There are a number of lenders that provide microloans for small businesses or entrepreneurs, including women, Black owned, veterans, Latinos, and other disadvantaged companies. Funds may be offered by government affiliated organizations, non-profits, community action agencies, the SBA, charities or other lenders. Find where and how to get a microloan below for your minority or women owned small business or start-up company.
Note that the amount of money available will vary, but it is generally from hundreds of dollars up to $50,000 or so. The lenders will support applicants of all credit levels, from those with poor or no credit to higher scores. The loans can pay any business related expense of the women or minority company, including equipment, rent, office equipment, inventory, or it can be working capital. Each microloan lender has their own application process as well as requirements, and some even offer zero percent (or interest-free) microloans.
Sources for business or startup Microloans
Accion USA is the country’s largest network of nonprofit micro-lending organizations and has loaned more than $450 million through more than 50,000 loans to help create small and home-based businesses ranging from street vendors to tech companies to small restaurants. A large percentage of their loans have gone to veterans, Black owned businesses, immigrants, women, and owners that are shut out of the traditional lending markets.
The low cost, competitive microloans range from $300-$50,000 with terms from six to 60 months. Interest rates generally range from 9-11%. Accion has offices located in nearly 30 cities, but they offer online microloan applications as well. To qualify for an Accion loan, borrowers need a credit score of at least 575 and must not have declared bankruptcy during the prior year. Requirements may vary depending on which Accion office is involved.
Borrowers requesting startup loans must have an outside source of income other than the business involved in the loan request. Startups often require a cosigner for the loan. A 12-month cash flow projection may also be requested. Once an online application is submitted, applicants will be contacted within two business days. Learn more about Accion Loans.
The U.S. Small Business Administration operates a microloan program. The SBA distributes funds to nonprofit organizations that may be near, and those local agencies act as intermediaries between the government and borrowers. Many of the non-profits are committed to assisting disadvantaged businesses, such as Latino, Asian or Black owned businesses as well as veterans or women. The government is not involved in servicing the micro loans, but because the funds come from the federal government SBA, there are often greater restrictions on the use of these loans.
Hundreds of non-profit organizations, small community lenders, and groups other provide the major source of microloans in the U.S. many of which do not rely on SBA funds. The qualifications to obtain a loan may differ somewhat between organizations. Some lenders serve regional areas while others are more mission-based and cater to specific clientele such as women, veterans, minorities and other underserved populations. Find a SBA lender here.
Kiva, founded in 2005, operates in almost 100 countries as a charity. The worldwide lender places a major focus on humanitarian endeavors but makes loans to any aspiring entrepreneur who meets its qualifications. Kiva has provided more than $550 million in loans to more than one million borrowers and has achieved a repayment rate above 98%.
Interest-free loans are limited to $10,000 but may be as small as $25. No minimum credit score is required, which means entrepreneurs or women or minority business owners with bad credit scores (or a limited credit history) may quality for a Kiva microloan. Instead, borrowers must be able to describe the type of business they want to start and how it will operate. A personal or business story or a biography may be requested and serve as a major factor during loan consideration. Repayment plans range from 3-36 months.
Kiva is considered a peer-to-peer microloan lender. Individual lenders can crowdfund a loan with zero interest. After a loan application has been approved, lenders are asked to fund the loan in increments of $25 or more toward a goal of fully funding a loan within 30 days. Funds are usually made available to the borrower is less time. After the small dollar loan is repaid, lenders can fund a new loan or withdraw their money.
While direct loans from Kiva are interest-free, Kiva partners with more than 250 lending organizations that offer interest-bearing loans. Kiva requires that partners have a social mission to serve the poor or underserved. This means a number of minority and even immigrant owned businesses often get financial help from Kiva as well as charities or individuals seeking to start their own non-profit. These partners screen borrowers, post loan requests on Kiva for funding, disburse loan funds and collect repayments. Learn more about Kiva microloans.
The Local Initiatives Support Corporation (LISC), founded in 1979, is a Kiva partner that operates in over 30 local offices along with other community-based affiliates. LISC sponsors a one-to-one match program using Kiva’s platform. Borrowers work with a LISC trustee to qualify for matching funds. Interest-free micro loans may be as high as $10,000 with three years to repay the funds. There are no loan fees, and collateral is not required. Locate an LISC office near you.
Opportunity Fund is a non-profit San Francisco Bay Area lender. Since 1994, it has helped to fuel the startup of numerous technology-related businesses primarily in California and Nevada, but they do offer a nationwide microloan program as well. In addition to having made more than 17,000 loans to help small businesses launch and grow (including women and veterans), the organization also provides management training. Roughly 90% of the loans have been made to minority-owned businesses and 30% to businesses owned by women.
While Fund underwriters will examine typical criteria including credit scores, collateral, business history and profitability, micro-loan decisions are based on more than just numbers. For example, lenders will take the time to examine the reason for a poor credit score and to learn about the business and personal life of the applicant. By doing so, the Fund often approves loans that banks would avoid. This means many minority, veteran, female, Black, Asian and other borrowers may be more likely to get financing from this non-profit. There may even be low cost business microloans for single mothers. Loans begin at $2,600 with repayment terms ranging between one and five years. There is not an application fee, and applicants will know within three to five days if they have been approved. Read more on Opportunity Fund.
