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Best Business Loans for Minority Business Owners

By Randa Kriss
Last updated on November 22, 2024
Edited by Sally Lauckner
Fact checked and reviewed
Minority entrepreneurs can use these small-business loans and other resources to grow their operations.

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Minority business loans are intended to increase access to capital for Asian-, Black-, Hispanic- and Native American-owned small businesses. In 2023, minority-owned businesses were nearly half as likely to be approved for financing than white-owned firms, according to findings released by the Federal Reserve in 2024 .
Many alternative lending sources, like nonprofit organizations and online lenders, offer small-business loans specifically to minority-owned businesses. Such products tend to have more flexible qualification requirements than traditional loans, and may require you to submit a certification stating your business is minority-owned.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 8 minority business loans

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

SBA 7(a) loan

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Best for SBA loans

$5,000,000650

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Fora Financial - Online term loan

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4.8/5

Best for startups or bad credit

$1,500,000570

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iBusiness Funding - Online term loan

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4.6/5

Best for established businesses

$500,000640

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SBA Microloan

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Best for loan amounts of $50,000 or less

$50,000620

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OnDeck - Online term loan

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4.9/5

Best for fast business loans

$250,000625

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Wells Fargo Small Business Advantage® Line of Credit

Read Review
4.9/5

Best for bank business loans

$50,000680
Read Review

Accion Opportunity Fund - Small Business Working Capital Loan

Read Review
4.8/5

Best for minority women

$250,000600
Read Review

Huntington National Bank - Lift Local Business Program

Read Review

Best for minority veterans

$150,000Undisclosed
Read Review

Here are 8 minority business loans

Best for SBA loans

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for startups or bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

570

Best for established businesses

iBusiness Funding

Max Amount

$500,000

Min. Credit Score

640

Best for loan amounts of $50,000 or less

U.S. Small Business Administration

Max Amount

$50,000

Min. Credit Score

620

Best for fast business loans

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for bank business loans

Wells Fargo

Max Amount

$50,000

Min. Credit Score

680

Best for minority women

Accion

Max Amount

$250,000

Min. Credit Score

600

Best for minority veterans

Huntington National Bank

Max Amount

$150,000

Min. Credit Score

Undisclosed

I'M INTERESTED IN:

Our pick for

SBA loans

SBA 7(a) loans offer competitive rates and terms and can be used for a variety of funding needs. In fiscal year 2024, minority business owners received almost $10 billion in 7(a) loans.

SBA 7(a) loan

Read Review

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Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%

Pros

  • Large borrowing maximums.
  • Interest rates are capped.
  • Long repayment terms available.

Cons

  • Collateral is typically required.
  • Longer processing times than online lenders.
Low interest rate

SBA 7(a) loan

Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%
Low interest rate

Our pick for

startups or bad credit

If you have a credit score of 500 or higher and at least six months in business, you may be able to qualify for a short-term loan from Fora Financial.

Fora Financial - Online term loan

Read Review

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Max loan amount
$1,500,000
Min. credit score
570

Pros

  • Cash can be available quickly.
  • Get a discount for prepaying.
  • No collateral required.
  • Low minimum credit score requirement.

Cons

  • Charges a factor rate that makes it more difficult to compare costs with other lenders.
  • Can’t build business credit.
  • Longest loan term is 18 months.
  • Charges an origination fee.

Fora Financial - Online term loan

NerdWallet rating 
4.8/5
Max loan amount
$1,500,000
Min. credit score
570

Our pick for

established businesses

Established businesses with strong credit may qualify for an online small-business loan with terms up to seven years. Funding can be available within two business days.

iBusiness Funding - Online term loan

Read Review

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Max loan amount
$500,000
Min. credit score
640
Est. APR
15.22-45.00%

Pros

  • Cash can be available within two business days.
  • Competitive rates among online lenders.
  • Terms up to seven years.
  • iBusiness Funding also offers SBA loans up to $5 million.

Cons

  • Charges an origination fee.
  • Must be in business for a minimum of 24 months.
  • Minimum credit score is higher than some other lenders.
May fund quickly

iBusiness Funding - Online term loan

NerdWallet rating 
4.6/5
Max loan amount
$500,000
Min. credit score
640
Est. APR
15.22-45.00%
May fund quickly

Our pick for

loan amounts of $50,000 or less

SBA microloans offer smaller loan amounts and more flexible qualification requirements compared to other SBA loan programs. In the 2024 fiscal year, 47% of SBA microloans went to minority-owned businesses, including Black- and Asian-owned businesses.

