How Fundability and Minority Small Business Grants Can Build Off Each Other

First, to be clear, minority small business grants, and any grants for that matter, are totally free money that you do not have to pay back. As such, those awarding grants typically do not consider your ability to repay a grant in the selection process. That doesn’t mean that fundability doesn’t matter though. It does.

Your Level of Fundability Can Affect Your Ability to Win Grants, and Winning Minority Small Business Grants Can Help You Build Fundability

How does this work? How does the fundability of your business affect your ability to get grants, and how can getting small business grants help you build fundability? Think about it. Of course, the main thing that grantors are looking for is a business that can be successful. That means having a winning business idea. That being the case, applicants focus on that piece. They present a fabulous pitch and a winning business plan, then they execute a flawless presentation and hope those that make the decisions love it.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

However, if the competition is a close one, and there are any red flags out there on any applicant, it could mean the difference between winning, and not. Winning is important, because grants can be a great option for supplementing your funding.

The Bare Minimum: Do I Need Fundability to Get Minority Small Business Grants?

Most likely, those offering grants are not going to check credit. They probably do not even really care about your personal financials. Those pieces of fundability are not likely to come into play. You can find out more about those and the other parts of the fundability puzzle here.

However, the foundation of fundability needs to be in place. This is what can make a difference when it comes to winning minority small business grants. What is a foundation of fundability and why does it matter? It matters because it is what sets your business apart as legitimate. These are the things that separate your business from yourself, and it shows that you have all of your proverbial ducks in a row. It may never come into play, but if it does, you want to be ready. What are the building blocks of the foundation of fundability?

Contact Information

The first step in setting up a foundation of fundability is to ensure your business has its own phone number, fax number, and address. Now don’t panic. That doesn’t mean you have to get a separate phone line, or even a separate location. You can still run your business from your home or on your computer if that is what you are doing. You do not even have to have a fax machine.

In fact, you can get a business phone number and fax number pretty easily that will work over the internet instead of phone lines. In addition, the phone number will forward to any phone you want it too so you can simply use your personal cell phone or landline if you want. Whenever someone calls your business number it will ring straight to you.

Faxes can be sent to an online fax service, if anyone ever happens to actually fax you. This part may seem outdated, but it does help your business appear legitimate to lenders.

You can use a virtual office for a business address. How do you get a virtual office? What is that? It’s not what you may think. This is a business that offers a physical address for a fee, and sometimes they even offer mail service and life receptionist services. In addition, there are some that offer meeting spaces for those times you may need to meet a client or customer in person.

EIN

The next thing you need to do is get an EIN for your business. This is an identifying number for your business that works in a way similar to how your SSN works for you personally. Some business owners use their SSN for their business. This is what a lot of sole proprietorships and partnerships do. However, it really doesn’t look professional to lenders, and it can cause your personal and business credit to get all mixed up. When you are looking to increase fundability, you need to apply for and use an EIN. You can get one for free from the IRS.

Incorporate

This is the most important step in fundability thus far. Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability. It lends credence to your business as one that is legitimate. It also offers some protection from liability.

Which option you choose does not matter as much for fundability as it does for you budget and needs for liability protection. The best thing to do is talk to your attorney or a tax professional. What is going to happen is that you are going to lose the time in business that you have. When you incorporate, you become a new entity. You basically have to start over. You’ll also lose any positive payment history you may have accumulated.

This is why you have to incorporate as soon as possible. Not only is it necessary for fundability and for building business credit, but so is time in business. The longer you have been in business the more fundable you appear to be. That starts on the date of incorporation, regardless of when you actually started doing business.

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Business Bank Account

You have to open a separate, dedicated business bank account. There are a few reasons for this. First, it will help you keep track of business finances. It will also help when it comes time to do taxes by keeping your personal finances separate from your business finances..

There’s more to it however. There are several types of funding that are not available without a business bank account. Many lenders and credit cards want to see a business account with a minimum average balance. In addition, you a merchant account is not an option without a business account at a bank. That means, you cannot take credit cards payments. Studies show that consumers usually spend more when credit card payment is available.

Licenses

For a business to be legitimate, it has to have all of the necessary licenses it needs to run. If it doesn’t, warning lights are going to flash all over the place. Research what you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels.

Website

In these times, you do not exist if you do not have a website. Having a poorly put together website can be even worse though. It is the first impression you make on most. As a result, if it appears to be unprofessional, your business will look bad before the customer even gives it a chance.

Spend the time and money necessary to ensure your website is professionally designed and works well. Pay for hosting too. Don’t use a free hosting service. Along these same lines, your business needs a dedicated business email address. Make sure it has the same URL as your Website. Don’t use a free service such as Yahoo or Gmail.

If you are a new business applying for minority small business grants to help get you off of you feet, you may not be ready for all of this yet. Much of it can be does at square one however, and it is infinitely easier to do so. For example, just go ahead and get a business number and address and use it on your grant applications. Get a professional website, or at least a prototype, up and running so you have something to show. It could make all the difference.

How Can Minority Small Business Grants Help Build Fundability?

It’s pretty easy to see how fundability can affect your ability to get minority small business grants. How is the reverse true though? How can minority small business grants help you build fundability, especially when you don’t have to pay them back so there are no payments to report to business credit.

Here’s how. When you get minority small business grants, you have free money to grow and expand your business. This can help you be more profitable without the debt typically associated with growth. This, in turn, makes it easier to pay back any debt you do have to get in the process of starting and running a business, which will help to build fundability.