Grameen America offers a unique program in over 10 cities that focuses on low-income women, single mothers or females living in poverty hoping to start a business. More than 132,000 women have received loans totaling more than $1.5 billion. Loans are limited to $1,500 with interest rates starting around 15% but with no other fees. Female applicants for a microloan are required to form a group with four other female entrepreneurs and complete a one-week financial training course. Each group member then opens a savings account into which microloan funds are deposited. The group continues to meet weekly to make loan payments and to receive continuing education. The Grameen microloan program also helps women borrowers, including those of color, build credit for future borrowing needs. Find loans for women from Grameen.
Pacific Community Ventures, based in San Francisco, offers loans ranging from $10,000-$200,000 to small businesses in California. Interest rates vary from 7-13% with repayment terms from one to five years. PCV specializes in working with business owners who have been turned down for traditional bank loans including female, minority and immigrant entrepreneurs as well as businesses of color. The non-profit PCV microloan program is also targeted at inner city business ventures, and they also offer free mentoring services along with the loan. Note other small business loans are also offered nationwide.
The business must have been in operation for at least one year and have at least one full or part-time employee. A credit score is not required to obtain a loan, but a personal guarantee may be sought from anyone owning 20% or more of the business. More details on PCV.
LiftFund, created in 1994 and based out of San Antonio, has made more than 17,000 loans totaling more than $210 million to businesses in 13 states located primarily in the south. Microloans from the charity organization are targeted toward businesses in low to moderate-income communities as well those owned by women, Latinos, Black people and other minority groups . LiftFund also provides free financial advice and counseling to their microloan clients. Business owners can also qualify if more than half of their full-time workforce is low-income. Borrowers looking or startup funds must show they have another source of income such as a job or a spouse with an income. Borrowers must also have collateral at least equal to the loan amount being requested. Find out about LiftFund micro loans
Non-profit local community action agencies and community development organizations may also provide a source of financing. For example, Oklahoma City operates a Small Business Loan Assistance program that provides loans from $5,000 to $250,000 with interest rates as low as 4%. The Community Action Program of Western Indiana offers a revolving loan program, with a focus on helping veterans. Community Action Agencies are located in all 50 states, with hundreds of offices around the country. They offer counseling, financial aid, grants and other support to people regardless of their age, race, or religion. Find a local community action agency near you.
The United Way 211 service can be a resource for business owners or entrepreneurs as well. Low cost or even interest free microloan programs can also often be found through the community resource lists maintained by local and regional United Way organizations. A number of their resources are tailored to helping the disadvantaged or low income launch a business, including minorities, women, or disabled. One example of a United Way loan program is Solidarity Microfinance, a program that provides loans and training to low-income individuals in Iowa who desire to open or grow a small business. Use the United Way 211 site, or dial 211.
Utah Microloan Fund (UMLF) is only for businesses in Utah. Up to $50,000 is provided. The funds (microloans) from the non-profit can also help borrowers or businesses with a very limited operating history or those with poor credit due to a past life event. They also provide business training opportunities to their clients. The address of the non-profit is 154 E Ford St, Salt Lake City, UT 84115. Call 801-746-1180. I major focus is on the underserved, such as Black, women, or Latino owned businesses that lack access to traditional bank loans or funding sources. They also run the Banking on Women program. Find details on microloans in Utah.
Business Center for New Americans is for immigrants, refugees, and minority owned businesses in the New York City area. They provide microloans of $500 to $50,000. Startups, sole proprietors, and small businesses in Queens, Staten Island., Brooklyn. Bronx and Manhattan can apply for funds. BCAN is an approved SBA Microlender and Community Advantage lender. There is no minimum credit score, which helps immigrant owned as well as start-up companies in NYC get the financial assistance they need. Offices are at 120 Broadway, New York, NY 10271 (dial (347) 730-6468) as well as 78-27 37th Avenue, Jackson Heights, NY 11372 (phone (347) 730-6468). Or find more on BCAN immigrant and refugee microloans.
Count Me In Revival is an online microlender. They give loans (or even small dollar grants) to both women as well as minority owned businesses. In addition to the financial assistance, Count Me In Revival gives small businesses, sole-proprietors and start-up companies additional support. As financial assistance is one tool, but many businesses (regardless of race, age, or gender) need additional support as well to help them grow or take it to the next level.
To that end, Count Me In Revival and its team offer mentoring services, free online workshops, educational programs and so much more. The organization also has a community of female business owners for support and nurturing advice. Successful women, including of color, are there to support minority, veteran, and in particualr female owned companies. Find loans and mentoring from Count Me in Revival.
Summary of microloans for underserved businesses – minorities and female owned
Access to credit is always critical for most small businesses to survive. Or financing is key for an entrepreneur or start-up company. In the past 15 years, microloans from the government, non-profits or other lenders have helped millions of people to grow, start or save their business. The loans have helped many people hit a goal of owning a successful business. The programs have even helped Americans escape poverty by providing the means to open or expand a business. The availability of this alternative source of financing will continue to play a vital role as the world and U.S. economies strive to recover in the years ahead.
By Jon McNamara