Qualifications for Minority Business Loans

A minority business loan is designed for business owners who fall into one or more of the following minority groups: Women, African Americans, Asian Americans, Indian Americans, Hispanics, Latinos and Pacific Islanders. The Minority Business Development Agency, otherwise known as MBDA, is the federal agency developed to ensure minority owned businesses are able to grow and prosper as well as the majority owned businesses. This agency funds several different centers, including the Minority Business Development Centers (MBDC), Native American Business Development Centers (NABDC), and Business Resource Centers (BRC). These organizations are available to help minorities develop business and marketing plans, assistance with technical and management tasks and even financial planning. 

Applying for a Minority Business Loan

When applying for a minority business loan, it is important to have all the necessary documentation in order. This includes proof of business ownership, licenses, permits, bank statements, sales receipts, a business plan, a marketing plan, etc. If your business needs help compiling anything necessary for the loan application, speak to the local small business administration office so you can contact someone who will help. The application will require standard information about you and the business operations, so having these documents together before sitting down to fill out the application will help the bank or other lender see what they need to see about the business to process the application.

Minority Business Loan Qualifications

In order to qualify for a minority business loan, the business must be able to prove it is owned and operated by a minority, and that it can handle the financial obligation of the loan repayment. Depending on the agency who lends the funds, there may be other qualifications. For more information about minority business loans, speak to a small business association professional, or locate the local business resource center.

Business Credit Score

The business will establish a credit score separately of the person or group of people who own and operate it. Initially, the business credit will be based on the personal credit of the owner, though, if the business is new. It is important that the owner and the business maintain good credit scores, because without good credit, the business may not be able to get a loan, and if the business does manage to secure a loan, the interest rate will be much higher. Much like personal credit, there are three bureaus agencies report to. The main difference between personal and business credit is that delinquencies and charge offs never drop from a business account. This is why it is extremely important to take care of all business obligations on time to ensure the business credit rating stays positive. In fact, minority small business loans will help your business start to establish its own credit record independent of the business owner's personal credit.

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