Does your business need funding? Find your best loan options with Fundera by NerdWallet.

You’re our first priority.
Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.

Best Of

4 Best Small-Business Loans for Minorities of August 2021

Minority business owners should compare financing options but may have more success with an online lender.

Steve NicastroFebruary 19, 2021
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Minority business loans are available from many lenders. But getting funding from a traditional financial institution may be tougher for minorities than other business owners due to issues like insufficient credit, limited banking history and unconscious bias.

More success may be possible with alternative sources, such as nonprofit organizations and online lenders. In fact, a 2019 report from the Federal Reserve found similar approval rates for white- and Black-owned businesses among online lenders, which was not the case for banks.

To get the best deal possible, be sure to compare all your small-business loan options. But here are some small-business loans that may be a good fit for minorities, plus other financing options and resources — including grants and certifications — for minority-owned businesses.

How Much Do You Need?

with Fundera by Nerdwallet

Our pick for

Businesses with good credit

A credit score in the high 600s can unlock additional funding options.

See Your Loan Options

with Fundera by Nerdwallet

Credibility Capital - Online term loan

See Your Loan Options

with Fundera by Nerdwallet

Est. APR

6.99 - 24.99%

Depending on your creditworthiness and your business's financials

Min. Credit Score

650

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Pros

  • Competitive rates among online lenders.
  • No prepayment penalty.
  • Extra monthly payments can save interest cost.

Cons

  • Requires high minimum credit score and revenue.
  • Requires business lien and may require personal guarantee.
  • Not available in Nevada, North Dakota, South Dakota or Vermont.
Read full review

Qualifications:

  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $200,000.
  • No bankruptcies in the past 5 years.

Our pick for

Businesses with unpaid customer invoices

Approval for invoice factoring typically depends on the strength of your customers — such as whether they pay on time.

See Your Loan Options

with Fundera by Nerdwallet

BlueVine - Invoice factoring

See Your Loan Options

with Fundera by Nerdwallet

Est. APR

15.00 - 68.00%

Depending on your creditworthiness and your business's financials

Min. Credit Score

530

BlueVine's invoice factoring can turn unpaid customer invoices into fast cash.

Pros

  • Finances larger invoices.
  • Cash can be available within the same day.
  • Accepts low minimum credit score and short time in business.

Cons

  • Not for businesses that do not invoice on net terms.
  • Loan amount is tied to the value of your invoices.
  • Dependency on customers to pay their bills on time.
Read full review

Qualifications:

  • Minimum credit score: 530.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $120,000.

Our pick for

Government-backed loans

Minority business owners aren't approved as often for government-backed loans, but these loans offer low rates and flexible terms if you can qualify.

See Your Loan Options

with Fundera by Nerdwallet

Top SBA Lenders

See Your Loan Options

with Fundera by Nerdwallet

Max Loan

$5k - $5M

Terms

5 - 25 years

Est. APR

Starting at 5.5%

Speed

As fast as 2 weeks

SBA loans work best for established businesses that prioritize low lending costs over funding speed.

Pros

  • Lowest down payments.
  • Longest payment terms.
  • Reasonable interest rates.

Cons

  • More paperwork than online term loans.
  • Longer approval time.
  • May require collateral.
Learn more

Qualifications:

  • Be a U.S. business.
  • Must first use alternative financial resources, including personal assets.
  • Approved SBA lenders will almost always have credit score minimums between 620-640.
  • Average successful applicant has an annual revenue of over $180,000.

Our pick for

Businesses with insufficient credit history

Online lenders may have lower credit score requirements — sometimes as low as a FICO score of 500 — compared to banks.

See Your Loan Options

on Fundbox's secure website

Fundbox - Line of credit

See Your Loan Options

on Fundbox's secure website

Est. APR

10.10 - 79.80%

Depending on your creditworthiness and your business's financials

Min. Credit Score

600

Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.

Pros

  • Cash can be available by the next day.
  • Low minimum credit score requirement.

Cons

  • Rates are high compared to traditional banks.
Read full review

Qualifications:

  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $100,000.

How Much Do You Need?

with Fundera by Nerdwallet

Summary of Best Small-Business Loans for Minorities of August 2021

LenderBest ForEst. APRMin. Credit ScoreNext Steps

Top SBA Lenders

Best for Government-backed loansStarting at 6%620
See Your Loan Options

with Fundera by Nerdwallet

Credibility Capital - Online term loan

Best for Businesses with good credit6.99 - 24.99%650
See Your Loan Options

with Fundera by Nerdwallet

BlueVine - Invoice factoring

Best for Businesses with unpaid customer invoices15.00 - 68.00%530
See Your Loan Options

with Fundera by Nerdwallet

Fundbox - Line of credit

Best for Government-backed loans10.10 - 79.80%600
See Your Loan Options

on Fundbox's secure website

What is a minority-owned business?