SBA Microloan

Read Review

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Max loan amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%

Pros

  • Can be used for a variety of funding purposes.
  • Designed to finance traditionally underserved businesses.
  • Startups and business owners with bad credit may be able to qualify.
  • Competitive interest rates, low fees and long repayment terms.
  • Intermediaries typically offer business training and educational resources.

Cons

  • Loan amounts max out at $50,000.
  • Can’t be used to pay existing debt or purchase real estate.
  • Collateral is likely required.
  • Slow funding timeline.

SBA Microloan

Max loan amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%

Our pick for

fast business loans

OnDeck offers short-term loans that can fund as quickly as the same day for business owners who may need to capitalize on a limited opportunity. These loans are good for specific, one-time purchases.

OnDeck - Online term loan

Read Review

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Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%

Pros

  • Cash can be available within the same business day (does not apply in California or Vermont).
  • Accepts borrowers with a minimum credit score of 625.
  • Streamlined application process with minimal documentation required.
  • Can be used to build business credit.

Cons

  • Cannot fund North Dakota-based businesses.
  • Requires frequent (daily or weekly) repayments.
  • Interest rates can be high compared with traditional lenders.
  • Charges origination fee.
May fund quickly

OnDeck - Online term loan

NerdWallet rating 
4.9/5
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
May fund quickly

Our pick for

bank business loans

Wells Fargo’s unsecured line of credit is designed for companies with less than two years in business and may be easier to qualify for than other bank loans.

Wells Fargo Small Business Advantage® Line of Credit

Read Review
Max loan amount
$50,000
Min. credit score
680
Est. APR
12.25-13.25%

Pros

  • Bank line of credit (backed by the SBA) with competitive interest rates.
  • No annual fee or prepayment penalties.
  • Available to borrowers with less than two years in business.
  • Does not charge an origination fee.

Cons

  • May take longer to fund than online lenders.
  • Credit lines only available up to $50,000.
  • Need a Wells Fargo checking account to access online bill pay.

Wells Fargo Small Business Advantage® Line of Credit

NerdWallet rating 
4.9/5
Max loan amount
$50,000
Min. credit score
680
Est. APR
12.25-13.25%

Our pick for

minority women

Accion is a nonprofit lender that primarily issues loans to business owners in traditionally underserved communities, including women and people of color.

Accion Opportunity Fund - Small Business Working Capital Loan

Read Review
Max loan amount
$250,000
Min. credit score
600
Est. APR
8.49-24.99%

Pros

  • Loan amounts from $5,000 to $250,000.
  • Customized loan terms.
  • No prepayment penalty.

Cons

  • Slower processing speed compared with online lenders.
  • Charges an origination fee.
  • Not available in all U.S. states.

Accion Opportunity Fund - Small Business Working Capital Loan

NerdWallet rating 
4.8/5
Max loan amount
$250,000
Min. credit score
600
Est. APR
8.49-24.99%

Our pick for

minority veterans

Huntington Bank’s Lift Local Business Program offers loans between $1,000 and $150,000 to minority-, women- and veteran-owned businesses at any stage of growth.

Huntington National Bank - Lift Local Business Program

Read Review
Max loan amount
$150,000
Min. credit score
Undisclosed

Pros

  • Loans starting as low as $1,000.
  • No origination fees.
  • SBA loans offered with SBA fees paid by Huntington.
  • Free financial entrepreneurial courses.

Cons

  • Low maximum loan amounts.
  • Program only available in certain U.S. states.
  • Limited information on terms and fees available online.

Huntington National Bank - Lift Local Business Program

Max loan amount
$150,000
Min. credit score
Undisclosed

How Much Do You Need?

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A closer look at our picks for the best minority business loans

SBA 7(a) loans

Best for SBA loans
How it benefits minority business owners: The U.S. Small Business Administration says it is committed to supporting minority-owned businesses, as well as underserved small-business owners. The SBA supports efforts to equalize lending to small businesses by guaranteeing business loans through private lenders — therefore incentivizing them to lend more and at lower rates. In fiscal year 2024, the SBA’s 7(a) program loaned over $9.9 billion to minority-owned businesses.
SBA 7(a) loans can be used for a wide array of business purposes, and offer low rates and favorable terms to those who qualify. If you are a fairly established business and can afford to wait for financing, SBA 7(a) loans are a good option for you.
Be mindful of: One thing to watch out for with SBA loans is that they typically take a long time — longer than online lenders and some traditional loans — to process and be funded. Make sure you discuss the timeline of funding with your lenders, and account for it during your planning.
Read more about SBA 7(a) loans.

