Guide, Options & Resources For Minorities Seeking Loans
If you are a minority business seeking startup business funding or other business funding services to expand your enterprise, discover how to obtain a quick and simple business loan here. There are several business funding services available to minorities today from private financial organizations as well as business loans accessible from the Small Business Administration (SBA) and the Minority Business Development Agency (MBDA). The good news is that SBA and MBDA business loans are readily accessible for minority startup business funding as well as minority small business funding with bad credit. Prosperum Solutions also provides loans and business funding to those seeking it by making the process easier.
Help with minority businesses seeking funding is ever-increasing; more minority businesses are being launched in today’s market and lenders are seeing this as an opportunity to extend their business funding services.
Investigate your minority startup business funding options by researching your loan options, comparing interest rates and loan terms, discovering lender requirements and processing time to determine your best option for likely business loan approval. Begin by researching the business funding websites of potential financing institutions (national banks, local banks, and credit unions) as well as business loan websites such as sbs.org and mbda.gov.
If you are a minority small business entrepreneur, it is highly recommended that you begin your research for a business funding service at mbda.gov – a website offering technical assistance and access to capital, contact opportunities, and new trending markets that increase job growth. At mbda.gov, you will locate information about a variety of financing options for minorities, including instructions on how to apply for minority business funding services. This agency also offers minority business owners one-on-one financial counseling as well as assistance in compiling the important financial documentation required to submit an application.
Although the SBA does not offer preferential minority business funding services, it is a loan guarantor that gives minority businesses seeking funding the opportunity to apply to certified commercial lenders for loans backed by the US government. The SBA offers the following varieties of business funding services:
- General minority small business loans by the SBA include the 7(a) business funding service that assists in the acquisition, operation, or expansion of an existing minority small business with funds up to $5 million. The SBA’s 7(a) business development program is not a loan program, however, it was created to assist minority-owned businesses grow through one-on-one business management counseling, training workshops, and technical guidance. The 7(a) program has been designed to effectuate minority businesses access to government contracting jobs in order to help them be competitive in the marketplace.
- Microloan business funding services from the SBA offer loan packages with funds up to $50,000 to assist minority small businesses in obtaining loans from designated and intermediary lenders. These lenders have individual lending and credit requirements, however, some offer special programs for minority small business owners. Microloans are typically used for working capital, inventory, supplies, furniture, fixtures, machinery and other equipment.
The SBA presumes that minority small business owners are socially and economically at a disadvantage in the marketplace compared to non-minority small businesses. These minority groups consist of African Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, Subcontinent Asian Americans, and other minority groups who can provide evidence and documentation that they have been discriminated against resulting in an economic disadvantage to competing in the market place.
Similar to the SBA, local community private lenders and national financial institutions offer minority small business loans with competitive interest rates, flexible approval requirements, and less restrictive lending qualification options. Typically, a minority small business owner applying for a business loan must meet the definition of minority according to the Equal Employment Opportunity Commission. They must also own and manage at least 51% of the business.
New business funding services available to minorities include a grant program known as the Small Business Innovation Research and Small Business Technology Transfer program that provides funds to minority small businesses whose purpose is focused on innovating research and development. The program is especially designed to reach out to socially and economically disadvantaged businesses in the market – there is a 21% rate of participation in this program by small businesses owned by minorities and women.
It is also advisable for all minority small business owners to investigate additional business funding services that are available through networking within membership unions and specific industry enterprises. The National Minority Supplier Development Council was established to offer business loans and other business funding services to minority small businesses. Other similar resources such as the US Hispanic Chamber of Commerce, the US Pan Asian American Chamber of Commerce, and the National Black Chamber of Commerce, offer advice to minority small business owners in the form of business funding services. In addition, professional organizations like the Alliance of Business Leaders and Entrepreneurs in Chicago offer mentorship programs.
When you consider applying for a minority small business loan, it is beneficial to be thoroughly knowledgeable about the lender’s approval requirements to receive approval for a business loan. Knowing how to get a minority small business loan may seem like a difficult and complex process; however, once you have determined the lender’s requirements, it is simply a matter of making a checklist and doing one step at a time.
A very important step is finding out both your business’ and your own credit history. First get a copy of your credit report from each of the top three sites. There are several websites that offer this service for free. Go through each report and make notes of every negative or inaccurate comment from creditors. Decide what you can easily and quickly resolve. Top items should include any liens against property (real or tangible). If a comment is in error, then contact the creditor and give them a copy of your proof that it is wrong. For all other remaining items, clear up what you can and keep documentation on all of the calls, correspondence and your documents so you can give copies to the potential lender.
All business income should be deposited into a stand-alone business account. Payments should be made from the business account for payroll and vendors. If you infuse your personal funds into the business, keep track of it as loan. The deposits will show proof of income for the business which is a vital part of your financial report and projections included in your business plan. Pay vendors, overhead expenses, taxes and other bills in a timely manner. Such a stellar history will help with obtaining the funds you need.
The next big step is in preparing a business plan for your company, but once again, when you break it down into small steps, it is easier and you won’t become overwhelmed by the process. At all times remember that you can seek advice from the local Small Business Administration or the Minority Business Development Agency.
A business plan generally has 5 necessary items included. First, you need an overview of your company’s goals, mission and strategy for progress in the future. Second, you will outline financial projections for your business’ future growth. Third, you document how you came to those projections. This takes solid marketing data, economic data, demographic data, and information on target customers, including a description of their needs and your plans to meet their needs. Fourth, you will create a presentation of your complete marketing plan. Included in the marketing plan will be how you intend to advertise, projected costs and effectiveness in that medium. You may use a combination of social media, emails, newspaper or magazine ads, personal contacts, affiliation with a particular charitable organization or any other way that could get your business and its products and services known to your target audience. Finally, you will need a detailed executive summary (this actually will be in the beginning of the business plan when you present it). An executive summary gives a brief introduction of your business plan, in concise terms. Keep it to one or two pages.
Remember, your business plan must be complete, and it must show you know the ins and outs of your business. Plan to check it every quarter at least to maintain accuracy about what is happening currently with your business. Potential lenders want to see what your business has accomplished, how your business is doing now, and what your business plan is going to be in the future.
In deciding the type of loan to obtain, first, determine what your needs are for the business loan. There are a variety of financing packages such as small business loans, lines of credit, specialized loan programs or business grants available through the Small Business Administration (sbs.org) and the Minority Business Development Agency (mbda.gov). These organizations may also offer mentorships or other help in moving your business toward greater profits and success.
You should decide the amount and type of funding your business needs. Consider what types are available. Do you need emergency funds, long-term funds for purchase of capital assets or day-to-day operating funds? Possibly you need funds for a variety of issues, such as expanding your business might require a larger site, more employees, larger equipment and deposits to new vendors who can supply increased demands. The funds you seek may be for just a few years or for a longer payment period. All of this should be considered before approaching a business funding website or service. For large or capital assets, the items you purchase will most likely serve as collateral.
As you work through the above steps, you are preparing for a successful loan approval. You can meet with or submit materials with confidence and the benefits do not stop with the loan. You now are armed with the vital plan toward building your business and seeing it grow from year to year.