The only question now is, where do you get minority small business grants? Many private and government agencies offer them, including some corporations. Some are offered annually, while others are available for one time only. It would be impossible to list all available grants, but here are a few to start with. Remember to do your research, as all of them have different eligibility requirements and application processes.

Options for Minority Small Business Grants

If you qualify, there are many grant options available. There are not as many specifically for minorities, but there are some. Here is just a sample of what is out there.

First Nations Development Institute Grants

With a mission to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans, this group is at the top of the list. They also offer assistance in the application process.

Not only that, but there are a wide range of other opportunities from the First Nations Development Institute. Get on the mailing list to receive information about new opportunities as they become available.

National Black MBA Association Scale-Up Pitch Challenge

Also known as NBMBAA, the Scale-Up Pitch Challenge has cash prizes ranging from $1,000 to $50,000. The associate states its purpose is to help newer businesses that have an African founder that maintains equal ownership.

A business must be a member of the NBMBAA to compete. There is a $10 monthly membership fee. After that, there is an online application. If chosen, you must submit a three-minute pitch. Then, finalists go on to compete at the NBMBAA annual conference.

Non-Minority Specific Options

There are grants options that can work well even though they are not exclusively for minorities. Some examples include the following.

FedEx Small Business Grant

This grant is the company’s way of working to strengthen small business innovation. There are 10 grants the company awards each year. They range from $15,000 to $50,000, and if you’re a minority owned business with a cutting-edge product, this could be the grant for you.

A business must use the FedEx website to submit entries. There are a few questions to answer about your business. In addition, there is a requirement for an elevator pitch about what makes your business special. Also, you have to explain how you would use the grant funds. A 90 second video submission is optional.

NASE Growth Grants

The National Association for the Self-Employed (NASE) has small business Growth Grants of up to $4,000. They are for micro-businesses, and proceeds can be used for a number of things including marketing, advertising, expansion, and even to hire employees. Anyone can apply, but you do have to be an NASE member. Membership fees vary based on the level of membership you choose.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

USDA Value Added Producer Grant

The USDA’s Value-Added Producer Grant (VAPG) program offers grants for small businesses. It includes minority owned business. Grants range up to $250,000. These grants are designed specifically to help agricultural producers with activities that add value to their products. As a result, grants are open to those in rural areas. They must be operating as one of the following:

Cooperative
Farmer
Rancher
an independent agricultural producer
or an agricultural producer group

Minority Small Business Loans and Fundability: It Goes Both Ways

While neither directly affects the other, the two do affect each other indirectly. Having a strong, fundable foundation can help the pendulum swing your way when it comes time to make a grant decision. By the same token, if you win a grant, the funds could help you build strong fundability if used properly. The two together make a winning team for your business.

The post How Fundability and Minority Small Business Grants Can Build Off Each Other appeared first on Credit Suite.

Land Minority Small Business Loans to Fund Your Business

If you are a person of color who runs a business, you could end up having some trouble finding traditional loans that will work with your unique needs. Typically, there are not a lot of loans designed specifically for minority business owners. However, there are some loan options that work better than others.

How to Find Minority Small Business Loans: What You Need to Know

What’s the trick to finding minority small business loans? Where is a minority business owner to go when the traditional options for loans do not work out? There are a few options for minority small business loans that you may not realize are out there. Some involve the government through the Small Business Administration, while others involve going a more non-traditional route with private lenders.

Find out why so many companies use our proven methods to get business loans.

Where to Start with Minority Small Business Loans: The Small Business Administration

You cannot talk about minority small business loans without some discussion on the SBA. While they do not lend funds themselves, they do handle the administration of a number of loan programs that help all small businesses get the funds they need through partner lenders.

Minority Small Business Loans: 7(a) Loans

This is the Small Business Administration’s most known program. It provides federally funded term loans up to $5 million. The funds can be used for a number of purposes. These include expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions in partnership with the SBA process these loans and disburse the funds.

Minority Small Business Loans: 504 Loans

504 loans are also available up to $5 million and can buy machinery, facilities, or land. Typically, they are used for expansion. They work especially well for commercial real estate purchases.

Minority Small Business Loans: Microloans

These are $50,000 or less. They work well for starting a business, purchasing equipment, buying inventory, or general working capital.

Minority Small Business Loans: SBA Express Loans

These are fast turnaround loans, with the SBA taking up to only 36 hours to give a decision. There is less paper work as well, which is part of what makes express loans great if you qualify.

Minority Small Business Loans: SBA Community Advantage Loans

This is a pilot program running through 2020, with the potential for extension. Its purpose is to promote economic growth in underserved areas and markets. Decision makers look past such things as poor credit or low revenue if the business has the potential to create jobs or promote economic growth in underserved areas.

These are some of their most popular programs. The Small Business Administration does so much more for small businesses in addition to these. Get more details on the SBA, these loan programs, and additional resources offered by the Small Business Administration here.

Other Options for Minority Small Business Loans: Private Lenders

Though not specific to minorities, some private lenders offer products that work better with the unique needs and challenges of minority business owners than others.

OnDeck

OnDeck offers lines of credit and term loans with fixed interest rates. You can get up to $500,000 with a term loan. Also, they have an A rating with the Better Business Bureau. The minimum FICO they require is 600. In addition, you must have $100,000 minimum annual revenue and be in business for at least one year. Find out more about OnDeck in our review.

BlueVine

BlueVine offers a number of financing options including term loans, invoice financing, equipment financing, lines of credit, and merchant cash advances. As a requirement, you have to be in business for at least 6 months. If you need a term loan or a line of credit, then they require a minimum annual revenue of $100,000. For those looking for invoice factoring, the minimum credit score is just 530! If you want a line of credit or term loan, you will need a minimum credit score of 600. They have an A+ rating with the BBB. Find out more about BlueVine in this review.

