Best business loans for minorities in December 2024

Written by
Kacie Goff
Edited by
Rob Watts
Dec 04, 2024
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Since 2016, all 12 Federal Reserve Banks have collaborated on a Small Business Credit Survey (SBCS). The results from the Federal Reserve remain consistent with numerous other studies that show minority business owners continue to lack adequate access to business financing and continue to see a greater share of loan denials and insufficient funding.

Although historically disadvantaged communities continue to face an uphill battle to get the business capital they need, some banks and financial lenders have been making an effort to combat the racial funding gap. They’re providing donations, grants, accessible loan options and programs aimed specifically at minority business owners. This focus on increasing awareness of racial disparities in business and providing access to financial capital is a necessary step to leveling the playing field.

If you’re a small business owner from an underserved community who needs financial help, check out our picks for best business loans for minorities and learn more about the financing options and additional resources available to you.

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Best for early payoff discount

4.4
Bankrate Review
Loan amount
$5k- $500K
Term: 4 - 24 months
Interest rate
Factor Rates Starting at 1.10
Fastest funding
1 business day
Apply nowArrow Right

on partner site

Best for online lender

4.6
Bankrate Review
Loan amount
$5k- $250K
Term: 3 - 24 months
Interest rate
Starting at 27.30% APR
Fastest funding
1 business day
Apply nowArrow Right

on BusinessLoans.com

Best for loan variety

4.2
Bankrate Review
Loan amount
$10k- $500K
Term: 4 - 24 months
Interest rate
Varies
Fastest funding
1 business day
Apply nowArrow Right

on partner site

Best for flexible repayments

4.6
Bankrate Review
Loan amount
$25k- $500K
Term: 6 - 84 months
Interest rate
Starting at 7.90% simple interest
Fastest funding
2 business days
Apply nowArrow Right

on BusinessLoans.com

Best for Midwest lender

4.1
Bankrate Review
Loan amount
Up to $5m
Interest rate
Not disclosed
Fastest funding
Not disclosed
Read our reviewArrow Right

on Bankrate

Best for secured credit building

4.3
Bankrate Review
Loan amount
$10k- $200K
Term: 12 - 60 months
Interest rate
Starting at 8.50%
Fastest funding
Not disclosed

Best for microloans

4.3
Bankrate Review
Loan amount
$1k–$15k
Term: 1 - 36 months
Interest rate
N/A
Fastest funding
5 business days

Best for low-interest loans

4.2
Bankrate Review
Loan amount
$5k- $250K
Term: 12 - 60 months
Interest rate
8.49- 24.99%
Fastest funding
Not disclosed

Best for unsecured lines of credit

4.2
Bankrate Review
Loan amount
$10k- $150K
Interest rate
Starting at 10.00%
Fastest funding
Not disclosed
On This Page

Compare the best business loans for minorities in December 2024

When seeking funding for a business, it is important for owners to compare lenders. Specific details such as the lender's loan products, loan amounts and time in business requirements can help minority entrepreneurs make informed decisions.

LENDER BEST FOR LOAN AMOUNT MIN. TIME IN BUSINESS
Flexible repayments $25,000 to $500,000 24 months
Online lender $5,000 to $250,000 12 months
Unsecured line of credit $10,000 to $150,000 24 months
Secured credit building Starts at $1,000 6 months
Low-interest loans $5,000 to $250,000 12 months
Microloans $1,000 to $15,000 N/A
Midwest lender $1,000 to $150,000 Startups eligible
Special purpose credit program Up to $500,000 Not stated
Underserved communities Up to $5 million Varies by lender
OneUnited Bank Black-owned bank Starting at $50,000 24 months
Hope Credit Union Southern region Up to $250,000 Not stated
Personalized lending experience Up to $12.375 million Not stated

A closer look at our top business loans for minorities

When choosing a small business lender suitable for your business needs, consider key factors like eligibility requirements, loan type and terms. Consider prequalifying, if possible, to see what interest rates, fees and repayment terms you’re eligible for. You'll also want to research their reputation. 

Funding Circle: Best for flexible repayments

Overview:  Funding Circle, which recently became a part of iBusiness Funding, offers varied loan options, including term loans, business lines of credit and SBA loans. Not only does the lender provide a streamlined application process to quickly match businesses with suitable loans, but businesses can also benefit from the flexible repayment terms. Funding Circle offers terms ranging from 6 months to seven years, more options than typical lenders. This flexibility allows for early repayment and extends payment schedules as needed, and repayment can be made on a biweekly or monthly basis.

