Minority Business Loans and Grants


Authored by Douglas Mefford in Business Management
Published on 06-11-2009

Growing out of the civil rights movement of the 1960’s there have been a multitude of government grant and loan programs developed to assure that the finances are available for the creation of minority owned businesses. At the time there was a majority bias that tended to make it very difficult for those of ethnic minority groups to acquire the same interest rates and loan opportunities as was available to Caucasian entrepreneurs. The oversight branch of the Federal government created the Minority Business Development Agency to be the envelope agency to coordinate the multitude of financial and training assistance programs that assure minorities are able to access whatever funding is needed to start and maintain their for-profit businesses.

Created in 1972, the National Minority Business Council, Inc. is dedicated to the betterment of minority owned businesses by providing help in securing private sector business contracts and especially with the procurement of government contracts. The National Minority Business Council, Inc. also provided tutoring to help minorities understand the process by which government grants and loans are made so they can be in a better position to apply for these financial aids. They also provide assistance for minority businesses to survive until such time as they are able to prosper on their own.

The Minority Business Council and other minority only oriented agencies provide help with new business entrepreneurs to successfully incorporate their business ventures. Often there are funds available to invest in the new business so that it gives the appearance of being more financially solid and more able to qualify for other loans to help it grow. Incorporations traditionally have a better chance of obtaining minority business loans.

The majority of the centralized agencies that work towards helping minority owned businesses provide the services of managing not only the promotion of a new minority owned business, but will also write the business proposals for them so they will meet the requirements for obtaining the government loans. With such well-crafted business plans it is easier for the minority owned business to obtain even more small loans. This is true even if earlier, less professionally written business plans had been earlier turned down for financial assistance.

Minority business loans can be obtained as either secured or unsecured loans. Secured business loans, in which collateral is provided, traditionally has much lower interest payments and easier terms for repayment. Unsecured minority business loans, just like any other unsecured loan, will usually be for smaller amounts with greater interest and stricter terms.

The interest payments for minority business loans are usually allowed to be written off on annual taxes as a legitimate business expense. The same is often allowed for the loan payment itself. This is a great tax relief for minority business loan recipients as traditional businesses are not able to exempt these payments from the annual gross income of their business. Minority business loans can also be approved for the expansion of already existing minority owned businesses. These loans can be used for a multitude of purposes including the new purchase or upgrading of equipment or for sponsoring working capitol.


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