Funding Circle

If you’re looking for a low APR, then Funding Circle is your go-to. They have fixed rate term loans and require a credit score of 620 or above. Unlike BlueVine, there is no minimum revenue requirement. However, they do require you to be in business for at least 2 years. They have an A+ BBB rating. Find out more in our Funding Circle review.

StreetShares

This company offers invoice financing, term loans, and lines of credit. Similar to others, there is a number of years in business requirement. However, they require less minimum annual revenue than others at only $25,000. Additionally, the minimum credit score is 600. They also have an A+ rating with the Better Business Bureau. Find out more about StreetShares in our review, here.

SmartBiz

SBA loans typically take a lot of time and paperwork. Still, SmartBiz found a way to speed things up. They make it easier than ever. Unfortunately, they do have stricter requirements. For example, your credit score has to be at least 650. Also, you have to be in business for 2 years or more. Further, annual revenue has to be $50,000 at least. There can be no outstanding liens, bankruptcies, or foreclosures in the past 3 years either.

Tips for Landing A Minority Small Business Loan

Once you know where to go to get minority small business loans, you need to know how to get them. Meeting all the requirements is the first part, but these tips can help you out even more.

Appear Fundable

A business that appears fundable to a lender is an established business separate from its owner. It is complete, organized, and either has solid revenue or a solid startup plan.

Find out why so many companies use our proven methods to get business loans.

To appear fundable, a business needs:

To be formally incorporated as an S-corp, LLC, or a corporation.
An EIN from the IRS. This is an identifying number for your business that functions similar to the way your SSN does for you personally.
A dedicated business bank account.
Contact information that is different from the owner’s. A separate telephone number on a toll-free exchange and a dedicated physical address are imperative.
A professional website and an email address that has the same URL. Free web hosting and email services won’t do the job in this case.

Find out more about fundability here.

You Must Have a Business Plan

Lenders want to see a professional business plan. Even if you are not a startup a plan is necessary. Startups need a plan so that lenders can see they know what they are doing. Established businesses need to show how they plan to use the funds. Lenders want to see that they have research to show the market supports that plan. Find out more about business plans here.

Be Prepared

It is almost impossible to over prepare when applying for a loan. Consequently, you should try to anticipate any questions. Pull together forms and documentation they may ask for. Items such as past tax returns, financials, and licenses are common. The more you have ready to go before you start, the faster and easier the process will be.

Your Personal Credit Has to Be Strong

You need a solid personal credit score to land the best small business loans. There is just no way around it. As you can see above, a score of 600 or above is required almost across the board with the exception of some invoice factoring options.

Remember, it is possible to improve your personal credit score. The first step is to get a copy of your credit report. You can get a free copy each year. Look for what may be having a negative impact. If there are mistakes, contact the credit agency in writing to have them removed. If late payments are the issue, start paying on time. You cannot fix a problem until you know what the problem is.

Business Credit Is Important Too

Of course, when it comes to minority small business loans, you cannot ignore business credit. While it isn’t listed as a primary requirement for most lenders, having a strong business credit score can only help you.

If a lender sees a personal score that isn’t exactly what they need, they may take business credit into consideration when making their decision. In addition, if you qualify for the loan and have good business credit, you may be able to get a lower interest rate.

Additional Options for Funding a Minority Owned Business

Grants are also an option for minority business owners. They can help bridge funding gaps and stretch funds from minority small business loans. However, they are highly competitive. Many are only available to those that meet very specific criteria. Here is just a sample of some minority business grants that are out there.

First Nations Development Institute Grants

The mission of this group is to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans. Not only that, but there are a wide range of opportunities from the First Nations Development Institute. There is a mailing list you can join to receive information about new opportunities as they become available.

National Black MBA Association Scale-Up Pitch Challenge

Also known as NBMBAA, the Scale-Up Pitch Challenge offers cash prizes ranging from $1,000 to $50,000. The association says its purpose is to help newer businesses that have an African founder that maintains equal ownership.

A business must be a member of the NBMBAA to compete. There is a $10 monthly membership fee. After that, there is an online application. If chosen, you must submit a pitch that lasts three minutes. After that, finalists go on to compete at the NBMBAA annual conference.

Other Grant Options: Non-Minority Specific

There are grant options that can work well even though they are not exclusively for minorities. They are available to everyone, including minorities. Some examples include the following.

FedEx Small Business Grant

This grant is how FedEx is working to strengthen small business innovation. There are 10 grants the company awards each year. They range from $15,000 to $50,000, and if you’re a business with a cutting-edge product, this could be a great opportunity.

A business must use the FedEx website to submit entries. There are a few questions to answer about your business. In addition, there is a requirement for an elevator pitch about what makes your business special. Also, you have to explain how you would use the funds. A 90 second video submission is an option as well.

Find out why so many companies use our proven methods to get business loans.

NASE Growth Grants

The National Association for the Self-Employed (NASE) has small business Growth Grants of up to $4,000. They are for micro-businesses, and proceeds can be used for a number of things. They can be utilized for marketing, advertising, expansion, and even to hire employees. These grants are open to everyone. However, you do have to be an NASE member to apply. Membership fees vary based on the membership level chosen.

