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2022 Guide to Business
Loans for Minority Owned Businesses

Minority owned businesses are among the fastest growing segment of new businesses and account for half of the new businesses created over the last 10 years, according to the Census's Annual Business Study. However, minority owned enterprises continue to face challenges related to limited capital and declining gross receipts. Specialized funding opportunities, certifications, and supplier programs can help minority owned businesses to find lenders they can work with and new customers they can work for. Here is the information leaders of minority owned businesses need to know.

Getting Funding While a Minority Business Owner

Minority owned businesses account for 18.3% of all businesses in the United States and 50% of the new businesses started in the last 10 years.

The work of minority owned businesses ranges in sectors from Health Care and Social Assistance to Accommodation and Food Services, Professionals Services and many more. According to the Census's 2021 Annual Business Survey, 1 million minority owned businesses employ over 4.7 million people. The largest groups of minority ownership are Asian owned ($863.3 billion in annual receipts), Hispanic owned ($455.6 billion in annual receipts), and Black owned ($150.2 billion in annual receipts) businesses. Native Hawaiian and Native American owned businesses have also increased in recent years.

Unfortunately, growth in the number of new minority entrepreneurs has not always led to increasing business opportunity. A recent report by the Minority Business Development Agency (MBDA) showed that although the number of new minority businesses has grown by 35%, annual receipts of those businesses declined by 16% in the same time period.

Limited access to capital and smaller cohorts of customers continues to challenge the health of minority owned businesses. Funding opportunities for minority owned businesses can vary based on type, location, and certification status. To make sure that your minority owned enterprise receives as much funding - and business - as it can, consider funding opportunities, as well as certification and supplier programs built to increase demand for the products and services of minority owned businesses.

Here is our guide with key tips on how to increase capital as a minority owned business.

Support for Minority Owned Businesses

Organizational support and business financing are two of the best ways minority groups can fund entrepreneurship opportunities. This first section will highlight support options that can increase gross receipt and provide training.

How to qualify as a minority owned business?

Qualifying your business as minority owned can be the first and largest step toward taking advantage of programs designed to support minority owned enterprises. Benefits of certifying a minority owned business can vary based on the authorizing organization. Likewise, the requirements and application processes for being registered can also differ.

Here are some of the best places to certify your minority owned business.

National Minority Supplier Development Council

The National Minority Supplier Development Council, or NMSDC, is a national nonprofit organization established in 1972 with regional councils dedicated to giving minority business enterprises (MBEs) opportunities to win good paying business supplier contracts.

Since 1972 NMSDC has expanded to 12 regions across the United States, gained 1,750 corporate members and has 12,000 active minority owned businesses earn valuable supplier contracts.

Businesses interested in joining NMSDC can do so by applying online at the website of their regional NMSDC affiliate, and can find an affiliate near them at the NMSDC network page. Registrants are required to pay an application fee online. And as with many organization or loan applications there is required documentation as well as a site visit and interview.

Here is are the eligibility requirements and documents needed to join certify as an MBE.

  • Business owners must be U.S. citizens
  • Business must be located in the U.S
  • Business must be at least 51% minority-owned operated and controlled
  • Articles of incorporation
  • Stock certificates, stock ledgers (if any)
  • Bylaws (executed and attested), and amendments (if applicable)
  • Certificate of incorporation

Minority Business Development Agency

The Minority Business Development Agency, or MBDA, was established by president Richard M.Nixon in 1968 as the the Office of Minority Business Enterprise. Today MBDA remains the only federal agency whose sole purpose is to promote and develop the growth and economic health of minority owned businesses.

By assisting minority business owners, MBDA has secured an average of $49 million worth of contracts for minority businesses. The agency works with businesses that have been certified with the National Minority Supplier Development Council. The MBDA offers a plethora of tools for minority business owners to connect with government contracting opportunities.

The MBDA has business centers across the country. The business centersare located in areas with high levels of minority concentration. You can view a list of business centershere. To get started accessing MBDA opportunities, you must first register for the MBDA Online Business Applications. You can access the tool by registering on their website,

To access MBDA support and business resourcesMBE certification through NMSDC.

Small Business Administration Programs for Minority Owned Businesses

The U.S. Small Business Administration (SBA) has been dedicated to small business development since 1953 when it was established by the federal government to help American start, build, and grow their businesses. SBA loans are among the most popular funding options taken by small businesses. Over time SBA has increased help for minority entrepreneurs by focussing on economic equity across social and economic backgrounds.