Who it's for: Established small businesses with good-to-excellent credit and at least two years in business, seeking financing of $25,000 to $500,000 and flexible repayment terms.

OnDeck: Best for online lender

Overview: OnDeck is an excellent choice for BIPOC communities seeking financing, offering both lines of credit and term business loans with fast approvals and funding. Unlike traditional banks with strict eligibility requirements, OnDeck welcomes fair-credit borrowers, providing a vital resource for communities historically underserved by traditional lenders. With relaxed qualifications, including a credit score of at least 625, one year in business, a minimum annual revenue of $100,000 and a business bank account, OnDeck ensures accessibility to a broader range of entrepreneurs.

Wells Fargo: Best for unsecured lines of credit

Overview: Wells Fargo actively supports underserved communities, aiding 152,000 small businesses through its Open for Business Fund including minority-owned businesses. It also provides resources for minority women business owners and the LGBTQ community. Its unsecured lines of credit cater to businesses of various ages, offering a revolving credit line of up to $150,000 for businesses operating for two years or more and another option for newer businesses, with both lines earning rewards on eligible purchases.

Bank of America: Best for secured credit building

Overview: Bank of America prioritizes supporting historically disadvantaged communities, offering down payment assistance for loans to women and minority-owned businesses. They've invested over $1 billion to advance racial equity, including funding for Greenwood Rising, a center honoring Black Wall Street's legacy and the Tulsa Race Massacre. When considering the lender's range of business loan products, its cash-secured business line of credit is ideal for businesses building credit. It requires a $1,000 deposit, which is refundable after 12 months of positive account performance, and it has the potential to convert to an unsecured line.

 

Accion Opportunity Fund: Best for low-interest loans

Overview: Accion Opportunity Fund is a nonprofit specifically developed to advance racial, gender and economic justice for all. Its working capital loan ranges from $5,000 to $250,000, with rates starting at 8.49 percent. That’s decidedly on the low end for business loan rates, meaning you can get access to the capital your business needs with less cost over the life of the loan. It also has relaxed credit score requirements, requiring a FICO score of just 600 to be considered for loan approval.

Kiva: Best for microloans

Overview: Kiva made a name for itself offering microloans, or small loans that can go a long way for lower-income entrepreneurs. They don’t offer business loans in the traditional sense, but they do provide a platform that could allow you to crowdfund the capital you need. If you’re looking for a loan of $15,000 or less, Kiva could give you a way to get it with 0 percent interest. The catch? You’re crowdfunding it rather than getting it as traditional loan proceeds, which is a much slower process.

Huntington Bank: Best for Midwest lender

Overview: Huntington Bank serves businesses primarily in the Midwest but also has branches located in the South. Its Lift Local Business® program helps provide minority-owned businesses with better access to business loans and lines of credit. The bank advertises that these loans come with low credit score requirements, longer terms and zero origination fees. Borrowers also get access to free entrepreneurial courses valued at $1,500.

Chase Bank: Best for special purpose credit program

Overview: JPMorgan Chase put its money where its mouth is with a $30 billion commitment to racial equality. They offer SBA loans, term loans and lines of credit, but its special purpose credit program specifically targets locations with underserved communities. It started in Dallas, Detroit, Houston and Miami and is now offered in more than 20 cities. To date, the program has serviced more than 6 million loans to small and mid-sized businesses. If  you live in one of the country’s bigger underserved communities, this program might make it easier for you to get access to capital.

SBA loan: Best for underserved communities

Overview: SBA loans can offer high loan amounts of up to $5 million and may come with repayment terms up to 25 years. Interest rates are capped, and some lenders have relaxed eligibility requirements. That means even startups and business owners with bad credit may qualify for a low-interest business loan. There are several types of SBA loans that can help historically disadvantaged small business owners. Some lenders like Lendio or Creditfy offer SBA 7(a) loans with relaxed eligibility requirements. In 2023, $87 million in SBA microloan funding went to 5,500 small business owners, with 50 percent going to Hispanic- and Black-owned small businesses. During fiscal year 2024, more than 8,700 SBA 7(a) loans went to Black-owned businesses, while about 5,000 loans went to Hispanic-owned businesses, 7,900 loans were given to Asian-owned businesses, and 543 SBA loans were awarded to American Indian or Alaska native applicants.