USDA Value Added Producer Grant

The USDA’s Value-Added Producer Grant (VAPG) program offers grants for small businesses. It includes minority owned business. Grants range up to $250,000. They are specifically to help agricultural producers with activities that add value to their products. As a result, grants are open to those in rural areas. They must be operating as one of the following:

Cooperative
Farmer
Rancher
an independent agricultural producer
or an agricultural producer group

Know Your Options for Minority Small Business Loans and Other Resources

As a minority business owner, it is important that you know what options are available to you regarding funding and support. The list above is a starting point, but here is so much more out there. Be sure to do your own research. In addition, get your personal and business credit in order, and be sure your business is fundable, so that you do not miss out on an opportunity.

The post Land Minority Small Business Loans to Fund Your Business appeared first on Credit Suite.

How to Supplement Funding with Minority Business Grants

While it’s almost impossible to fully fund a business on grants alone, minority business grants are a great way to supplement other types of funding. For example, if you win a grant, you can use it to reduce the amount of debt you need to take on. You could use the funds to reduce the amount of cash on hand you have to use. In turn, this would reduce the need to take on debt in the future. Grants can be a great funding option for minority owned business.

Minority Business Grants are a Great Way to Supplement Funding

Of course, finding and winning minority business grants is easier said than done. It takes considerable time and work to do so. First, you have to do the research to find the grants you qualify to apply for. Then, you have to do the work of filing the grant application. In some cases, the application is just the first step in a long, competitive process.

Why Bother with Minority Business Grants?

Some wonder what the point is in even bothering to try to get grants if they are so rare and competitive. Is it worth it if they are so hard to get? The simple answer is, yes. Grants are free money. The funds never have to be repaid. If you win a grant, you get to keep the funds free and clear.

However, there are sometimes compliance points that come into play. There may be certain rules for the use of the funds you have to adhere to. Still, when it comes to minority business grants, they are all designed to help you build a better business. For free money, the compliance hassle is a small price to pay.

Where Do Minority Business Grants Come From?

They come from a variety of sources. The government issues some grants from minority business owners. Special agencies will sometimes have grant opportunities. Even private businesses will offer grants sometimes, including big names like FedEx.

Learn business loan secrets and get money for your business.

Do You Qualify for Minority Business Grants?

Who knows? Maybe? If your business is under more than 51% minority ownership, the answer is likely yes. Other than the minority ownership piece, some minority business grants are designed for a specific minority group. It can take some time to seek out those grants for which you specifically qualify.

Some Minority Business Grants to Try

Here are some minority grant options to consider. There are certainly others out there however, and they are not always well advertised. This means you need to be sure to do your own research also.

Minority Business Grants: First Nations Development Institute Grants

The mission of this group is to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans. They offer assistance in the application process in addition to funds.

Not only that, but there are a wide range of opportunities from the First Nations Development Institute. New ones initiate as old ones retire. There is a mailing list you can join to receive information about new opportunities as they become available.

Minority Business Grants: National Black MBA Association Scale-Up Pitch Challenge

Non-Minority Specific Options

There are grants options that can work well even though they are not exclusively for minorities. Some examples include the following.

FedEx Small Business Grant

NASE Growth Grants

The National Association for the Self-Employed (NASE) has small business Growth Grants of up to $4,000. They are for micro-businesses, and proceeds can be used for a number of things. They can be utilized for marketing, advertising, expansion, and even to hire employees. These grants are open to everyone. However, you do have to be an NASE member to apply. Membership fees vary based on the membership level chosen.

Learn business loan secrets and get money for your business.

USDA Value Added Producer Grant

Cooperative
Farmer
Rancher
an independent agricultural producer
or an agricultural producer group

What About Loans?

As I said above, you can’t fund a business on grants alone. They work better as a supplemental funding source. Likely, you will need to seek out business loans. There aren’t a ton of loans specifically for minorities, but some options do work better for minority business owners than others.

Minority Specific Loans

Minority specific business loans are few and far between. However, they do exist. Some only offer minority business loans to those in certain cities. Some are only available if you are looking to land government contracts. Each have their own requirements, and it takes a ton of time and research to figure it all out. With the information below though, you don’t have to start from scratch.

Business Consortium Fund, Inc.

This program is specifically for minority businesses. It is certified by the US Department of the Treasury. Businesses can qualify for $75,000 to $500,000 after approval. Also, amounts above $500,000 are available on a case by case basis.

Allowable fund usage includes working capital, equipment financing, and contract financing. To apply, you have to certify your business through The National Minority Supplier Development Council. In addition, you must have a supplier relationship with the Council.

National African American Small Business Loans

These loans are only available in Chicago, Los Angeles, and New York. The NASBLF provides capital to African American minority-owned businesses. Specifically, those that are not eligible for more traditional forms of financing.

Loans range from $35,000 to $250,000. In addition, other services are available. These include technical assistance and financial consultation services. Business owners can use funds for expansion, equipment purchases, and cash flow. They only have $30 million total to loan out in a year, unless more grant funds become available to the program.

Accion

Accion offers loans in all states. Funds are available to the following:

minorities
veterans
women
those with disabilities
and low to medium income business owners

Loan amounts start from $200,000 and go up to $300,000. Business owners can use them to help build businesses from the beginning. Accion can also put owners in contact with other resources to help build a network of support.

The minimum credit score for these loans is 575. In addition, you cannot be 30 days late on credit cards, loan payments, or bills. Also, you will not qualify if you have any late rent or mortgage payments over the past year.

Community Development Financial Institutions Fund (CDFI)

This group lends to those communities that are traditionally underbanked, including business owners that are minorities. Since the Community Reinvestment Act of 1977, banks are required to offer funding in communities that find it hard to qualify for traditional funding. Big banks often fund minority business owners indirectly through their CDFI partners.