SBA 8(a) Business Development program

The SBA 8(a) Business Development Program supports growth of socially and economically disadvantaged small businesses by prioritizing competition for certain contracts to participating MBE businesses. This step allows minority businesses to become winning competitors in the federal marketplace.

According to SBA, participants the 8(a) program can:
  • Compete for set-aside and sole-source contracts in the program

  • Get a Business Opportunity Specialist to help navigate federal contracting

  • Form joint ventures with established businesses through the SBA's Mentor-Protégé Program

  • Receive management and technical assistance, including business training, counseling, marketing assistance, and high-level executive development

  • Compete for contract awards under multiple socio-economic programs, as they apply

All minority suppliers are welcome to join SBA 8(a). Before participating businesses must meet program requirements. Here are the participant criteria as listed by SBA:
  • Be a small business.

  • Not have previously participated in the 8(a) program

  • Be at least 51 percent owned and controlled by U.S. citizens who are socially and economically disadvantaged

  • Have a personal net worth of $750K or less, adjusted gross income of $350K or less and $6 million or less in assets

  • Demonstrate good character and potential to perform on contracts

State and local Minority Owned Business certifications

Owners of minority owned businesses can register their businesses as minority owned at many state and local business development agencies or other locally based business centers.

Qualifications for these state and local certifications can differ based on locality and governing body. But, there are a handful of requirements that can be expected regardless of where you apply for your certification. Many of these requirements are similar to those requested by national organizations. Making apply for all possible minority owned business certifications at once a good rule of thumb.

Here is a helpful article from Biz2Credit that explains in detail how to register a minority-owned business.

Here are the most common requirements for MBE certifications:

  • Minority ownership of at least 51%

  • Citizen of the United States

  • Business is located in and does business in region of the certifying agency

Funding Options for Minority Owned Businesses

Business financing gives business owners immediate access to capital, control of terms and speed that may not be available through certain non-profit or local and state government programs. Finding the best funding options may depend on how the capital will be used, the lending organization, and, of course, the borrower.

The here are some of the best financing options for minority business owners and entrepreneurs.

Financing with the Small Business Administration

SBA has many different funding programs available to help small businesses maintain and grow their businesses. To explore all of SBA's small businesses financing options visit their loan center.

In addition to funding programs built for all small businesses, SBA has dedicated resources specifically to Minority and Women Owned Businesses as well as those that face other social and economic disadvantages.


SBACommunity Advantage Loans

SBACommunity Advantage loans fall under the 7(a) umbrella and are administered by community-based lenders. They are available to entrepreneurs in underserved markets who need anywhere between $50,000 and $250,000 in financing. Community Advantage loans for minority business owners are guaranteed up to 85% for a $250,000 loan, with interest rates typically falling between 7% and 10%.

SBACommunity Advantage Loans are structured as term loans. This means that they have a specified repayment schedule and either a fixed or variable interest rate.

Community Advantage (CA) Lenders must make at least 60% of their loans in underserved markets. Underserved markets include:
  • Low-to-moderate income communities

  • Businesses where more than 50% of the full-time workforce is low-income

  • Veteran-owned businesses

  • Receive management and technical assistance, including business training, counseling, marketing assistance, and high-level executive development

  • Rural areas



Small businesses and nonprofitchild care centers can borrow anywhere from $500 to $50,000 through the SBAMicroloan program.

The average SBAmicroloan is $14,434 with a 6.5% interest rate and a six-year repayment schedule. While anyone can apply, the Microloan program is designed to assist startup, new and early-stage businesses, particularly those owned by women, low-income, veteran, and minority small business owners.

Working Capital Loans
Financing Options for Minority-Owned Companies

There are a number of providers of small business financing that will support minority-owned companies especially well, ranging from dedicated community financial institutions to some banks or online lenders. In particular, some companies are committed to investing in the minority communities that make up a large percentage of their clients, and these companies will often be a great place for small business owners to turn to when seeking capital.

Funding providers like Biz2Credit recognize the importance of diversity in the community of business owners, and are proactive in supporting businesses run by people of diverse backgrounds. Biz2Credit funding is open and accessible to business owners of all backgrounds, and is based on business performance, not factors that can lead to unconscious discrimination or unfair financing practices. In addition, here are some great options that you can consider when looking for day-to-day financing for your business.

