Minority entrepreneurs in the United States often have difficulty raising money for their businesses. A lot of minority entrepreneurs have to rely on personal savings and family loans to fund their businesses. To resolve this issue, a few organizations have provided various funding alternatives for minority business owners. This article will highlight eight various small business financing options for small businesses.
1. Alternative Loan Companies
Alternative loan companies different from banks can provide loans to minorities without social security numbers (SSN) and other documents that banks and regular lenders will demand. These alternative financial institutions may only require ITIN (individual taxpayer identification number) and other minimal documentation.
2. Minority-focused Venture Capital Firms
Venture capital firms do an excellent job of investing in businesses and providing mentorship in exchange for some percentage ownership. In the last few years, a few venture capital firms have arisen that target minority entrepreneur and small businesses. You can research these establishments, find out their application process and apply for funding from them.
3. The United States Department of Transportation Disadvantaged Business Enterprise (DBE) Program
The United States Department of Transportation has a particular Disadvantaged Business Enterprise program designed to cater to minority and female entrepreneurs to win transport contracts at fair rates. Businesses that qualify for this program are businesses in the transport industry. A lot of minority business owners have been able to win transport contracts through this program.
4. The Community Development Financial Institutions Fund
The Community Development Financial Institutions Fund of CDFI fund is an offshoot of the United States Treasury Department. This fund is a significant source of business funding to affordable loans to several minority-owned businesses. The fund is typically sent to local financial institutions, who then disburse it to local businesses.
5. The Minority Business Development Agency (MBDA)
The Minority Business Development Agency (MBDA) is an offshoot agency of the United States Department of Commerce. This agency helps minorities to grow their businesses through various loans and grants. The MBDA also owns various business centers around the country to help local minority business entrepreneurs with multiple things like obtaining funding, finding partners, and winning contracts.
6. The FedEx Small Business Grant Contest
The FedEx Small Business Grant Contest is a yearly competition where 12 businesses are awarded $250,000 yearly. Companies that win the contest are typically those that focus on sustainability and innovation. Some of the businesses that win this grant are owned by minority founders.
7. The Federal Grants Website
The Federal Grants website (www.grants.gov) has a very comprehensive directory with tons of grants listed there. The list is very exhaustive, with thousands of funding opportunities listed on the website. If you are a minority entrepreneur, you will do well to visit the website to search for available funding opportunities.
8. The Small Business Administration Loan (SBA) for Minorities
The United States Small Business Administration (SBA) has a Community Advantage Loans program specifically for entrepreneurs. The loans are dispersed through community lenders under the program. The loans could amount to $250,000 with interest rates of up to 6%. Borrowers have up to 10 years to repay the loan along with the loan interest.
The SBA also has other loans for minority entrepreneurs, such as the SBA Microloan program and the SBA 8a Business Development Program.
As a minority entrepreneur, you can raise small business financing from any of the options mentioned above. External business funds are a good way to raise money for the financial needs of a business. You don’t have to rely on your business revenue alone.
Take your time when applying for these funding sources and go through all the requirements carefully. Go through the fine print, and understand the possible funding amount, the repayment terms, interest rates, etc., and other terms.