To locate a CDFI, contact the local business development center or your local Small Business Development Center office. They can hook you up.

While the application process can be long, they do offer assistance to prepare for future bank loans. Another benefit is that their rates are competitive within the U.S.

Union Bank Business Diversity Lending Program

This program from Union Bank assists minority business owners with loans and lines of credit. To qualify as a minority for this program you must be Hispanic, American Indian, Latino, Asian, Alaskan Native, African American, Native Hawaiian, or other Pacific Islander.

A business that has revenue of up to $20 million could qualify for a loan of up to $2.5 million. However, you must be in business for at least 2 years, and the minority business owner must own at least 51 percent.

Indian Affairs

Businesses owned by Native Americans can get financing from the federal government through the Indian Affairs branch. An individual can fill out an application for up to $500, 000, but business entities and tribal enterprises my apply for more.

Potential borrowers can apply with any lending institution, they just have to use the application for Indian Affairs. Additional requirements are in place if the funds are used for construction, renovation, or refinancing. In general, a list of collateral, a credit report, and an analysis of business operations are required.

Camino Financial

Camino Financial is an online lender that offers minority-owned businesses loans. They also offer business solutions. They are an easy and convenient option. Mostly because they offer the entire application process online. Microloans range from $5,000 to $50,000. Also, they offer small business loans between $10,000 to $400,000.

There is no requirement for security. In addition, you can pay off the loan any time with no penalties or fees. Pre-qualification comes within 24 hours. Since all documents are submitted online, you do not have to make unnecessary trips to turn in or sign papers either.

Other Loans that Are a Good Option for Minority Businesses

While not specifically for minority business owners, these loans often work well for them.

Fundbox

Surprisingly, there is no minimum credit score. Consequently, if you have at least $50,000 in annual revenue, you can qualify for a line of credit from Fundbox. Additionally, you need to be in business for at least 3 months. Amounts range from $1,000 to $100,000 with rates from 10.1% to 79.8%. Terms are for 12 weeks, and funds are available as quickly as the next business day.

Kabbage

Kabbage is another lender that will make loans to borrowers with credit scores as low as 500. Terms are for 6, 12, or 18 months and amounts range from $2,000 to $250,000. Interest rates are higher, at 24% to 99%. Funding can take several days, but sometimes happens in just a few minutes.

QuarterSpot

Another option is QuarterSpot. In fact, some prefer it due to terms that go up to 18 months. Loans range from $5,000 to $250,000. However, rates are pretty high at 30% to 70%. Still, approval can come in as little as 24 hours.

Credibility Capital

Credibility Capital loans range from $50,000 to $400,000. Terms are for 1,2, or 3 years, with rates ranging from 10% to 25%. Like most, funding usually takes around 7 days.

SmartBiz

Lastly, SmartBiz offers low cost financing for expansion. Unlike the others, these are SBA loans. However, with SmartBiz, funding happens a lot faster than with traditional financial institutions. Truthfully, they can take as little as a few weeks instead of a few months.

Learn business loan secrets and get money for your business.

Minority Business Grants and Loans Make a Winning Combination

A business with minority ownership has resources available to it that are not available to all business owners. They come in the form of both loans and grants for minorities. Pursuing both allows you take advantage of as many resources as possible.

If you still need more, you can apply for loans that are not specifically for minority owned businesses. Even if you do not qualify for traditional financing due to a low credit score, there are options.

Regardless of what combination of funding works best for you, remember to ensure your business is as fundable as possible. Find out more about fundability and what affects it here.

The post How to Supplement Funding with Minority Business Grants appeared first on Credit Suite.

Additional Minority Owned Business Funding Sources are Available if You Know Where to Look

The United States is known as the melting pot for a reason. It is full of people with roots stretching worldwide. Some countries are less represented than others however. This means we have a lot of citizens in minority groups. In some areas of the country, the entire population is part of a minority group. In 2016, there were 8 million minority owned businesses. This was up 38% from 2007 data. If you have a minority owned business, then you have some additional funding options.

Additional Funding Options for Your Minority Owned Business

These options come in the form of loans and grants for minority owned business. You need to know where to look. You also need to know eligibility requirements. This will help you prepare your application. A great application will help to improve your chance of winning a grant or loan approval.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business.

Minority Owned Business Grants

Grants are basically free money. You never have to pay it back. However, they are also highly competitive. In addition, they are rarely enough to completely fund a business. Still, grant money can reduce the need to borrow money.

Here are some minority grant options to consider. There are certainly others out there though. They are not always well advertised. This means you need to be sure to do your own research as well.

First Nations Development Institute Grants

This group has a mission to offer grants to help Alaska Natives, Native Hawaiians, and Native Americans. In addition to the funds, they offer assistance in the application process.

There is a wide range of opportunities from the First Nations Development Institute, with new ones rolling on as old ones roll off. Join the mailing list to be notified of new opportunities as they are posted.

National Black MBA Association Scale-Up Pitch Challenge

Also known as NBMBAA, their Scale-Up Pitch Challenge offers prizes in cash ranging from $1,000 to $50,000. The purpose of the association is to help newer businesses that have an African founder that maintains equal ownership.

A business must be an NBMBAA member to compete. There is a $10 monthly membership fee. Then, there is an online application. If chosen, a business must submit a three-minute pitch. Finalists will go on to compete at the NBMBAA annual conference.”

FedEx Small Business Grant

This grant is the FedEx way of working to strengthen small business innovation. The company awards 10 grants. They range from $15,000 to $50,000 every year. If you’re a minority owned business owner with a cutting-edge product, this could be the grant for you.