Union Bank's Business Diversity Lending Program

Union Bank's Business Diversity Lending program is designed to provide loans to minority business owners of up to $2.5 million. It requires minority or women entrepreneurs to "own and actively manage at least 51% of the business" seeking funding. The company also needs to have been open for at least two years and must have annual sales below $20 million.


Accion'snonprofit community organization offers term loans for minorities ranging from $300 to $1,000,000 for both established and new businesses. While Accion doesn't exclusively fund minority-owned ventures, over 60% of their borrowers come from minority communities. Fixed rates range from 7% to 34% APR depending on your credit score and other criteria.

National Minority Supplier Development CouncilBusiness Consortium Fund

Certified by the U.S. Department of the Treasury as a Community Development Financial Institution, the Business Consortium Fund (BCF) works to make financing more accessible for minority business owners through various programs.

Minority business owners can borrow anywhere from $75,000 to $500,000 from the BCF through their Direct Lending Program (in the form of either a term loan or line of credit). To be eligible, you must certify your business as a minority business enterprise through the National Minority Supplier Development Council (NMSDC).

Indian Loan Guarantee & Insurance Program

The Indian Loan Guarantee & Insurance Program (ILGP) focusses on giving economic support to recognized Native Americans and Alaska Native groups. The program provides $500,000 to individuals with access to more for tribes and businesses. Since 1974, IGLP has provided over $2 billion in loans.

Through the Indian Loan Guarantee Program recipients can expect affordable loan rates. More favorable terms and higher loan amounts make this a good financing option to many different business needs. Borrowers can use loans for operating capital, equipment financing, acquisition, refinancing, line of credit and more.

Borrowers must have at least 20% equity in the project being financed and the project must benefit the economy of a reservation or tribal service area.

Further requirements must show the borrower is:

  • An enrolled member of a federally recognized American Indian and Alaska Native (AI/AN) tribe or group, or

  • A federally recognized AI/AN group, or

  • A corporation, limited liability company or other business entity with no less than 51% ownership by federally recognized AI/AN individuals

NMSDCBusiness Consortium Fund Loan

Founded in 1987, The National Minority Supplier Development CouncilBusiness Consortium Fund is a 501(c)3 non profit dedicated to supporting NMSDC certified organizations with the funds they may need to meet capital costs and grow their businesses.

The Consortium Fund loan caters exclusively to minority entrepreneurs who haven't had luck securing financing through traditional channels. These business loans range from a minimum amount of $100,000 up to $750,000. Interest rates are capped at 3% above the prime rate, and repayment terms extend up to seven years.

Eligibility is based on certification as an NMSDC business and ability to meet loan criteria. Minority entrepreneurs seeking a Consortium fund loan will need to present the following:

  • 3 years of business operations

  • a business relationship with at least one NMSDC corporate member

  • positive future business prospects

  • the capacity to repay the loan as articulated in a statement of financial condition

  • earnings and cash flow history

  • earnings and cash flow forecast

  • management experience

  • available collateral

Community Development Financial Institution (CDFI) Loans

Community Development Financial Institutions are certified by the U.S. Department of the treasury Community Development Financial Institution Fund. Certified lenders are mission driven to provide affordable lending and financial education services to minority and economically distressed communities.

There are over 950 CDFIs nationwide certified by the CDFI Fund, a part of the U.S. Department of the Treasury. Interested businesses seeking financial assistance can search the CDFI award database to find a CDFI certified lender near you.

State and local loans for minorities

Many of the financing options geared towards minority business owners operate on the state and local level, which often results in specific lending options for particular industries and use-cases.

Two of the largest local loan programs are the National African AmericanSmall Business Loan Fund and the Malama Loan for Native Hawaiian small business owners.

The National African AmericanSmall Business Loan Fund is designed to provide financing to African American-owned small businesses in New York City, Chicago, and Los Angeles. These loan amounts range from $35,000 to $250,000.

The Office of Hawaiian Affairs (OHA) offers the Malama Loan to Native Hawaiian entrepreneurs. Qualified applicants can borrow $2,500 to $100,000 with repayment terms of up to seven years at a 4% APR. Businesses can use the funds for starting a small business, growingand existing small business or as working capital.

Eligibilitycriterial for the Malama Loan requires proof of Native Hawaiian ancestry with an OHA Hawaiian Registry card. Research your state's loan programs, grants, and resources for minority-owned businesses to affordable funding that fits your business plan.