Mixed race couple behind the counter at their coffee shop to illustrate the idea of minority business loans
Italia Martinez Vallejo
By: imartinezvallejo
Read in 19 minutes

Top 10 Small Business Loans for Minorities

Small business loans for minorities are a great source of commercial financing. But, unfortunately, entrepreneurs don’t seem to get them. According to the SBA, only 5% of minority business owners get a loan! So, they often feel more comfortable getting the funds from their own savings or family.

Does this sound familiar to you? If you are a minority business owner, the truth is you could be missing a unique opportunity to fund your business. There are alternative lenders and special programs out there that offer minority business loans specifically crafted for entrepreneurs like you.

Diverse group of business owners that got small business loans for minorities

The Best Small Business Loans for Minorities

Since small businesses, especially minority-owned ones, are taking a bigger role in the country’s economy. That’s why many innovative technology companies like Camino Financial are keen on partnering and funding this new breed of entrepreneurs.

Fortunately, minority business owners can apply with alternative lenders that offer minority businesses. We have curated a selection of the ten best lenders/programs in the market.

Top 10 Small Business Loans for Minorities at a Glance

  1. Community Development Financial Institutions (CDFIs)
  2. Community banks
  3. SBA Business Development Loans
  4. National African American Small Business Loans
  5. Accion US Network
  6. Business Center for New Americans
  7. Business Consortium Fund, Inc.
  8. Business Diversity Lending Program
  9. Indian Loan Guarantee Program
  10. Camino Financial

Want to learn more about these minority business loans? Keep reading!

stack of one hundred dollars notes from a business loan

1. Community Development Financial Institutions (CDFI)

CDFIs are non-profit financial institutions looking to lend to traditionally underbanked communities, including minority small business owners. After the Community Reinvestment Act of 1977, banks are obligated to fund communities that find it harder to qualify for a loan. Many large financial institutions indirectly fund minorities by funding their CDFI partners and referring bank clients to them.

CDFI stands for Community Development Financial Institution.

The best way to locate a CDFI is by going to your local Small Business Administration office or business development center to inquire about them.

Pros: Personalized assistance with your loan that helps you prepare to get a large bank loan in the future. Competitive rates with wide coverage in the U.S.

Cons: The application process might take a while. If you require a larger amount of loan, a CDFI loan might not be enough. Just as with a large bank loan, you might require collateral.

Camino Financial is the first neo-CDFI in the US!

2. Community Banks

Community banks are usually a great alternative for minority-owned businesses. They’re more accessible than large banks and more focused on helping people in the community instead of serving big national businesses. In addition, they offer personalized customer care, small business loans for minorities, and competitive rates: that’s what makes them a great alternative.

But as in everything in life, there are pros and cons.

Pros: Faster and better customer service so you can access your loan more easily. They will get to know your story and will consider this in the loan application. Building a relationship with your bank is key! Since most banks are certified SBA lenders, their rates and loan terms are just as good as large banks.

Cons: Similar to large banks, they don’t move very fast. In addition, community banks are even less tech-enabled than large banks, which requires you to make several trips to the bank branch to submit paperwork and sign your loan docs.

3. SBA Minority Loans

The SBA Business Development Program targets socially and economically disadvantaged communities. It offers federal small business loans for minorities. This allows business owners to compete for federal contracts set aside for small businesses.

SBA stands for Small Business Administration

After certifying as a small business, you work with a business analyst specialist and form joint ventures with other businesses. According to the guidelines, disadvantaged people include anyone subjected to racial, ethnic, and cultural bias or those with less capital or credit.

Pros: You can receive business training and counseling and get help with marketing your business. The federal government earmarks 5% of its contracts to benefit disadvantaged people as defined by its regulations.

Cons: You must meet specific criteria to qualify for the Small Business Administration Business Development Program. A U.S. citizen must control at least 51% of the business: non-lawful permanent residents don’t qualify. Personal net worth must be less than $250,000.

green icon with dollar sign representing sba minority loans

4. National African American Small Business Loans

The NASBLF offers small business loans for minorities in low and medium-income communities in New York, Los Angeles, and Chicago. NASBLF’s mission is to help provide financial assistance to African American minority-owned businesses that can’t get funding through traditional means.