A business is typically considered to be minority-owned if it’s at least 51% owned and operated by people of specific ethnicities. For example, to be considered a minority-owned business in New York, business owners must be Black, Hispanic, Asian-Pacific, Asian-Indian Subcontinent, Native American or Alaskan Native.

A certification stating your business is minority-owned may be required for you to qualify for specific minority business loans or programs.

Loans for minority business owners

Banks typically offer the lowest-cost business loans, and some — such as Union Bank and Native American Bank — specifically work with minorities. But traditionally, minorities have struggled to get approved for bank small-business loans.

If you’re a minority business owner, you may instead want to consider:

  • Online loans. Alternative online business loan lenders tend to have looser eligibility requirements than traditional banks, and may focus more on criteria like your cash flow than your credit. Loan amounts range from about $1,000 to $5 million. Minority applicants have a better chance of getting approved with online lenders than banks, according to the Federal Reserve, but your loan will likely cost more.
  • SBA Community Advantage loans. The U.S. Small Business Administration backs many types of SBA loans, which banks and other lenders issue. The Community Advantage program is for businesses located in underserved communities that need $250,000 or less. The SBA works with local, mission-based lenders to provide the financing. Use the SBA Lender Match tool to find loan providers near you.
  • Microloans. The SBA offers microloans of up to $50,000 through nonprofit organizations. Its partners include The Opportunity Fund, which says 86% of its borrowers are minority business owners, and Accion, which draws more than 60% of its borrowers from minority communities. You can find providers in your state on the SBA website. Contact your local SBA district office for assistance.
  • Community development financial institutions. CDFIs are banks, credit unions and other institutions that provide financial access, including loans, to minorities and other economically disadvantaged communities. For example, The National Minority Supplier Development Council Business Consortium Fund is a CDFI that provides minority business loans from $100,000 to $750,000. You can find a CDFI in your state with this tool.

Additional help for minority businesses

  • SBA 8(a) business development program. The SBA 8(a) program does not offer loans. Rather, it’s a certification that can help small businesses interested in government contracting improve their chances of winning bids. To qualify, your firm must be 51% controlled by “socially and economically disadvantaged individuals,” which includes minorities, women and veterans.
  • Small-business grants. The government and private organizations offer grants and awards to minority-owned businesses. Opportunities often vary drastically from state to state, but here are some minority small-business grants to consider.
  • Free community resources. Many federal resources have regional or local offices, such as the small business development centers and Minority Business Development Agency offices. These resources may be able to provide information on community financing, look over your loan applications and offer mentorship and networking opportunities.
  • SCORE. Though it’s not specifically geared toward minority business owners, SCORE is a free volunteer program that connects entrepreneurs with seasoned business mentors who have a wealth of knowledge about business funding challenges.

If your business has been open less than a year

Funding options are limited for small businesses that have less than one year of operating history — regardless of the owner’s background.

Lenders typically prefer established businesses with a track record and operations that produce more than enough cash flow to support loan repayments, which tends to disqualify young businesses. The good news: You still may be able to finance your startup.

If you have strong personal credit, for instance, a personal loan for business is a viable option since most personal loans are unsecured. may be available but are usually expensive. Startup business loans for bad credit may be available but are usually expensive.

Business credit cards, too, may also offer financing for minority business owners starting out or those looking for working capital.

Compare small-business loans

When shopping for loans, be sure to compare annual percentage rates, or APRs, which indicate the true cost of borrowing including all fees. Use NerdWallet’s business loan calculator to figure out your monthly payment and total interest costs, and see loan options based on your credit score.

NerdWallet’s small-business loans comparison tool can also help you compare options. We gauged lender trustworthiness, market scope and user experience, among other factors.

Last updated on April 29, 2021

To recap our selections...

NerdWallet's Best Small-Business Loans for Minorities of August 2021

Frequently Asked Questions

Two new laws provide coronavirus relief for small businesses and the self-employed, including access to forgivable small-business loans under the Paycheck Protection Program and immediate emergency funds.

To qualify as a minority-owned business, your company must be owned and controlled at least 51% by a minority. That could include someone who is Asian, Black, Hispanic, Native American or part of a different ethnic group.

The U.S. Department of Agriculture, National Association for the Self-Employed and the Minority Business Development Agency are just a few organizations providing small-business grants for minorities.

Does your business need funding? Find your best loan options with Fundera by NerdWallet.

See Your Loan Options