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. However, many alternative lending sources, like nonprofit organizations and online lenders, offer small-business loans specifically to minority-owned businesses.
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What is a business loan for minorities?
A business loan for minorities is a loan targeted toward members of minority communities and is intended to help them access capital when they may not otherwise be able to.
A business is typically considered to be minority-owned if it’s at least 51% owned and operated by a person 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.
Did you know...
Getting certified as a minority-owned business can open up additional financing and networking opportunities for you and your 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 Oct. 31, 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.
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 (CDFIs) are banks, credit unions and other institutions that provide financial access, including loans, to minorities or 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.
Online lenders
Online business lenders tend to have more flexible eligibility requirements than traditional banks, and many target funding access to minority-owned businesses or other underserved communities. Some online lenders work with startups or borrowers with bad credit. While minority applicants have a better chance of getting approved with online lenders than banks, the loan will likely cost more.
Best minority business loans
| Product | Max loan amount | Min. credit score | |
|---|---|---|---|
 SBA 7(a) loan with NerdWallet Small Business | $5,000,000 | 650 | with NerdWallet Small Business |
 Fora Financial - Online term loan Nerdwallet Rating with NerdWallet Small Business | $1,500,000 | 570 | with NerdWallet Small Business |
| SBA microloan with NerdWallet Small Business | $50,000 | 620 | with NerdWallet Small Business |
 Giggle Finance - Merchant cash advance with NerdWallet Small Business | $15,000 | 300 | with NerdWallet Small Business |
 Huntington National Bank Lift Local Business Program | $150,000 | Undisclosed | |
 Accion Opportunity Fund Small Business Working Capital Loan Nerdwallet Rating with NerdWallet Small Business | $250,000 | 620 | with NerdWallet Small Business |
A closer look at our picks for the best minority business loans
SBA 7(a) loans
Best for established businesses
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. So far in fiscal year 2025, the SBA’s 7(a) program has loaned more than $5 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 lender, 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 makes 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.
Read our full Fora Financial review.
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.
Giggle Finance
Best for self-employed individuals
How it benefits minority business owners: Giggle Finance’s same-day funding can be a lifeline for minority freelancers, contractors or self-employed individuals. It requires $18000 in annual revenue, 3 months in business and has no minimum credit score requirements.
Be mindful of: Giggle’s loans are merchant cash advances (MCAs) which tend to be one of the most expensive forms of financing. Even though it doesn’t offer large funding amounts, the cost of financing and daily required payments could trap you in a bad cycle of debt.
Read our full Giggle Finance 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. So far in FY 2025, Huntington has funded over 3,500 SBA 7(a) loans totaling over $850 million. 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 need more money.
» MORE: Best business loans for veterans
Accion
Best for minority women
How it benefits minority business owners: Accion is a nonprofit community development financial institution 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.
Alternative funding options for minority business owners
- Grants for minority entrepreneurs. The government and private organizations offer small-business grants for minorities. Opportunities often vary drastically from state to state.
- Venture capital. Venture capital firms are investment companies that fund startups and entrepreneurs in exchange for a percentage of ownership in your business. Firms like Oakland-based Kapor Capital and Harlem-based Harlem Capital are dedicated to closing the gap in venture capital that many minority-owned businesses experience.
- Self-funding. Self-funding, also known as bootstrapping, is another option to fund your business, if you have enough money in savings. You may also consider Rollovers as Business Startups (ROBS) transactions, which allow you to use retirement savings to fund your company. With self-funding you can save money on interest and avoid diluting your ownership; however, you are at risk of losing your own money if your business fails.
» MORE: Business grants for Black women
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 to supporting minority-owned businesses. It offers 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 — 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 SBA’s Office of Native American Affairs provides free resources and technical assistance to American Indian, Alaskan Native or Native Hawaiian small-business owners. |
Frequently Asked Questions
What is a minority business loan?
Loans for minority-owned businesses can be referred to as minority business loans. The term can be used to designate lending programs that support funding for minority-owned small businesses and entrepreneurs from underserved communities.
What qualifies as a minority-owned business?
Typically, a business is defined as minority owned when an American citizen who is at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic or Native American has at least 51% ownership in the enterprise. This definition can vary based on the organization.
Are there benefits in getting certified as a minority-owned business?
Minority-owned business certification is not typically required to obtain a loan, but it can be helpful in securing business opportunities with large companies or government agencies.
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- 1. Federal Reserve. 2024 Report on Employer Firms: Findings from the 2023 Small Business Credit Survey. Accessed Apr 1, 2025.
- 2. U.S. Small Business Administration. 7(a) & 504 Summary Report. Accessed Apr 1, 2025.
- 3. U.S. Small Business Administration. 7(a) & 504 Lender Report. Accessed Apr 1, 2025.