Pros: Loans range in size from $35,000-$250,000. The program also provides technical assistance and financial consultation to small business owners. Recipients may use the money to purchase equipment, provide more cash flow, and expand operations.

Cons: Funding is restricted to three major cities limiting outreach to minorities in other locations. Likewise, businesses must be owned by African Americans. The loan fund is capped at $30 million unless NASBLF receives additional grants.

5. Accion US Network

Accion offers funding from $200 to $300,000 in all 50 states to business owners with low to moderate incomes. In addition to minority-owned businesses, Accion also reaches out to women, veterans, restaurant owners, and people with disabilities.

Pros: The nonprofit community lender helps entrepreneurs build their businesses from the ground up. The organization puts business owners in contact with banks, non-profits, and government agencies to provide a support network.

Cons: You can’t be over 30 days late on bills, loans, or credit cards. Applicants must have a minimum credit score of 575 and no late mortgage or rent payments within the last 12 months.

6. Business Center for New Americans

BCNA offers $5,000 to $50,000 loans to minority business owners in the US. In addition, BCNA offers capital to refugees, women, and immigrants. The organization helps business owners who other lenders have turned down because of low credit scores, loan requests that are too small, or startup businesses.

Pros: Lenders charge fixed interest rates between 8.25 and 10 percent, low application fees, and a 2% closing fee on loans.

Cons: A cosigner is required for amounts over $3,000. Borrowers are required to match 20% of the loan amount.

7. Business Consortium Fund, Inc.

The Business Consortium Fund is a non-profit business program for minorities certified by the US Department of the Treasury. It is dedicated exclusively to offer $75,000 and up to $500,000 commercial loans for minorities.

Pros: Business loans are mainly term loans or lines of credit. Loan amounts above $500,000 are considered on a case-by-case basis. Uses for BCF loans include contract financing, working capital, and equipment financing.

Cons: You must certify your business through The National Minority Supplier Development Council. You can only apply for a loan if you have a supplier relationship with the NMSDC.

icon of a small minority business

8. Business Diversity Lending Program

The Business Diversity Lending Program is a Union Bank program that offers small business loans for minorities and lines of credit. Qualifying ethnicities include Hispanic, Latino, American Indian, Alaskan Native, Asian, Black or African American, and Native Hawaiian or other Pacific Islander.

Pros: Businesses with revenues up to $20 million may qualify for a loan and borrow up to $2.5 million.

Cons: You must have been in business for at least 2 years. Business owners must legally own at least 51% of the business.

9. Indian Loan Guarantee Program

The Indian Affairs branch of the federal government helps native Americans secure small business financing. Individuals may apply for up to $500,000. In addition, tribal enterprises and business entities are allowed to complete an application for minority business loans that offer larger amounts.

Pros: Applicants apply with any lending institution as long as the lender uses a designated Indian Affairs application.

Cons: There are additional loan requirements if you use the funds for construction, renovation, or refinance an existing loan. Most loans require an analysis of the business operation, a list of available collateral, and a credit report from a national credit bureau.

10. Camino Financial

Camino Financial is an online lender with the mission to help minority-owned businesses grow by offering small business loans for minorities.

While we’re a CDFI, our process is 100% online. This makes getting a loan convenient, simple, and secure for small business owners. At Camino Financial, we offer small business loans that range from $5,000 to $400,000. Plus, we don’t have a minimum credit score requirement.

Camino Financial has the mission to serve minority communities; that’s why we have a bicultural team that speaks English and Spanish.

Pros: Our online business loans don¡t require collateral. You can repay the whole loan amount at any time with no penalties or additional fees. Your application is pre-qualified within 24 hours, and all required documents are submitted electronically to avoid unnecessary trips to submit or sign documentation.

Learn here the 4 easy steps to get a business loan with Camino Financial

Cons: The loans can’t be used for real estate investing, financial investing, and car dealerships.

What about small business loans for female minorities?
There aren’t really any small business loans for minority women, but there are many grants and small business loans for women you can access.

outside of a bank that doesn't offer small business loans for minorities

Large Bank Loans: an Option for Minority Business Owners?

