Business Loans for Minorities

How Minorities Can Get a Business Loan in 2025: The Definitive Guide

Minorities own over 1 million businesses in the United States, and that number is growing fast. In this guide, we'll show you:

• The best loan minorities should apply for to get operating capital
• What you need as a minority to qualify for a loan
• How to get approved and funded quickly in just 1-2 days
• How to secure the lowest interest rate on a business loan
• Answers to frequently asked fundraising questions by minorities

Read on to find out how you can get instant financing for your minority-owned company.

What's Considered a Minority-Owned Business?

A minority-owned business refers to a company that is at least 51% owned, operated, and controlled by a minimum of one U.S. citizen who belongs to a minority group. For instance, if a business has two or more owners, 51% of the company must be controlled and managed by the minority partner. If the company is publicly traded, at least 51% of the shares must be minority-owned to be considered under this category.

For this definition, a minority person refers to an individual with an ethnic background of African American, Asian, Hispanic, Alaskan Native, or Native American. The term may also apply to Alaska Native corporations, North American tribes, and Native Hawaiian organizations.

Top 5 Business Loan Options for Minorities

One of the biggest reasons small businesses fail — especially minority-owned companies — is the lack of capital or funding. At Clarify Capital, we want to do our part to help solve this problem. We strive to simplify the process of choosing the right loan for your business needs.

Below are the best business loans for minority-owned companies — with over 10,000 business owners approved and funded so far!

1. Business Line of Credit for Minorities

These are ideal for minorities who want a flexible funding option to manage day-to-day business expenditure.

Business lines of credit work like a business or personal credit card, but you can enjoy much lower interest rates. When you're approved, you get a specified amount of revolving funds that you can draw from on demand.

The key benefit of a line of credit is that you only pay interest on the funds your business withdraws for use, and there are no restrictions on the type of expenses you can pay for. You can purchase new equipment, stock up on inventory, hire more staff, or open a new location.

Benefits of a business line of credit:

• Business owners with bad credit scores can secure funding
• Low APRs starting at 6%
• Working capital is available on demand as needs arise
• Only pay interest on the funds you withdraw
• Improves your personal credit rating
• No prepayment penalties

Apply for Business Line of Credit

Long-Term and Short-Term Loans for Minorities

These loans are ideal for minorities who want instant approval regardless of their credit score without giving any personal guarantee or collateral.

Short-term loans are the most popular financing option for minority-owned businesses. They're also the most traditional way of raising working capital. With short-term loans, you receive a lump sum amount that you pay back plus interest over a specified term.

Repayment terms are usually between six months and two years. Short-term loan funds are best used as working capital, to cover emergency expenses, take care of payroll, purchase inventory, and pay for other immediate business expenses.

Long-term loans are a financing option similar to short-term loans except you can pay back the capital over a longer period of time — typically from three to 10 years. Some loans, like SBA loans, have even longer terms of up to 25 years. Long-term small business loans are best used for buying real estate, purchasing equipment or vehicles, renovating or expanding your business space, refinancing existing debt, and more.

With long-term loans, you have more time to repay and you'll likely have lower monthly payments compared to other business loans. However, it can be more challenging to qualify for long-term loans unless you have an established business and a strong credit score.

Clarify has the highest approval rates for minority term loans and offers early payoff incentives that further reduce your costs. The entire funding process takes as little as 1 day with interest rates starting at 7%. Another benefit is that you don't need to provide any collateral or personal guarantee to secure a short-term loan.

Benefits of term loans for minorities:

• Fixed interest rate
• Early payoff incentives that lower costs
• Fast business loan option
• Any personal credit score can get approved
• All types of minority-owned businesses are eligible for approval
• No prepayment penalties
• No collateral or personal guarantee requirements

Apply for Short-Term Loan

3. Equipment Financing for Minorities

This is ideal for minorities who want to buy or lease new or used equipment.

Equipment financing,also called equipment loans, is a great way for businesses to fund the purchase of any equipment or machinery. The process is quick and you can borrow up to 100% of the money you need. Equipment loans can be used on a wide array of purchases, including technology, vehicles, and commercial machinery.

The term length of the loan is dependent on the expected life of the equipment you're buying. And the equipment serves as collateral for the loan, so there's no personal guarantee needed.

Benefits of equipment loans for minorities:

• Low documentation or paperwork
• Highly competitive APRs due to the collateral
• Bad personal credit is okay

Apply for Equipment Financing

4. Invoice Financing for Minorities

This is ideal for minorities who want to get paid instantly for outstanding customer invoices.

Invoice financing, also called factoring, allows business owners to borrow capital with unpaid invoices as collateral. With this type of loan, a factoring company will give you 85% to 99% of the total invoice amount upfront. Once the invoices clear, the lender will pay you any remaining amount after deducting factoring fees.

With invoice financing, lenders care more about your customers' creditworthiness, so this is a great option for business owners with less-than-stellar credit scores.

Benefits of factoring for minorities:

• High approval rate
• No personal credit score requirements
• Instant infusion of cashflow without taking on debt
• Only collateral needed is the unpaid account receivables

Apply for Invoice Factoring

5. SBA Microloans for Minorities

Ideal for minorities who have good credit score and need less than $50,000 in funds.

The U.S. Small Business Administration (SBA) is a federal agency that provides support to entrepreneurs and small businesses through loans, grants, and business development programs. The SBA Microloan Program is fully funded by the federal government and administered by approved lenders who are mostly nonprofit organizations and business centers.

With Microloan program, loan amounts up to $50,000 are available to small business owners who have lower incomes or those with no credit history. These are typically awarded to startups or new businesses trying to expand. Business owners can use microloan funds to cover working capital, purchase inventory or raw materials, and buy equipment or machinery.