Fora Financial

Best for startups or bad credit
How it benefits minority business owners: Fora Financial’s minimum credit score requirement of
570
makes it a good option for minority business owners who have found that their personal credit score stands in their way of accessing capital. Fora is also unique in allowing business owners to borrow more capital once at least 60% of their loan is repaid.
Be mindful of: Fora Financial’s use of factor rates rather than APRs make its loans more expensive and difficult to compare with other options. Make sure you understand what the loan is really costing you by converting the factor rate into an APR.

iBusiness Funding

Best for established businesses
How it benefits minority business owners: iBusiness Funding, which acquired Funding Circle in 2024, offers some of the longest terms among online lenders. This allows minority business owners to make affordable monthly payments for larger, long-term purchases. Plus, you can pay off your loan early without any penalties, allowing you flexibility.
Be mindful of: Even though iBusiness Funding is an online lender, its qualification requirements are more in line with banks or other traditional lenders.

SBA Microloans

Best for loan amounts of $50,000 or less
How it benefits minority business owners: SBA microloans are typically offered through nonprofit, community lenders, and have more flexible requirements than other SBA loans. Many larger lenders don’t find it lucrative to lend in small amounts; however, if your business is forced to take more money than it needs, it can end up doing more harm than good. SBA microloans fill that gap.
In addition to funding, the SBA has several programs that support minority-owned businesses, including government contract programs like the 8(a) program, the Mentor-Protégé Program and T.H.R.I.V.E. Emerging Leaders Reimagined, which provides education and resources to businesses in underserved cities. It also partners with agencies like the Minority Business Development Agency (MBDA) and hosts initiatives at several Historically Black Colleges and Universities (HBCUs) around the country.
Be mindful of: Like other SBA products, SBA microloans can take a while to fund, so you’ll want to make sure you’ve built that into your timeline.
Read more about SBA microloans.

OnDeck

Best for fast business loans
How it benefits minority business owners: OnDeck’s streamlined and direct online application can help minority business owners access capital within the same day of applying, which is beneficial for those who may lose out on a project or asset if they can’t access fast funding. Business owners who prefer to limit in-person interactions with bankers may also opt for OnDeck’s fully online process.
Be mindful of: Before you commit to a loan with OnDeck, make sure you think about whether or not your business can support daily or weekly payments. If your clients or projects pay you once a month, you may have trouble making minimum payments.
Read our full OnDeck review.

Wells Fargo

Best for bank business loans
How it benefits minority business owners: Wells Fargo’s Small Business Advantage Line of Credit has no annual fee and can offer low rates to minority business owners who qualify based on creditworthiness. Spending on the line also qualifies for Wells Fargo’s Business Rewards Program, which can be used for card payments or to purchase merchandise.
Be mindful of: The maximum amount for this line of credit is only $
50000
. It’s best to use this loan to help cover small cash flow gaps.

Accion

Best for minority women
How it benefits minority business owners: Accion is a nonprofit community development financial institute that is dedicated to addressing financial inequity in underserved communities. It provides personalized offers and options that work best for your unique needs. Minority business owners who are new to business ownership or the loan application process may benefit from working with a specialist on a personal level.
After funding, Accion also provides a resource library plus free mentoring and coaching to its borrowers.
Be mindful of: Similar to SBA loans, small-business loans from Accion can take longer than other lenders due to its personalized process. If you don’t feel like you need a hands-on touch, you may consider other lenders that can provide a faster process.
Read our full Accion review.

Huntington Bank

Best for minority veterans
How it benefits minority business owners: Huntington Bank is consistently one of the top SBA lenders in the country. In fiscal year 2024, Huntington funded more than 7,500 SBA 7(a) loans — more than any other SBA lender — totaling over $1.54 billion in the 2024 fiscal year. The bank’s Lift Local Business Program supports minority business owners through capital access, free business education and personalized business planning support, and is available to businesses in any stage. Newer minority-owned businesses can benefit from the low fees, access to a free business checking account and free educational courses.
Be mindful of: Huntington’s Lift Local Business Program has loan maximums that are capped at $
150000
, something to be mindful of if you’re in need of more capital.

What is a business loan for minorities?

A business loan for minorities is a loan targeted toward members of minority communities, and is aimed to help them access capital when they might not otherwise be able to. Minority business loans are generally not structured differently from standard business loans, but they may be advertised toward specific communities or they may come with more lenient qualification requirements.

Who qualifies as 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, the National Minority Supplier Development Council (NMSDC), defines a minority business owner as an American citizen who is at least 25% of any of the following groups:
  • Asian-Indian. 
  • Asian-Pacific. 
  • Black. 
  • Hispanic. 
  • Native American.
Some certification agencies or lending institutions also extend their definition to other underserved groups, such as women, veterans or LGBTQ business owners.