OneUnited Bank: Best for Black-owned bank

Overview: As both the first Black-owned digital bank and the largest Black-owned bank in the country, OneUnited Bank knows what it means to operate in and for historically disadvantaged communities. In partnership with Lendistry, business owners can apply for a business loan even if they don’t have a OneUnited Bank account. And with a $35 million allocation in New Markets Tax Credits (NMTCs), OneUnited and Lendistry have funds they can specifically use to provide loans to “Qualified Active Low-Income Community Businesses,” which are businesses that serve low-income communities. To qualify, you’ll need at least two years in business and take out a minimum of $50,000. Loans are available in all 50 states and the lender promises a response within 48 hours. 

Hope Credit Union: Best for Southern region

Overview: The HOPE Business Loan Program facilitates access to up to $250,000 in loans for businesses seeking to start, grow, or expand. This aligns with Hope's mission to support sustainable enterprises that create jobs, benefit local communities, and improve infrastructure in underserved areas. The lender offers real estate loans, equipment loans, unsecured loans, shared secured loans, and vehicle loans.

U.S. Bank: Best for personalized experience

Overview: The Business Diversity Lending Program from U.S. Bank provides minority-owned businesses with up to $2.5 million, a hefty sum compared to most business loans. Loan options include term loans, lines of credit, owner-occupied commercial real estate and investment loans.

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Bankrate Insight

Research by the public policy think tank Third Way found five reasons why minority business owners struggle to gain access to capital:

  1. Lack of access to community banks
  2. Fewer collateral options to secure loans
  3. Stricter underwriting criteria
  4. Fewer banking relationships
  5. Less incentive for banks to offer the types of loans that benefit minority business owner

What are business loans for minorities?

This has changed in recent years. Historically, it meant any loan proceeds offered to minority-owned businesses. But now, thanks to programs specifically geared toward supporting business owners in underserved communities, these loans increasingly come from special programs or get funded by specifically allocated money. 

Ultimately, though, minority business loans go to a business owned by someone who qualifies as a minority. 

What qualifies as a minority-owned business? 

To be a minority-owned business, the company needs to be at least 51-percent owned by individuals who are considered minorities. This can vary, but according to the Minority Business Development Agency, which is the only federal agency that promotes the growth and development of minority owned businesses, a minority is:

  • Black
  • Hispanic/Latin American
  • Asian-Indian
  • Asian-Pacific
  • Native American
  • Hasidic Jew

Depending on the lender and their program, business loans for minority-owned businesses may also get extended to other underserved communities, like businesses owned by women, veterans and LGBTQ+ community members. 

How does a minority business loan work?

Generally, these loans work similarly to any type of business financing: you apply for the loan, get approved, get the loan proceeds and then need to manage them. Business loans can help cover just about any business-related need, including starting a business, covering day-to-day costs, emergencies and debt consolidation.

Some small business loans for minorities also come with mentorship and education components. These aim to help you better manage the loan — and your business in general. 

Requirements for a minority business loan

That depends on the loan and the lender’s specific requirements. Generally, they’ll look at your:

  • Personal and business credit score
  • Time in business (you usually need at least one to two years)
  • Business finances (existing debts, annual revenue)
  • Industry (some lenders won’t work with businesses in higher-risk industries)

Types of minority business loans

Business loans for minorities can come in a lot of shapes and sizes. You can find low-interest business loans, fast business loans — even business loans for a 500 credit score. Here are a few of the broad categories you may want to explore for financing your company needs. 

SBA loans

The U.S. Small Business Administration guarantees SBA loans, which helps to make them more affordable. Small business lenders can work with the SBA to provide traditional SBA 7(a) loans and other SBA loans, like microloans, which can be helpful to business owners in historically disadvantaged communities. 

Term loans

With term loans, the lender gives you a lump sum and you have a set amount of time (the loan term) to pay it back, usually in monthly installments. These are typically long-term options that have lower interest rates than other types of loans.

Microloans

These loans are generally on the smaller side, less than $50,000. They can be through the SBA or nonprofit lenders, or they can be crowdfunded through platforms like Kiva. 

Lines of credit

Lines of credit are a lot like a credit card. As you pay back what you borrowed, you can use it again. If you need cash flow on an ongoing basis, this might be right for your business. 

Invoice factoring and financing

Invoice factoring and invoice financing both involve getting cash for your unpaid invoices  — albeit less than the full invoice amount. This type of financing is more accessible to borrowers with bad credit since financing and factoring companies are more concerned with the creditworthiness and payment history of the invoiced clients.
 

Merchant cash advances

Merchant cash advances can help cover short-term costs like emergencies and seasonal cash shortages. Funding is based on past credit and debit card sales. This is one of the most accessible forms of business loans, but there are considerable downsides to be aware of. The biggest disadvantages are that interest rates can rise into the triple digits, and repayment terms are usually daily or weekly.  

