Moving forward with the intended direction of a business is an exciting ordeal. Whether the business has been around for a few years, or is still in the planning stage, having the proper funding is crucial to the success of the company.
For minority business owners, which are defined by the Equal Opportunity Employer Commission as individuals that are Hispanic, Black, American Indian, Alaskan Native, Asian, Pacific Islander, and minority women, there are specific loans available to help a growing business along. Minority business loans can cover a large spectrum of business expenses, and may consist of varying criteria for qualification.
Minority Small Business Start up Loans
Because of the booming business opportunities presented through the internet, start up companies are increasing in popularity. Though not all start ups pertain to online business, many of today's entrepreneurs are turning to the internet for inspiration. The good news is that there tend to be a lot of companies looking to invest in these businesses, so minority small business start up loans should not be too terribly hard to find. If given one of these loans, the business would potentially benefit by growing in sales, increasing networking opportunities, and learning about merger possibilities and related topics if they are interested.
Am I Ready for a Minority Business Loan?
Minority business loans exist to aid individuals and companies that have a vision, but no practical financing to get there. The main aspect to consider when determining whether or not to take out one of these loans is if it's likely that the business will eventually be successful and resourceful enough to pay off and end the loan. Before entering the process of starting a minority business loan, it is recommended to have a clear business plan that details how the company will need to mature in its first few years.
The Potential Expenses of Running a Business
As with all types of businesses, operating a company accumulates expenses that must be well thought out prior to taking a loan. It is important to calculate the expected costs of things like rent, taxes, insurance, employees' pay, retirement plans, interest rates, and more, depending on the more specific functional elements of the business. Of course, it is not uncommon for a business to run in to additional unexpected financial needs once it is up and running, so choosing a plan that allows for a little wiggle room is advised.
The interest rate can depend on the company overseeing the loan, the prime rate, the market, and the length of the loan. However, interest rates on minority business loans can generally be expected to be somewhere under 5%. With some companies, the longer the timeframe on the loan, the higher the interest rate becomes, though the difference is usually not any more than 1%. In some cases, collateral for these loans can include savings accounts, stocks, land, accounts receivable, real estate, life insurance policies, equipment, and more.
Qualifying for a Minority Business Loan
Qualifications for minority business loans fluctuate through different lenders, but most will look at how much of the business the owner runs, if they are considered a minority through the Equal Employment Opportunity Commission, and their expected need. Already existing businesses will be considered based on annual sales and age of the company, as well. Depending on if an individual qualifies, they may be able to get anywhere from $1,000 to $750,000, and sometimes even more for necessities like capital and a wide range of fees.
The Various Sources Minority Business Loans
There are several different sources of loans within the minority business group. For minority women, there are certain state-run opportunities that exist to lend women that are road blocked by the economy. Seeking online loans from individual banks is another possibility for minority women, with the potential for them to also select the lending method that best fits their need.
Minority business grant loans are also available in many cases, and can be an excellent form of financing. These grants, provided by specific investors, companies, agencies and the government, work similarly to the basic loans, except for the notable component that the business owners do not have to pay back the financing they give you. This is a key point, and can make a huge difference in the survival of a company.
Another noteworthy potential source of funding is produced by the National Minority Business Council Inc. It allows certified business owners to access the financing provided through NMSDC affiliates, which can make up a whopping combined one million dollar loan.
Taking the First Steps
Undertaking the process of seeking a minority business loan will require some basic information. It is important to reference the most updated version of a credit report, and make sure it is void of any errors. Taking the time to put together a strong business strategy is also important. This should include information about the intended product or service, potential customers, and other similar aspects. It is wise to receive council from several different sources of financing to understand the full array of options available. Comparing the amount available to be borrowed, interest rates and repayment expectations are all vital to the decision making process.
A business owner will then likely be asked to provide documentation, which will be specified by the lender. They should be prepared to talk about collateral options or cosigning arrangements, though not all lenders will require either of these. When actually applying for the loan at the end of this process, whether the procedure occurs online or in person, the business owner should seek assistance if any questions are raised along the way. It is better to take an extended period of time and understand every detail than to agree to guidelines they may not entirely understand.
Minority business loans can make it possible for the envisioned corporate dream to become a reality. With seemingly endless lenders available both online and in nearby cities, there is likely a loan that will work for all sorts of minority business plans. Doing the research ahead of time to adequately compare options and prepare for the application process can save a business owner valuable financing in the long run. Having a clear understanding of how to grow as a company and repay loans swiftly will ensure maximum business potential, and ultimately peace of mind.