You have to submit entry via the FedEx website. It requires that you answer a few questions about your business. This includes providing an elevator pitch about what makes your business stand out. In addition, you have to explain how you would use the grant funds. You can also submit an optional 90 second video.

NASE Growth Grants

The National Association for the Self-Employed (NASE) has small business Growth Grants that range up to $4,000. Grant recipients must be micro-businesses. Proceeds can be used to help your business market, advertise, expand, and hire employees. These grants are open to everyone. However, you do have to be a NASE member to apply. Cost of membership depends on the member level you choose.

USDA Value Added Producer Grant

The USDA’s Value Added Producer Grant (VAPG) program offers grants for small businesses. This includes minority owned business. Grants range up to $250,000. They are specifically to help agricultural producers with activities that add value to their products. Grants are open to those in rural areas. They must be operating as cooperatives, farmers, ranchers, independent agricultural producers, or agricultural producer groups.

Minority Owned Business Resources

These resources do not offer grants or any type of funding directly. Still, they can be a great help and support in finding funding. They can also help with other issues that come with being a minority business owner.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business.

Minority Business Development Agency (MBDA)

This agency is under the direction of the United States Department of Commerce. It helps minority business owners and minorities that want to become business owners. They have business centers all around the country. They offer help finding grants that could be a good fit. In addition, they offer help with the application process.

USA.gov

While not minority specific, this website offers a list of government resources. This includes resources for any minority owned business. It also provides links to many federal government agencies that offer loans and grants for minority small business.

Grants.Gov

This is another resource to help find grants for your minority owned business. In addition to a list of grant opportunities, it has information that can help you create a winning grant application package.

There are over 1,000 grants to dig through. Most of them are for research and development purposes. You should still take the time to look at them, as you may find one that will work well for your business.

Loans for Minority Owned Business

Loans for minority business owners can come from several different sources. Some only offer minority business loans to those in certain cities. Some are only available if you are looking to land government contracts. Each have their own requirements. It takes a lot of research to line everything out and see what is available. We have a list of some of the best options to help you get started.

Business Consortium Fund, Inc.

This program is through the US Department of the Treasury. Typically, businesses can qualify for $75,000 to $500,000 after approval. Amounts above $500,000 are possible. However, they are on a case by case basis only.

Businesses can use funds for working capital, equipment financing, and contract financing. To apply, you have to certify your business through The National Minority Supplier Development Council. In addition, a business must have a supplier relationship with the Council to be eligible.

National African American Small Business Loans

These loans are only available in Chicago, Los Angeles, and New York. They go to communities with low to medium incomes. The NASBLF provides capital to African American owned businesses that are not eligible for traditional financing options.

The range for loans is $35,000 to $250,000. Borrowers can use funds to help with cash flow, expansion, and equipment purchases. Thirty million dollars total are available each year.

Accion

Accion offers loans in all states for minority owned business. They also serve veterans, women, and those with disabilities. Low to medium income business owners may also be eligible. Loan amounts range from $200,000 to $300,000. They work to help build businesses from square one. They can also put owners in contact with other banks, non-profits, and government resources to help build a network of support.

The minimum credit score for these loans is 575. In addition, you cannot be 30 days late on credit cards, loan payments, or bills. Late rent or mortgage payments over the past year will also disqualify you.

Community Development Financial Institutions Fund

CDFI lends to communities that typically lack banking options. This includes minorities. Since the Community Reinvestment Act of 1977, banks must offer funding in communities that find it hard to get traditional funding. Big banks often fund minority business owners indirectly through their CDFI partners.

To locate a CDFI, contact the local business development center. Your local Small Business Development Center office should also be able to help.

The application process can be long. Thankfully, they do offer assistance to prepare for future bank loans as well.

Union Bank Business Diversity Lending Program

This program from Union Bank assists minority business owners with loans and lines of credit. To qualify as a minority for the program, you must be Latinx, American Indian, Asian, Alaskan Native, African American, Native Hawaiian, or other Pacific Islander.

Other requirements must be met as well. For example, you must be in business for at least 2 years, and the minority business owner must own at least 51 percent.

Indian Affairs

Native American business owners can get loans from the federal government. These come through the Indian Affairs branch. You apply with any lending institution. You just have to use the Indian Affairs application. If the funds are for construction, renovation, or refinancing, there will be additional requirements. Generally, a list of collateral, a credit report, and an analysis of business operations are necessary.

Camino Financial

Camino is an online lender that offers minority business owners loans and business solutions. All processes take place online, making it an easy option. Their microloans range from $5,000 to $50,000. They also offer small business loans between $10,000 to $400,000. There is no collateral requirement. As a benefit, you can pay off the loan any time with no penalties or fees.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business.

SBA Options for Minority Owned Business

In addition to these options, the Small Business Administration has some programs that may work well, though they are not for minorities only.

SBA Community Advantage Loans

Community advantage loans are for underserved communities that need less than $250,000. Likewise, you can find lenders that work with the SBA on this program using the SBA Lender Match tool.

SBA Microloans

They also have microloans available of up to $50,000. Unlike others, these are offered through nonprofit organizations. With interest rates ranging from 8% to 13% and maximum repayment terms of six years, they can work well for minority business owners.

One of the SBA’s partners in this program is The Opportunity Fund. According to them, 90% of its borrowers are minority business owners.

SBA 7 (a) Loans

Like other SBA programs, these are not specifically for minorities. Still, they are available to minorities the same as everyone else. They are 10-year loans of $30,000 to $350,000. Rates range from 9.7% to 11.04%, and they can turn around in as little as 7 days. More often they take up to several weeks.

