Minority-owned businesses are increasingly becoming an indispensable part of the U.S economy. These are businesses owned by underserved entrepreneurs like Latinx, Asians, veterans, Hispanics, Native Americans, and blacks. According to SBC, more than 4 million minority-owned businesses are generating $700 billion annually and creating about 4.7 million jobs. That’s huge!
Unfortunately, obtaining small business loans has never been a cakewalk for minority business owners. Being immigrants to the U.S, most merchants in this category lack proper identification documents like Social Security Number (SSN) and employer identification number (EIN).
Throw into the mix of business credit, inadequate business revenues, and collateral to secure funds, and obtaining credit becomes an uphill task for minority business owners. Banks and other traditional lenders see them as high-risk customers and refuse to lend to them.
Luckily, alternative lenders are marching into the funding gap to provide minority business owners with capital to grow their businesses. For instance, ITIN loans were created to offer financing to business owners with no credit or social security number.
Funding option for minority business owners
If you’re an immigrant without a social security number or SSN, it may be a pipe dream to obtain a loan from a bank. Look into ITIN loans from an online lender if you don’t have legal immigration status. Mostly, these loans are available to entrepreneurs with an Individual Taxpayer Identification Number or ITIN, but no Social Security Number.
Small Business Administration (SBA) loans
SBA has designated loan programs to those who qualify as minority business owners, including Asians, Hispanics, Native Americans, and African Americans. Businesses can seek low-cost loans from $500 to $500,000 from SBA. Other helpful resources under the SBA’s 8(a) Business Development program include protected access to federal contracts and training & mentorship geared towards helping minority business owners flourish in entrepreneurship.
Many state programs offer friendly financing options to minority business owners. The loans don’t require beneficiaries to have SSN or specific documents to be eligible. They seem to be favorable options for immigrants. A few of these include:
The Birmingham Strong Emergency Loan Fund
This program offers $10,000 to $25,000 interest-free loans within 180 days. Interest rates range from 3%-5% thereafter. It’s a great option for you if you are a business owner in the state of Alabama.
Chicago Small Business Resiliency Fund
If you run a small business in Chicago, you can access funding up to $50,000 with this program. You get a loan up to 3 months’ average monthly revenue that should be repaid in 60 months.
Los Angeles City Small Business Emergency Microloan Program
If you own a small business in California, take advantage of this program. You’ll access microloans from $5,000 to $20,000 at 0% to 3% interest rates.
Small business grants
While competitive, small business grants can be a game-changer in the financial needs of a minority-owned business. Top grants include:
USDA Rural Business Development Grants
Look into this option if you run a business in a rural area with a population of 50,000 and below. The program offers minority-owned business grants of $10,000 to $500,000.
Asian Women Giving Circle(AWGC) Grants
Asian American business owners can qualify for grants up to $15,000 each funding cycle.
Minority Business Development Agency (MBDA)
Run by the U.S Department of Commerce, this agency offers targeted grants and loans to minority-owned businesses throughout the year. MBDA Business Centers are also widespread throughout the U.S to help companies secure capital, contracts, and partners.
Microlenders and community development financial institutions (CDFIs)
Microlenders like The Opportunity Fund draws 86% of their borrowers from minority communities, while Accion has 60% of its borrowers as minority business owners. There are also CDFIS banks and credit unions like The National Minority Supplier Development Council Business Consortium geared towards providing financial access to underserved groups.
Fund your minority-owned business with an ITIN loan
If you can’t obtain financing through some of the ways above, your sure bet is to seek ITIN loans from online lenders like Camino Financial that provide small business loans without SSN or solid business credit.