Business Loans for Minorities
As of 2012, approximately one-third (29.3%) of all businesses in the United States are owned by minorities, according to the Minority Business Development Agency (MBDA). These 7.95 million MBEs (minority business enterprises) generated a total of $1.38 trillion in gross receipts that year! However, non-minority business owners are three times more likely to be granted a loan than minority business owners. Plus, if an MBE owner does get approved for a loan, more often than not she or he will pay higher interest rates than a non-minority owner would.
The inequality continues. From 2007 to 2012, the average gross receipts of MBEs decreased by 2.5% while non-MBE gross receipts increased by 13.9%. MBEs with paid employees averaged $1.3 million in 2012 whereas respective non-MBEs averaged $2.3 million. Directly quoting the MBDA website, “Data suggest that, assuming current trend rates of growth continue unabated into the foreseeable future, it would take almost 70 years for MBEs to achieve statistical parity in paid employment, and more than a century to achieve statistical parity in gross receipts levels.”
To try and help solve the problem instead of be part of it, we here at American Business Credit have done extensive research and come up with what we consider the best loan options for MBE owners. We absolutely do not count ourselves among those who are prejudiced toward applicants. We’re here to help anyone and everyone who wants to improve business.
Approaching it categorically, we’ve come up with the best loans for MBEs with bad credit, the best loans for MBEs with good credit, and the best overall startup loans for MBEs. At the end we tacked on a list of things to remember when hunting for the best loan for your business.
Best Loan Option with Good Credit: Unsecured
It’s no secret that having a healthy credit score and a strong financial record is the key to securing the best loan possible. That being said, an unsecured small business loan is likely the most viable option for an MBE owner with good credit. There is no collateral involved, which puts the lender at higher risk than it would in a secured loan. However, credit score and financial history become the two main factors. These two things usually go hand in hand, so for MBE owners with good credit, we suggest that you apply for an unsecured business loan with us.
Bear in mind that the max amount loaned in an unsecure fashion is typically lower than the max would be for a secured loan. We suggest applying for an unsecured loan primarily for small to mid-level expenses. There are usually shorter repayment terms with unsecured loans as well. That all being stated, they’re an excellent streamlined source of funds once you establish yourself as a trustworthy loan recipient.
Best Loan Option with Bad Credit: Secured
A secured small business loan is more than likely the best option for a minority business owner with less than stellar credit. Because a secured loan uses the borrower’s personal and business assets as collateral to guarantee repayment, (whereas an unsecured loan does not), lenders are usually more lenient with secured loans than with unsecured ones when it comes to approval. Therefore, not only is approval more likely with a lower-than-average credit score, but the interest rate will likely be lower than it would be with a secured loan. We suggest that if you find yourself with a low credit score but a crucial need for funding that you apply for a secured business loan with us.
Also, it’s crucial to first consider all means of self-financing prior to applying for a loan, especially for owners with weak scores and/or few to no assets for collateral. Getting business loans with a troubled credit history, a low FICO score and little or no financial track record is difficult at any stage of the economic cycle.
American Business Credit offers unsecured small business loans with extremely competitive interest rates, fast funding, and loans up to $250K. Better yet, there are absolutely NO upfront fees and absolutely NO cost to you if we are unable to secure the proper funding. However, it’s darn close to a guarantee that we will be able to provide you with a loan that suits you and your business, so no worries in that department anyway.
Best Loan Option for a Startup
There are both secured and unsecured startup loans. The difference between a conventional loan and a startup loan is simple: Startup loans are aimed specifically at fledgling businesses, those less than a year old; conventional loans are aimed at everyone. Startup loans are a little more flexible than traditional loans. We can provide either a lump sum or a credit line that enables your startup to launch full-scale operations, and we offer extremely modest rates.
American Business Credit can help your startup secure a much-needed loan even when traditional banks and other institutions turn you away. We can connect you with either secured or unsecured loans of varying types to help you meet the funding needs of your startup. Our lending industry connections enable us to assist all types of businesses with finding the right type of loan with no upfront fees. We have more than 20 years of industry experience, and the application process is quick and easy. Let us work with you to find the capital that your startup needs.
Things to Remember
- Before applying for a loan, have the following items at the ready: your resume, your business plan, your credit score, your business credit report, your income tax return paperwork, financial statements (including but not limited to balance sheets, income statements, cash flow, and bank statements), accounts receivable/payable, collateral, and all legal documents associated with your business.
- American Business Credit will absolutely never deny any applicant based on racial status, background, ethnicity, or any facet of life that doesn’t have to do strictly with finances. We also offer the best rates on loans with the quickest turnaround time.
- Decide if you’re best suited with a secured or unsecured loan. Check out all the different options pertaining to term length and interest rate. Ask about all types of fees, including prepayment penalties and/or late penalties, (although we barely have any fees).
- No matter your circumstances, the decision to use small business financing can have a lasting impact on your business. Carrying debt can shape the way you operate your new company, and it affects ownership and control.