Benefits of SBA microloans for minorities:

• Low interest rates for minorities with great credit score and business plan
• Good option if you need less than $50,000 and not in a rush to secure funding

Along with organizations like the Minority Business Development Agency (MBDA) and the National Minority Supplier Development Council (NMSDC), the SBA has programs geared toward women- and minority-owned businesses. These include financial assistance, technical assistance, business funding, or help in getting government contracts.

Minority entrepreneurs can also apply for other loan programs, such as the SBA 7(a), SBA 8, or SBA Community Advantage Loans.

Apply for SBA Microloan

Benefits for Minorities of Getting Financing from Clarify Capital

Over the last 10 years, minority business enterprises accounted for more than 50% of the 2 million new businesses started in the United States and created 4.7 million jobs.

Clarify Capital is committed to helping minority-owned companies receive the funding they need to grow. This is why we work with more than 75 lenders that offer fast approval and competitive interest rates.

1. Best interest rates for minorities

As one of the largest lenders for underserved communities, Clarify Capital offers the most competitive rates on short-term loans and business lines of credit. Our core mission is to help our clients achieve success in their business endeavors.

2. Instant approval and funding

We have the highest approval rating in the industry for minority-owned businesses. Unlike traditional financial institutions like banks, which take weeks to make a decision, Clarify offers instant approval online. Even if you have bad credit, our team will work hard to get you approved for funding.

3. Fast approval process for minorities

We understand that time is your most precious asset, so we have streamlined our loan process to have money in your bank account in as little as 24 hours. The online application is simple – it takes less than two minutes. You'll also be connected to a dedicated Clarify adviser who will walk you through the entire process.

4. Minimal documentation — we handle all the paperwork for you

For short-term loans, all you need is three months of recent bank statements. That's it! We have all the legwork covered so you can focus on running your business.

5. No collateral required

You don't need to provide any personal guarantee or collateral to get a business loan. We're committed to lowering any risk for minority small business owners to borrow working capital loans.

6. No hidden fees, full transparency

We take transparency seriously. Our application process has no hidden fees or complicated terms you can't understand. We make sure you're clear on the interest rate and loan term length before you sign. We take pride in being the most transparent lender in the industry.

7. Interest is tax deductible

You can deduct any interest paid on business loans at the end of the year, which reduces your overall cost of small business financing. The Internal Revenue Service (IRS) allows you to deduct interest payments for any type of business loan.

8. Customized payment schedule based on your cashflow

With term lengths from six months to two years, we tailor payment plans that work best for your business. We offer flexible repayment options: daily, weekly, biweekly, and monthly.

Apply for Business Loan

How Minorities Can Apply for a Business Loan

As a minority business owner, you want a friction-less loan process that doesn't slow you down. That's what we're great at. We have a simple online application that you can complete in under 2 minutes.

Here is a detailed look of how the overall process works:

Step 1: You Decide How Much Money You Want to Borrow

You're applying for a loan because you have a plan for your business. This might include buying real estate, getting new equipment to increase production, or renovating your current space. Calculate the amount you need to implement your plan using exact numbers as much as possible. Then, calculate how much you want to borrow and if you can pay it back plus interest and other costs of borrowing.

Step 2: Apply Online

The online loan application is as simple as it gets — three quick steps and you're done!

Step 3: Prepare Business Documents

After you've filled out the online application, it's our turn to work. Prepare your business documentation, IDs, and three months of your most recent bank statements for cash flow verification. That's it! We do all the other paperwork to save you time.

Step 4: Money Is Sent to Your Account

Our advisers will guide you through all the available loan options so you can make a better business decision. There are no hidden fees or language you can't understand — we offer complete transparency. Get approved and funds are deposited into your account within a day.

Apply for a Minority Loan

Eligibility Requirements for Minorities to Get Approved

When you apply with Clarify, we consider you family — and do everything needed to get you approved fast. Our streamlined process for minorities factors in just three things. Here is what you need to be eligible for a business loan:

1. Credit score over 550

You can get approved for a minority loan even with bad personal credit. We recommend you have a credit rating of 550+. The higher your score, the better the APRs and loan terms you get from alternative lenders.

2. Have been in business for 6+ months

We recommend that your minority-owned business has been operational for 6 months or more. The longer you've been in business, the more confident lenders are to provide you operational capital.

3. Average monthly revenue over $10,000

Your current cashflow helps lenders decide on the maximum amount of much capital you can borrow. The higher your revenue, the more you can borrow. As such, we recommend that your business should be generating at least $10,000 per month or $120,000 per year on average.

Types of Minority-Owned Businesses That Can Get Funded

There are no restrictions on which type of business can get funded by Clarify Capital. We have financed over 10,000 companies and here are just a few of them:

• Construction
• Trucking & transportation
• Medical & healthcare
• Retail
• Restaurants & bars
• Manufacturing
• Automotive
• Professional services
• Technology
• ... and many more!

How Minorities Utilize Financing in Their Businesses

Having the required working capital needed to handle expenses is critical for the success of a minority-owned business. Here are the most common ways minority entrepreneurs use their financing:

• Buy or repair equipment
• Store renovations and improvements
• Taxes & payroll
• Marketing & advertising
• Hiring more employees, education, and training
• Open up a new location
• Pay for emergency repairs
• Operating expenditure
• Pay rent for office space
• Manage unanticipated business expenses that arise
• Refinance any existing debt you have
• Short-term operational expenses
• Overcome gaps in payables vs. accounts receivables
• Explore new growth opportunities
• Bulk material purchases
• COVID-19 help
• Pandemic related costs

FAQs about Minority Business Loans

We take pride in bringing simplicity and clarify to online small business loans. Here are the questions that we get asked the most by minority business owners before they get funded: