by Aidan Kang, CFA
Senior Writer
UPDATED: July 26, 2021

Getting financing for your business is hard enough, but a study done by the US Small Business Administration (SBA) shows that minority entrepreneurs have a harder time getting the funding they need for their businesses. If they have bad credit, things get even more difficult.

When it comes to lending, minorities are generally classified as African American, Hispanic-American, Asian-American, Alaskan Native, Pacific Islander or Native American. A company is considered a minority business if it is at least 51% owned by a minority and usually needs to be certified as a minority business enterprise (MBE) or disadvantaged business enterprise (DBE).

If you’re a minority business owner who is looking for small business loans but who has poor credit, fret not, as there are SMB loans that you can qualify for. In this article, we take a look at some of them.

SBA loans

When it comes to business loans, SBA loans are the most affordable and thus the most desirable. Because they are strongly backed by the US government, lenders are encouraged to offer low-interest rates and long repayment periods, which make monthly payments very affordable. SBA loans are notoriously hard to get, however.

While many SBA lenders place high importance on the borrower’s credit score, even entrepreneurs with bad credit may be eligible for startup funding, as long as their business is a legal for-profit business that is physically located and operating in the US or in US territories. Also, the owner should have invested time or money into the company and the firm cannot get funds from other lenders.


The nonprofit organization Accion provides small business loans to African Americans, Hispanics, Asians, Native Americans, and other minorities who have businesses in a wide variety of industries, such as construction, healthcare, and retail. TheseSMB loans can be used to buy supplies, purchase or upgrade equipment, hire employees, remodel, add health and beauty services, or market the business.

Accion looks at the borrower’s credit score, but also looks at other factors as well. Entrepreneurs whose credit histories are either poor or not well established can still get approved if their business or finances have strengths in other areas.

The National African American Small Business Loan Fund

This lending program is a collaboration between the Valley Economic Development Centers (VEDC) and JP Morgan Chase to provide short-term and long-term loans to African American-owned companies in New York City, Chicago, and Los Angeles. It aims to provide capital, technical assistance, and financial consulting to small businesses even if the owners have damaged credit that makes them unable to qualify for conventional financing.

With this fund, businesses can receive capital that they can use to expand, purchase equipment, solve cash flow issues, and provide contractor lines of credit. The fund also assists loan recipients in technical aspects of the business, such as in marketing, networking, business plan creation, and financial consulting.

Business Center for New Americans

The Business Center for New Americans (BCNA)provides microloans to minority business owners in the United States. The loans can range from $500 to $50,000, payable within 6 months to 3 years. There is no minimum credit score required but the business must have all required licenses and be making enough cash flow to pay the monthly payments.

Loans below $10,000 have an 8.25% fixed interest rate while loans ranging from $10,000 to $50,000 have a 10% fixed interest rate.

In addition, BCNA also offers credit-building loans ranging from $500 to $2,000 and payable within 6 to 12 months. These loans can help credit-impaired entrepreneurs to establish or improve their credit score.


OnDeckprovides both business loans and commercial lines of credit. The minimum credit score is 600 and the business has to be at least one year old and earning at least $100,000 each year.

Loans can be up to $500,000, payable within 3 to 36 months, with annual interest rates as low as 9.99%.

Loan applications are done online and only takes 10 minutes. Approval is within hours and the funds are released as soon as the following day.

Square Capital or PayPal Working Capital

If you process payments via Square or PayPal, you can also get financing from Square Capital or PayPal Working Capital, respectively. Both do not have credit score requirements.

Bottom Line

Being a minority entrepreneur has its own challenges when it comes to getting small business loans. If you have bad credit, things get even more complicated. But don’t lose hope. There are still multiple options available to help you get funding for your company. Aside from alternative lenders that have more lenient requirements than traditional lenders, there are loans that are specifically for minority business owners who have poor credit.