banks that provide banking services and loans to underserved communities. They are officially defined as financial institutions whose voting stock is at least 51% owned by minority individuals, or if the majority of the board of directors is part of an underserved community and the primary community served is predominantly minority.
Agility Bank, for example, is a women-owned and led bank based in Houston, Texas. It offers term loans, lines of credit, commercial real estate loans and SBA loans to businesses located in the Houston area.
Many mission-based nonprofit organizations offer microloans to local businesses, often focusing on businesses owned by minority groups, women and veterans. Microlenders typically offer small loan amounts up to $50,000. These loans can have more flexible qualification requirements, but eligibility and loan terms will vary by lender.
Additional funding sources for minority-owned businesses
The government and private organizations offer business grants and awards to minority-owned businesses. Opportunities often vary drastically from state to state, but here are some minority small-business grants to consider.
Venture capital firms are third-party investment companies that fund startups and entrepreneurs in exchange for a percentage of ownership in your business. Firms like Oakland-based Kapor Capital and Harlem-based Harlem Capital are dedicated to closing the gap in venture capital that many minority-owned businesses experience.
If you’re struggling to qualify for traditional funding, borrowing from friends and family is also an option, and may allow you to avoid paying too much in interest. Accepting a business loan from family or friends does have the potential to affect personal relationships, however, so it’s best to make sure you trust the person you ask, and put the terms of your agreement in writing.
Self-funding, also known as bootstrapping, is another option to fund your business, if you have enough money in savings. You may also consider Rollovers as Business Startups (ROBS) transactions, which allow you to use retirement savings to fund your company. With self-funding you can save money on interest and avoid diluting your ownership; however, you are at risk of losing your own money if your business fails.
Government and nonprofit organizations may offer free assistance to minority entrepreneurs. These resources may help you gain access to alternative financing options, educational tools or advice from industry experts.
Minority Business Development Agency
Part of the U.S. Department of Commerce, the MBDA is a federal agency that is dedicated exclusively to promoting the growth and competitiveness of minority-owned businesses. The MBDA operates a network of centers across the country, which offer assistance securing capital, competing for contracts and identifying new opportunities.
National Minority Supplier Development Council
The NMSDC is a national nonprofit organization that — in addition to its MBE certification process — links MBEs with corporate members to promote growth and access for minority-owned businesses through its 23 regional chapters. Originally created to promote minority suppliers across all industries, the NMSDC also partners with lenders and offers resources and programs in executive leadership, marketing and operations.
Business Consortium Fund
Business Consortium Fund (BCF) is a nonprofit business development CDFI that works closely with the NMSDC to develop and fund certified minority-owned small businesses, particularly those with supply-chain contracts.
SBA 8(a) business development program
The SBA 8(a) program is a certification program that can help small businesses interested in government contracting improve their chances of winning bids. To qualify, your firm must be 51% controlled by “socially and economically disadvantaged individuals,” which includes minorities, women and veterans.
The SBA’s HUBZone Program is a certification program dedicated to awarding government contracts to businesses in underutilized zones, specifically designated as HUBZones. HUBZone-certified businesses are eligible to compete for contracts that are specifically set aside for small-business owners, and get a 10% price evaluation preference.
T.H.R.I.V.E. Emerging Leaders Reimagined
The Emerging Leaders program, an SBA Office of Entrepreneurial Development initiative, works with high-potential, established small businesses in America’s underserved cities. Participants receive customized training and networking opportunities in order to create a three-year strategic growth action plan for their businesses.
SBA Office of Native American Affairs
The Office of Native American Affairs is an SBA office dedicated to providing resources to small-business owners with American Indian, Alaskan Native or Native Hawaiian heritage. The office offers free technical assistance in areas such as marketing, strategic planning, compliance, financial analysis and more.
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
-Transparency of rates and terms
-Flexible payment options
-Fast funding times
-Accessible customer service
-Reporting of payments to business credit bureaus
-Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
Loans for minority-owned businesses can be referred to as minority business loans. The term can be used to designate lending programs that support funding for minority-owned small businesses and entrepreneurs from underserved communities.
Typically, a business is defined as minority owned when an American citizen who is at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic or Native American has at least 51% ownership in the enterprise. This definition can vary based on the organization.
Minority-owned business certification is not typically required to obtain a loan, but it can be helpful in securing business opportunities with large companies or government agencies.