Private Lender Options for Minority Owned Business

Again, these are not necessarily only for minorities. However, many alternative lenders offer loans that work well. Specifically, minority owned businesses sometimes struggle with meeting credit score requirements. The following loans are available with a lower credit score than what most traditional lenders require.

Fundbox

Surprisingly, there is no minimum credit score. In fact, if you have at least $50,000 in annual revenue you can qualify for a line of credit from Fundbox. Additionally, you also need to be in business for at least 3 months. Amounts range from $1,000 to $100,000 with rates from 10.1% to 79.8%. Terms are for 12 weeks, and you can have your funds as quickly as the next business day.

Kabbage

Another lender that will make loans on credit scores as low as 500 is Kabbage. Terms are for 6, 12, or 18 months and amounts range from $2,000 to $250,000. So interest rates are higher, at 24% to 99%. Funding can take several days, but sometimes happens in just a few minutes.

QuarterSpot

QuarterSpot is another option. Many prefer it, due to terms that go up to 18 months. Loans range from $5,000 to $250,000, but rates are pretty high at 30% to 70%. Nevertheless, approval can happen in as little as 24 hours.

Credibility Capital

Loans with Credibility Capital range from $50,000 to $400,000. Terms are for 1, 2, or 3 years, and rates range from 10% to 25%. So like most, funding usually takes around 7 days.

SmartBiz

SmartBiz offers low cost financing for expansion. Unlike the others, these are SBA loans. However, with SmartBiz funding happens a lot faster than with traditional banks. In fact, they can take a few weeks rather than a few months.

A Minority Owned Business Has Additional Funding Options Available

It’s true. In addition to the traditional options, there are other funding resources available to help minority business owners. While many of them, like grants, will not fully fund a business, they can all reduce the need for debt. The key is knowing where to find them and how to qualify. The list above is a great starting point, but there is so much more. It’s worth the time it takes to dig in and see what is available.

The post Additional Minority Owned Business Funding Sources are Available if You Know Where to Look appeared first on Credit Suite.

The Tale of Elusive Minority Business Loans: Where to Find Them and What It Takes to Get Them

Minority Business Loans are Out There, You Just Have to Know Where to Look

The United States is full of those considered to be “in the minority.” In fact, in some areas the majority of the population is considered to belong to a minority group! This is why minority business loans are more important than ever. Ensuring minority business owners have the funding they need to help their business thrive is vital to the economy.

The thing is, if you do not know where to look or what you are looking for, it can be difficult to snag one minority business loans. We are here to help you have a successful hunt.

The Best Sources for Minority Business Loans

There really are several sources for minority business loans. It is necessary to know the specifics of each however, before you can move in for the kill. Some only offer minority business loans to those in certain cities. Some are only available if you are looking to land government contracts. Each have their own requirements, and it takes a ton of time and research to figure it all out. We have a lot of research here to save you time. You do not have to start from scratch.

Business Consortium Fund, Inc.

This program is designed specifically for minority businesses. It is certified by the US Department of the Treasury. Businesses can qualify for $75,000 to $500,000 after approval. Amounts above $500,000 are on a case by case basis.

Funds can be used for working capital, equipment financing, and contract financing. To apply, you have to certify your business through National Minority Supplier Development Council. Additionally, you must have a supplier relationship with the Council.

National African American Small Business Loans

These loans are only available to low- and medium-income communities in Chicago, Los Angeles, and New York. The NASBLF provides capital to African American minority-owned businesses not eligible for traditional financing.

Loans range from $35,000 on the low end to $250,000 on the high end. Technical assistance and financial consultation services are also available to business owners. Allowable fund uses include expansion, equipment purchases, and cash flow. They only have $30 million total to loan out in a year, unless more grant funds become available to the program.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Accion

Accion offers funding in all states for minorities, veterans, women, those with disabilities, and low to medium income business owners. Loan amounts range from $200,000 to $300,000. They work to help build businesses from the beginning, and can put owners in contact with other banks, non-profits, and government resources that help build a network of support.

The minimum credit score for these loans is 575, and you cannot be 30 days late on credit cards, loan payments, or bills. In addition, you will not qualify if you have any late rent or mortgage payments over the past year.

Community Development Financial Institutions Fund (CDFI)

To locate a CDFI, contact the local business development center or your local Small Business Development Center office. They can hook you up.

While the application process can be lengthy, they do offer assistance to prepare for future bank loans. In addition, their rates are competitive within the U.S.

Union Bank Business Diversity Lending Program

Indian Affairs

Businesses owned my Native Americans can get financing from the federal government through the Indian Affairs branch. An individual can fill out an application for up to $500, 000, but business entities and tribal enterprises my apply for more.

Potential borrowers can apply with any lending institution, they just have to use the Indian Affairs application. If the funds are used for construction, renovation, or refinancing, there are additional requirements. Generally, a list of collateral, a credit report, and an analysis of business operations are required.

Camino Financial

They are an online lender that offers minority-owned businesses loans and business solutions. They process all of their lending online, which makes it easy and convenient. Their microloans range from $5,000 to $50,000. They also offer small business loans between $10,000 to $400,000.

There is no collateral requirement. Also, you can pay off the loan any time with no penalties or fees. Pre-qualification happens within 24 hours, and since all documents are submitted online, you do not have to make unnecessary trips to turn in or sign papers.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Other Options for Minority Business Loans

If you do not qualify for any of those already mentioned, or if you need more funding than what you can get with them, you may need a plan B. There are other options out there, but first you should know that traditional big banks are probably not on the list.