This is probably the first thing that came to your mind, right? It seems only obvious.

If you need a loan, you go to a bank because they offer the best rates, and you probably have a checking account opened with them.

While banks do offer the lowest rates and the longest payback terms, they have several drawbacks.

Bank loans might not work for minority business owners:

  • Large banks are not very comfortable lending to businesses earning less than $1 million in sales because of the relatively small loan amounts and higher failure rates than larger businesses.
  • Due to the lack of collateral, small businesses find it challenging to access a secured loan from a bank. Why? Small businesses don’t always own large assets such as commercial real estate or a fleet of vehicles to pledge as collateral for the loan. It’s more likely that small businesses rent or lease large properties or assets instead of owning them.
  • When applying with a large bank, you need to ensure you have a credit score over 680 to qualify.

But don’t lose hope yet! There is a great loan alternative that adapts perfectly to your situation.

Compare the Top Minority Business Loans

Analyzing all the information about business loans for minorities can make you dizzy! Check out this comparison table to take a fast look at what could be the best minority business loan for you:

LenderCollateral Required?Need profitable tax return?Average Credit ScoreEase of loan processSpeed of loan processOffered Business Education
Large Bank✔️✔️650+Requires significant documents60-90 daysSponsors events and workshops
Community Bank✔️✔️650+Requires significant documents45-60 daysPersonalized customer care
CDFI✔️620+Requires significant documents60-90 daysWorkshops
Camino FinancialNot required to applyLow amount of documents submitted electronically2-10 daysBlog, online videos, webinars, e-mails, newsletters

diverse corporate business team with minority business owners

Qualify for a minority business loan is not always easy. Usually, your business must be majority-owned by a member of a minority group. Additionally, you may need to be registered or certified as a minority business or disadvantaged business enterprise (MBE/DBE).

Keep in mind that not all lenders have those requirements. For example, Camino Financial is an alternative lender open to lending to any business owner without the stringent requirements.

What else do you need to be considered for programs created to offer small business loans for minorities and to help minority small business owners? If you answer “Yes” to any of the following questions, you’re likely eligible for flexible loan programs to finance your business.

  • Do you run a business generating less than $1 million in sales?
  • Has your business reported less than 2 years of positive net income in its tax returns?
  • Are you starting a business, or have been operating for less than 3 years?
  • Do you belong to one of these minority groups? Women, African Americans, Asian Americans, Indian Americans, Hispanics, Latino, or Pacific Islanders.

So… What’s the Best Option for Minority Small Business Owners?

At a glance, it might seem that getting small business loans for minorities is complicated. But as we mentioned, there are several financial institutions and organizations that have the mission to help these sectors.

Getting the capital you need will definitely involve some effort, but it’ll be worth it.

After all, getting the money that you need and a lender that understands you can make your small business soar in little time.

The best business loans for minorities

We founded Camino Financial to offer the best small business loans for minorities. But don’t take our word for it.

portrait of Oscar, who got business loans for minorities

Meet Oscar, a passionate business owner of a small deli shop in San Francisco, California. After working for two years at his favorite sandwich shop, he finally got the opportunity to acquire it, and that’s when his journey began.

His main goal was to make some changes in the dining area to improve the customer experience get in some new equipment to ease the work for his employees. He tried three other lenders, but he was never approved. He also considered an MCA, but it was too expensive.

Then he found Camino Financial, and his life changed.

Not only has the process of getting a loan has been fast; Oscar is also very satisfied with the customer service and the way they’ve been so understanding and helpful with his business needs. Camino Financial has helped him increase 5 times his credit capacity and increase 50 points in credit score, so he’s now able to access higher credit lines.

Camino Financial logo, a lender that offers minority business loans

Camino Financial offers the best small business loans for minorities

If you look into the myriad of small business loans for minorities, you’ll find the option that best fits your needs and your ability to pay back: Camino Financial.

We think that the only way to thrive is to help underserved communities and minority-owned businesses. That’s why we have reasonable rates, but there’s also no need for pledging collateral. We have a paperless application, and your loan can be approved in 24 hours.

Apply for a Camino Financial loan today. We’ll be happy to hear from you and guide you through the process of getting the capital you need.

Apply now and grow yor business!



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