MORE NERDY PERSPECTIVE

Should I get certified as a minority-owned business before applying for a loan?

"In a previous role, I helped minority-owned businesses access funding of all types. In my experience, getting certified as a minority-owned business isn’t necessary, as most lenders won't require you to be certified.
That said, the networking opportunities that some certification organizations offer can be invaluable. As a small-business lender, I often found myself in the same room as leaders from local and national certification agencies, like the NMSDC. I made it a point to establish a relationship with those organizations so I could be a resource for capital for their businesses.
Furthermore, many certification organizations offer networking opportunities that may help you connect with likeminded business owners who can provide helpful tips on finding and applying for business loans."
Face, Happy, Head
Olivia Chen, lead writer, Small Business

Where to get a minority business loan

SBA lenders

One of the best SBA loan options for minority-owned businesses is working with Community Advantage Small Business Lending Companies (CA SBLCs), previously Community Advantage lenders. Although the SBA Community Advantage program expired on Sept. 30, 2023, the CA SBLC license allows these lenders to issue regular 7(a) loans. CA SBLCs will continue to prioritize loans for business owners in underserved markets.

Minority depository institutions

Minority depository institutions (MDIs) are mission-driven banks that provide banking services and loans to underserved communities. They are officially defined as financial institutions whose voting stock is at least 51% owned by minority individuals, or if the majority of the board of directors is part of an underserved community and the primary community served is predominantly minority.

Online and alternative lenders

Alternative lenders, which include online lenders, are third-party lending companies that don’t hold deposits like banks or credit unions do. Alternative lenders may offer more flexibility in loan amounts and requirements than traditional banks, and many target funding access to minority-owned businesses or other underserved communities.
Online business lenders tend to have more flexible eligibility requirements than traditional banks. Some online lenders will work with startups or businesses with bad credit. While minority applicants have a better chance of getting approved with online lenders than banks, the loan will likely cost more.

Banks and credit unions

Banks and credit unions typically offer the most competitive business loans, and some — such as U.S. Bank, Huntington Bank, Fifth Third Bank and Native American Bank — offer lending programs dedicated to minority-owned businesses. Traditionally, minority business owners have faced difficulties in getting approved for small-business bank loans due to issues like unconscious bias, credit challenges or limited banking history. However, if you can qualify for a business loan from a bank, this will likely be your most affordable option.

Community development financial institutions

Community development financial institutions, or CDFIs, are banks, credit unions and other institutions that provide financial access, including loans, to minorities and other economically disadvantaged communities. Many CDFIs also utilize the SBA microloan program, and provide other resources, like counseling and networking, for minority-owned businesses.

Microlenders

Many mission-based nonprofit organizations offer microloans to local businesses, often focusing on businesses owned by minority groups, women and veterans. Microlenders typically offer small loan amounts up to $50,000. These loans can have more flexible qualification requirements, but eligibility and loan terms will vary by lender.

Additional funding sources

Other resources for minority-owned businesses

Government and nonprofit organizations may offer free assistance to minority entrepreneurs. These resources may help you gain access to alternative financing options, educational tools or advice from industry experts.
Organization
Overview
The MBDA is a federal agency dedicated exclusively to promoting the growth and competitiveness of minority-owned businesses. It operates a network of centers across the country, which offer assistance securing capital, competing for contracts and identifying new opportunities.
The NMSDC is a national nonprofit organization that — in addition to its MBE certification process — links MBEs with corporate members to promote growth and access for minority-owned businesses through its 23 regional chapters. The NMSDC also partners with lenders and offers programs in executive leadership, marketing and operations.
Business Consortium Fund (BCF) is a nonprofit business development CDFI that works with the NMSDC to develop and fund certified minority-owned small businesses, particularly those with supply-chain contracts.
SBA 8(a) business development program
The SBA 8(a) program is a certification program 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.
The SBA’s HUBZone Program is a certification program dedicated to awarding government contracts to businesses in underutilized zones, specifically designated as HUBZones. HUBZone-certified businesses are eligible to compete for contracts that are specifically set aside for small-business owners, and get a 10% price evaluation preference.
The Emerging Leaders program, an SBA Office of Entrepreneurial Development initiative, works with high-potential, established small businesses in America’s underserved cities. Participants receive customized training and networking opportunities.
The Office of Native American Affairs is an SBA office that provides resources to small-business owners with American Indian, Alaskan Native or Native Hawaiian heritage. The office offers free technical assistance in areas such as marketing, strategic planning, compliance and financial analysis.
Last updated on November 22, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
-Transparency of rates and terms -Flexible payment options -Fast funding times -Accessible customer service -Reporting of payments to business credit bureaus -Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.

Wondering if you qualify?

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