Small businesses are vital to economic prosperity for countless reasons. Still, often the journey to business ownership requires an influx of capital when you’re starting when you’re scaling up, or when you’re simply weathering an economic shift.
Unfortunately, many entrepreneurs in minority communities may have trouble obtaining the investment capital to compete during a market where financial assistance isn’t always unbiased. This is where specific grants for minority-owned small businesses play a crucial role.
When angel investors and bank loans aren’t practical and plentiful, grants offered by public for-profit and nonprofit institutions to small business owners provide funding to sustain and expand companies with the bonus of not having to be repaid.
Small Business Grants for Minority Entrepreneurs
According to Black Enterprise, several grants are available specifically for minority-owned businesses—but don’t miss out on a number of the overall grant opportunities either.
You can inquire Businessgrants.com or Grants.gov using keywords for your business, including “minority-owned,” to seek out grants tailored toward funding your sort of business. See a few of the suggestions below.
- The National Association for the Self-Employed (NASE) Growth Grants Program lets business owners apply for financing a particular small business need. Past recipients used funds to get computers, hire part-time help, and make marketing materials.
- The Dare to Dream Grant Program encourages students to move through the business creation process by offering business development seminars and up to $10,000 in funding.
- The Miller Lite Tap the longer term Business Plan Competition (formerly referred to as the MillerCoors Urban Entrepreneur Series) is an annual competition for minority business owners sponsored by Miller Lite. Designed to economically empower minority businesses, the program continues to invest in entrepreneurial dreams to build up urban communities.
- DBE DOT Disadvantaged Business Enterprise, this program is to ensure non-discrimination regarding the administration and award of the Transportation department -assisted contracts in the department’s transit, highway, airport, and highway safety financial assistance programs.
- The FedEx Small Business Grant Contest is a nationwide competition that awards $50,000 in total to six deserving U.S.-based entrepreneurs and business owners.
But if the town you call home doesn’t have a minority-focused initiative for little business grant opportunities, take a glance at the choice below. The grant programs listed here aren’t limited to residents during a specific U.S. state or territory—and all aren’t necessarily minority-only grants—but all of the grants listed below are great for minority small business owners looking to start, sustain or improve their enterprises.
Minority Business Development Agency (MBDA)
Despite the large pool of eligible applicants for the MBDA’s cooperative agreements (AKA project grants), the agency awards prizes throughout the year to selected minority-owned businesses that can be renewed after the successful completion of the initial project.
Native American Business Development Institute (NABDI) Grant
Although it’s difficult to work out what proportion grant money is awarded for the NABDI program, funded by the U.S. Department of Indian Affairs, its primary goal is clearly to empower the economic process of Native American and Alaska Native business owners with a dedication to uplift their community and grow their financial security.
Community Programs to Improve Minority Health Grant Program
The Department of Health and Human Services, in seeking to address health disparities of minority communities, awards businesses and organizations working to improve the health issues in historically disenfranchised populations.
Who Qualifies as a Minority-Owned Small Business?
From tech innovators in rural areas to savvy military veterans in the disabled community, entrepreneurs of underrepresented populations are in no short supply. However, minority-owned businesses are typically defined as companies employing 50 persons or less, majority-owned by a minority group member, because it relates to race, ethnicity, gender, physical disability, or other socioeconomic designation.
Tips for getting a minority business loan
Whether you’ve struggled to get financing or are just thinking about getting a loan for the first time, some strategies will help improve your chances of getting the funding you need.
Create a business plan
Writing a business plan is an important step. The business plan will act because of the roadmap for your business. Be sure to supply specific information within the plan about your minority business and the way it’ll improve the economy and your community.
Read through grant-information thoroughly.
Once you’ve got decided which grant you’ll apply for, confirm that you simply read through all of the knowledge. This will ensure that you have all of your ducks in a row. Most grant synopsis’ are detailed and need tons of specific information.
Keep track of the application deadline.
It’s important that you do not miss the deadline. So be sure to apply for the grant before the deadline. A good idea would be to make a project checklist that incorporates dates and milestones. It’s a good idea to submit the grant before the deadline approaches.
Gather all of your documents.
Make sure you gather all of the documents required for the grant. Prepare a checklist, check, and double-check. You do not want to have any missing documents that may cause the grant to be denied.
Find the right lender.
Your local SBA district office will be able to provide you with information on community and national banks. They also have a wealth of information on loan eligibility and application requirements.
Learn how to prepare a loan proposal.
When applying for a minority commercial loan, you ought to expect to organize a loan proposal. These documents consist of personal and business financials that prove your net worth, sales projects, and general information about your business. Be prepared to provide:
- Financial statements
- Certifications and licenses
- Loan application history
- Income tax returns
- Business history
- Leasing information
- Personal background statements
The SBA offers free online courses on how to complete a loan proposal and other application requirements, as well as loan application checklists to help guide you through the process.
Many business owners, whether they are minorities or not, are turned down for business loans. Don’t get discouraged. If you do get turned down, don’t let this be a deterrent. However, make sure you find out the specifics on why your application was denied. This can help you as you move forward with future applications.
Decide on a minority business loan.
Once you’ve decided that you’re able to apply for a minority commercial loan or other sorts of financing for your business, it’s smart to work out exactly what proportion you’ll require and how to allocate the funds. To preserve your credit and improve your chances to grow your business successfully, it makes good sense to borrow only as much as you need and to have a very clear strategy for a way you’ll pay back what you’ve got borrowed.
As well, you will want to understand the terms of the loan completely. This includes amortization (the monthly payments of principal and interest), whether or not there is a balloon payment or prepayment penalty, and any collateral that will be required to secure the loan. Being a savvy lender who knows the options and understands the terms is the best way to borrow money successfully.
As a minority business owner, you’ve got an incredible amount of lending options and resources to assist you on your path to entrepreneurial success. Whether you choose a government program, a commercial bank, or other private lending sources, you can obtain the funds you need to achieve your goals. The first step is to ask for help and acquire information from a variety of sources to find out what is right for you and your business. With the facts in hand, you’ll be ready to get the proper loan and leverage the funds to the simplest of your ability.
There are many resources, including business membership alliances, networking groups, and specific industry organizations that provide specific assistance for minority business owners.
The National Minority Supplier Development Council (NMSDC)
It is the organization that was created to supply increased procurement and business opportunities for minority businesses of all sizes. The Council advances business opportunities to minority-owned businesses and connects them with corporate members.
The NMSDC has regional councils across the country and 1,750 corporate members that include most of the most important top publicly-owned, privately-owned, and foreign-owned companies, also as hospitals, universities, and other buying institutions. The Regional Councils have matched quite 12,000 minority-owned businesses with member corporations that want to get their products and services.
Other resources for advice include:
- The U.S. Hispanic Chamber of Commerce
- The US Pan Asian American Chamber of Commerce
- The National Black Chamber of Commerce
There also are professional organizations (for example, the Alliance of Business Leaders and Entrepreneurs in Chicago) that help connect black entrepreneurs with decision-makers at corporations.
Even though there are an abundant number of minority-owned businesses (and much more growing), funding is often harder to attain for these businesses. Fortunately, grants, resources, and online lending help bridge this gap for minority-owned businesses to grow and succeed.