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Bankrate Insight

A lender can deny your loan if you ask for more than you can reasonably afford to repay. If you only need small loan amounts, check out our guides on the following loan amounts:

Pros and cons of minority business loans

With more business loans for historically disadvantaged communities now than ever before, you have options to consider. They come with upsides, of course, but be wary of the drawbacks too.
 

Pros:

  • Cash flow support. As a business — and particularly if you’re one that’s growing — having liquid capital can make all the difference. And small business loans for minorities can help you get just that. 
  • Credit-building opportunities. Borrowing money gives you the chance to pay it back on the agreed-upon schedule. And as you do that over time (assuming your lender reports to the credit bureaus), it gives your credit score a bump. 
  • Potential added perks. Some loans and lines of credit for underserved communities come with wraparound education and mentorship opportunities, which can help build your business skills and improve your chances of success. 

Cons:

  • Potential for higher rates. Because traditional business loan lenders have long seen historically disadvantaged communities as higher-risk borrowers, your business loan has the potential to come with a higher interest rate and loan fees. Shop several options to make sure you’re paying as little as possible here. 
  • Fewer options. If you’re looking for loans specifically geared toward minority-owned businesses, you’ll need to do your homework. Many lenders still don’t have tailored programs here. 
  • Collateral requirements. A lot of small business loans for minorities require you to put up collateral. Think carefully before you put something on the line that you would be pained to lose. 

Who should get a minority business loan? 

The people who own and manage minority-owned businesses should at least look into these types of loans. While there aren’t a lot of options, you absolutely have more choices than you used to. And these types of loans can come with significant perks, like lower interest rates, low credit score and eligibility requirements or education programs.

Ultimately, you should compare both small business loans for minorities and business loans from traditional lenders. That way, you can determine which is best for your specific business and its unique financial goals.

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Bankrate Insight

As you’re exploring business loans for minorities, watch out for:

  • Lenders that ask you to pay cash before they fund your loan
  • Promises of guaranteed approval (this is often a sign of a scam)
  • Prepayment penalties
  • Tight action timelines — you should be able to take your time to fully explore your loan options

Alternatives to business loans for minorities

You don’t necessarily need to get a traditional business loan to bring some liquid capital into your business. You can also explore: 
 

Where to get a business loan for minorities

You can start with all of the options we’ve already highlighted, of course. But if you’re looking to broaden your scope, check out:

National banks

Think: Bank of America, Wells Fargo and Chase. Look specifically for banks that have special purpose credit programs because that means they’ll have funds specifically allocated to helping issue proceeds for small business loans for minorities. 

Online lenders

Online lenders typically have higher rates and fees but can often move faster than traditional banks and credit unions. They also tend to be more accessible than traditional lenders.

SBA lenders

The SBA backs a lot of small business loans. And knowing the SBA is behind your loan might make it easier to get approved, so you may want to check for lenders specifically offering SBA loans. Specifically, Community Advantage Small Business Lending Companies (SBLCs) give SBA loans to disadvantaged businesses, such as those in low-income communities. You may also qualify for an SBA microloan through specialized microlenders, which lower requirements to get approved. 

Community Development Financial Institutions

Community Development Financial Institutions (CDFIs) often target their support for underserved communities. You might be able to find a CDFI that issues loans to minority-owned businesses who will get behind you. 

Minority Depository Institutions

In 2019, a study from the Federal Deposit Insurance Corporation (FDIC) found that Minority Depository Institutions (MDIs) originate more SBA loans to borrowers in historically disadvantaged communities. In other words, if you’ve had a hard time getting a loan, working with an MDI might increase your odds of approval. 

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Bankrate Insight

Bridge, a platform built by Citi connects people to regional banks, CFDIs and MDIs to get the business capital they need. Today, Bridge has more than 70 lenders in its network, including women-owned and black-owned institutions working to help underserved communities.

Frequently asked questions about business loans for minorities

How we chose our best business loans for minorities lenders

Bankrate's trusted small business loan industry expertise

Read our full methodology

57

years in business

30

lenders reviewed

22

loan features weighed

770

data points collected

To choose the best business loans for minorities, we researched banks with relaxed eligibility requirements and programs that are specifically geared toward helping minority business owners. We then considered features that make loans affordable and accessible to businesses with different characteristics and needs, including interest rates, whether the loans are secured or unsecured, minimum annual revenue and fees. These lenders were also evaluated for notable qualities such as funding speed and nontraditional eligibility criteria.

When evaluating lenders, we use a 22-point scale to measure quality in five key areas: