According to a 2012 survey by the US Census Bureau, there were 5.8 million minority business owners in the United States, a 39% increase from 2007. Further, employment at minority-owned firms jumped 33% to 7.7 million, a clear indication that minority business enterprises (MBEs) are an important part of the American economy.

Despite this fantastic growth, the Census Bureau reported that there is a considerable revenue gap between MBEs (which averaged $196.000 in 2012) and non-minority businesses (which averaged $650,000 during the same time period).

It’s clear that cash flow is a concern for MBE owners. Thankfully, there are a number of key funding initiatives that are specifically for MBEs in the form of government agencies and non-profit organizations.

Government Agencies

There are a number of government agencies (at both the federal and local level) that offer funding specifically for MBEs.

Small Business Administration (SBA) programs

While the SBA, as a government body, doesn’t actually loan out its own capital, it does partner with private lenders to underwrite different types of loans, thereby reducing the risk and making such loans more feasible and accessible.

Though the 7(a) loan program is the SBA’s most popular, it’s not specifically for MBEs. However, entrepreneurs that control a majority stake in a MBE should consider applying for the 8(a) Business Development Program, which not only helps such entrepreneurs qualify for a highly competitive 7(a) loan, but also provides vital assistance in securing contracts and essential business expertise.

Another helpful program is the SBA’s Community Advantage Initiative, which helps MBEs in underserved communities access 7(a) loans of up to $250,000. Essentially, this initiative empowers lenders at the community level to offer 7(a) loans.

For more information, reach out to your SBA office or Small Business Development Center (SBDC).

Minority Business Development Agency (MBDA)

An arm of the US Department of Commerce, the MBDA serves similar functions as the SBA, albeit with a focus on MBEs. Though the MBDA doesn’t necessarily give loans or grant capital, it does assist minority entrepreneurs in finding capital, business partners, contracts, and private equity.

Government grants

While government grants are essentially free capital, they are hard to qualify for given their stricter criteria and specialist niche. For instance, while the USDA’s Rural Business Opportunity Grant (which gives up to $100,000) isn’t necessarily minority-focused, many of its grantees are Native Americans on reservation lands.

Nonprofit Organizations

Nonprofit lenders tend to be privately-funded, non-governmental organizations. Though many people think of such nonprofit lenders as being only present in developing nations (think microloans in rural India, for instance) such groups do exist in the United States.

Accion

An international network of nonprofit lenders, Accion-affiliated lenders provide small business loans up to $300,000. While Accion is not necessarily for MBE owners specifically, their stated mission is to help entrepreneurs who have difficulty finding capital through traditional means (such as banks).

For-profit Lenders

Union Bank

Through its Diversity Lending Program, Union Bank provides loans of up to $2.5 million for MBE owners. Because it uses the same classification for minorities as government bodies like the Census Bureau, the Diversity Lending Program is compatible with most MBE certifications. Best of all, Union Bank offers a wide range of products for different needs, including secured and unsecured loans with fixed or variable-rate financing.

The National African American Small Business Loan Fund (NASBLF)

Founded as a joint venture between the Valley Economic Development Center (VEDC) and JP Morgan Chase, the NASBLF offers African-American entrepreneurs access to loans of up to $250,000, as well as technical assistance in areas like marketing, networking, and business development. Unfortunately, this loan fund is only concentrated in major cities (New York, Chicago, and Los Angeles).

Business capital, especially for underserved communities and minorities, should not be a barrier to business growth and expansion. Towards that end, there are a host of governmental agencies, nonprofit organizations, and other types lenders that seek to address the funding gap between MBEs and non-minority businesses.


Meredith Wood is the Head of Content and Editor-in-Chief at Fundera, an online marketplace for small business loans. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith manages financing columns on Inc, Entrepreneur, HuffPo and more, and her advice can be seen on Yahoo!, Daily Worth, Fox Business, Amex OPEN, Intuit, the SBA and many more.