Why Big Banks Probably Will Not Work

Big banks are what most people think of as the first stop when it comes to getting a loan. That is true for some, but for most small business owners they are not the way to go. This is true whether they are looking for minority business loans or business loans in general.

Here’s why:

● Small businesses represent small loans with higher failure rates than larger businesses. Most are not at ease lending to companies with less than $1 million in sales.

● Big banks like collateral, and small businesses are less likely to have sufficient collateral for the loans they need. They are more likely to be leasing assets than larger businesses may own and offer as collateral.

● They also like to see a personal credit score of at least 680. Many small businesses, especially those that are less than 3 years old, do not have this.

So, what are small businesses to do if they need funding? What if the specific minority business loans are not enough? Consider these other options.

Community Banks: Minority Business Loan Heroes

Community banks can be a great option. They are more easily accessible to small businesses in general. They tend to have better customer service and care more about the people involved than the bottom line. Often, they are more interested in building relationships with their lenders than their big bank counterparts are. However, their rates and terms are typically just as good as those with the larger lenders.

The downside is, as a brick and mortar financial institution they are still going to be slow. You will have to make multiple trips to the bank, and the whole process can be kind of long and drawn out.

The Small Business Administration

The Small Business Administration, or SBA, offers a number of options for minority business loans. They do not lend funds themselves, but rather work with lenders to offer security, so that they can make loans to those business owners that may be considered higher risk than what they would normally consider approving.

SBA Community Advantage loans:

Community advantage loans from the SBA are designed for businesses in underserved communities that need less than $250,000. You can find lenders that work with the SBA on this program using the SBA Lender Match tool.

SBA microloans

They also have microloans available of up to $50,000. These are offered through nonprofit organizations. With interest rates ranging from 8% to 13% and maximum repayment terms of six years, they can work well for those need minority business loans

One of the SBA’s partners in this program is The Opportunity Fund. According to them, of its borrowers, 90% are minority business owners.

SBA 8(a) business development program

If you are a small business interested in government contracts, an 8(a) certification can help. Your business must be at least 51% controlled by individuals that are “socially and economically disadvantaged.” This includes minorities, veterans, and women.

SBA 7 (a) Loans

These are not specifically for minorities, but they are available to minorities as well as everyone else. They are 10-year loans of $30,000 to $350,000. Rates range from 9.7% to 11.04%, and they can turn around in as little as seven days, though they more often take up to several weeks.

Alternative Lenders and Minority Business Loans

While not necessarily only for minorities, many alternative lenders offer loans that meet the challenges often faced by those seeking business loans. One of the greatest issues for small business owners when it comes to small business financing is credit score. The following loans are available with a lower credit score than what is typically required by traditional lenders.

Fundbox

There is no minimum credit score, but if you have at least $50,000 in annual revenue you can qualify for a line of credit from Fundbox. You also need to be in business for at least 3 months. Amounts range from $1,000 to $100,000 with rates from 10.1% to 79.8%. Terms are for 12 weeks, and you can have your funds as quickly as the next business day.

Kabbage

Another lender that will make loans on credit scores as low as 500 is Kabbage. Terms are for 6, 12, or 18 months and amounts range from $2,000 to $250,000. Interest rates are higher, at 24% to 99%. Funding can take several days, but sometimes happens in just a few minutes.

QuarterSpot

QuarterSpot is another option, and it is preferable for many as the terms go up to 18 months. Loans range from $5,000 to $250,000, but rates are pretty high at 30% to 70%. Approval can happen in as little as 24 hours.

Credibility Capital

Loans with Credibility Capital range from $50,000 to $400,000. Terms are for 1,2, or 3 years, and rates range from 10% to 25%. Funding usually takes around 7 days.

SmartBiz

SmartBiz offers low cost financing for expansion. These are SBA loans, but with SmartBiz funding happens a lot faster than with traditional banks. In fact, they can take a few weeks rather than a few months.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Business Credit is Better

These minority business loans are heavily dependent on personal credit scores. That’s well and good, and if you qualify and need funding now, go for it. Regardless of whether or not you qualify for these loans however, you need to be building business credit.

Business credit is credit that is not connected to your personal credit score. It is based on the merits of your business alone. It is much better to use business credit than personal credit to fund your business. For one thing, if your business goes bust, your personal credit will not be affected directly. However, handling business transaction using your personal credit can negatively affect your credit score even if you make all of your payments on time.

This is due to the fact that, by nature, personal credit limits are lower than business credit limits. At the same time, business transactions are more expensive than personal ones. This means that if you fund business transactions on personal credit, you will always be close to maxing out your credit. That raises your debt-to-service ratio, which in turn lowers your credit score.

How Do You Get Business Credit?

The first step is to make your business look fundable. That means separating it from yourself in all ways possible. There needs to be a business address that is separate from your own, as well as a dedicated business telephone number through a toll-free exchange.

In addition, you need to incorporate. That means choosing between a corporation, s-corp, or LLC. A sole proprietorship or partnership will not work for business credit building. Next, apply for and EIN. It functions similarly to an SSN, but for your business.
There are a ton of other steps to establishing business credit, but these will give you a great start.

Don’t Give Up on Minority Business Loans

One thing is for certain, there are a ton of options out there for minority business loans. The only catch is that not all of them will work well for every minority owned business. We have given you enough to get you started, now get moving figuring out which ones will work for you. In the meantime, start building business credit so you can fund your business using its own credit and not your personal credit.

The post The Tale of Elusive Minority Business Loans: Where to Find Them and What It Takes to Get Them appeared first on Credit Suite.