Minority Business Loan Programs – A Primer
by Leeia Ladipoh on January 10th, 2008
The political picture of the world we live in today, at least in North America, has forced people to recognize that some individuals may be at a disadvantage when it comes to making money.
For this reason, several laws and organizations have been set up in order to ensure that minority groups, including women, have access to the wages and funds they deserve.
In fact, the government has stepped in and specifically developed a plan to assist minorities and women in setting up their own business. The program is developed and run by a federally created body known as the Minority Business Development Agency .
It is this agency which runs the different centers across the country from which entrepreneurs of different minority backgrounds, as well as women, may turn in order to start and grow a business.
There are several services which the MBDA and its various centers provide, but the most frequently used is their loan program. It’s important to note that these are not grants but loans; as with any loan, they must be paid back to the lending agency within a certain time period. These loans can be used to start up or to expand a business that is owned primarily by a woman or a person of a visible minority.
The loans themselves vary in size, and will usually be determined by the credit history of the person applying; again, no different than any other type of loan. First, though, you will have to put together a loan application package for the Small Business Association. There are a few specific criteria:
* You must have already been turned down for a regular loan by a bank or lending company.
* A guaranty is required.
* The business must operate in the United States.
The loan may be approved for up to $250,000, and terms range from five to twenty five years.
Once you have been approved by the SBA , the next step is to once again return to the lending companies (remember, you will have had to have been turned down by these people once already). With your approval from the agency in hand, you will have little trouble getting approved this time, particularly from banks with a commitment to the minority business development, such as Wells Fargo.
Any lending company who you approach needs to be approved of by the SBA, which is a great way of getting your short list together. Most will have their own set of further criteria, so make sure you look at that before going in.
A minority business loan makes it a little bit easier to expand or start up a business if you are a member of certain groups. It is well worth taking advantage of, as it is a resource that other businesses do not have access to.