There are nearly 5 million Hispanic-owned businesses in the U.S., making this the fastest-growing segment of U.S. small businesses, according to the U.S. Small Business Administration (SBA). Yet, despite these big numbers, Hispanic and Latinx business owners frequently face challenges accessing capital and, as a result, often can’t successfully scale their businesses.
Fortunately, a number of organizations and government agencies in the U.S. are stepping up to address this unmet need, offering loans, grants, and other financing options to Hispanic and other minority entrepreneurs. These minority business loans may have lower interest rates and be easier to qualify for than some traditional loans. Here are 18 financing options that are worth checking out.
What Qualifies as a Hispanic-Owned Business?
To qualify as a Hispanic-owned business, at least 51% of the company must be owned by people of Mexican, Puerto Rican, Cuban, or other Hispanic origin. Currently, nearly one in four new businesses are Hispanic-owned.
What Is a Minority Business Loan?
A minority business loan is a small business loan designed to provide financing options for underserved communities. While minorities are free to apply for any business loan, minority business loans may offer more competitive rates and have less stringent qualification requirements.
Groups that are considered minorities in the U.S. include African Americans, Asian Americans, Hispanic Americans, and Native Americans. Women are also considered minorities for many types of loans, as well.
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Alternative Business Loan Options for Hispanic Business Owners
The following lenders offer different types of small business loans to Hispanic and minority entrepreneurs and were chosen based on our analysis of search volume.
1. Accion
Accion is a nonprofit financial institution that invests in underserved communities and offers low-cost lending opportunities to Hispanic- and minority-owned businesses. The Accion Opportunity Fund provides loan amounts from $5,000 to $250,000 and is quick and easy to apply for online.
Accion’s offerings include working capital and equipment financing loans, open to all minority-owned businesses and women entrepreneurs.
Accion also offers online resources, events, and networking opportunities (in Spanish and English) to help minority business owners learn and grow their companies.
2. CDFI
The Community Development Financial Institutions Fund (CDFI Fund), which is part of the U.S. Treasury, gives funds to companies and organizations that help underserved people and communities. Minority business owners can reach out to local banks and nonprofit groups that have received CDFI funds to discuss and apply for low-cost business loans.
3. Camino Financial
The owners of Camino Financial were inspired to start their lending business in order to help people like their mother, who lost her Mexican restaurant business when they were children. To that end, they offer simple and affordable loans to small businesses who find it difficult to borrow through banks. Now merged with Fundation, they offer bad credit loans, secured and unsecured loans, microloans, and working capital loans up to $50,000.
4. SBA
The U.S. Small Business Administration (SBA) offers several financing programs that can help minority-owned businesses get access to the funding they need. Here are two programs you may want to check out to find a Hispanic small business loan:
Microloans
The SBA microloan program is administered by an intermediary network of nonprofit community-based lenders, rather than traditional banks. Through these lenders, the SBA aims to reach lower-income communities and minority-owned businesses that are often overlooked by traditional lenders. These loans come with low interest rates, six-year terms. and loan amounts up to $50,000.
Community Advantage Loans
The SBA’s Community Advantage loan program provides up to $350,000 in capital and is specifically designed to meet the needs of business owners in underserved communities. To qualify for an SBA community advantage loan, business owners need to have good credit and a strong business plan. However, the business’s balance sheet and amount of collateral will not affect eligibility.
5. Kiva
By offering crowdfunded loans with 0% interest, nonprofit Kiva is working to lift barriers to capital often faced by entrepreneurs from underserved communities. To apply, you need to market your Hispanic business to the community of 2.2 million individual lenders. These lenders can then choose to lend your company and you’ll have a specific period of time in which to repay them.
6. CDC Small Business Finance
CDC Small Business Finance is a nonprofit whose mission is to provide access to affordable and responsible capital to underserved entrepreneurs, including minority, veteran, and Hispanic business owners. CDC offers loan amounts up to $250,000.
If you are looking for advice to rebuild your credit, develop your business strategy, or manage financial reports, you’ll appreciate having access to small business advisors through CDC.
7. Grameen America
Grameen America strives to achieve racial and gender equity by providing microloans of up to $2,500 to female and minority business owners. As part of their program, borrowers can open free savings accounts with commercial banks and build personal credit as they pay off their microloans. Grameen also offers training and support to women who want to start businesses and rise out of poverty.
8. LEDC
The Latino Economic Development Center (LEDC) offers Hispanic small business loans of $1,000 to $250,000 that can be used to purchase equipment, expand a business, hire staff, or purchase inventory.
The three types of loans offered by the LEDC are as follows:
• LEDC Growth Loan: Loan amounts up to $250,000 for established small businesses that have been in operation for a minimum of two years.
• LEDC Startup Loan: Loan amounts up to $20,000 for new businesses with less than two years of business history.
• LEDC Seed Loan: Loan amounts up to $5,000 for businesses with less than one year of experience and with plans to launch a company within three months of funding.
LEDC also offers free business advice and credit-building services, as well as a directory of latino-owned small businesses.
9. NALCAB
The National Association of Latino and Community Asset Builders (NALCAB) provides funding to a network of over 200 nonprofit organizations that serve diverse Latino communities throughout the U.S. With NALCAB support, these partner organizations offer Hispanic loans, grants, professional training, and support.
Grants for Hispanic and Latino Business Owners
Hispanic small business loans aren’t the only way for your business to get funding. There are also minority business grants that can provide capital that you don’t have to repay. These grants are offered by federal and local government agencies, corporations, and nonprofits.
10. Grants.gov
Grants.gov is the largest database of federal grant opportunities. While most grants are not specifically targeted to Hispanic small business owners, awards are available for all types of entrepreneurs, especially those focused on healthcare, U.S. defense, and environmental protection.
11. digitalundivided
digitalundivided’s BREAKTHROUGH Program (powered by JPMorgan Chase’s Advancing Black Pathways) offers $5,000 grants to Black and Hispanic women in specific areas, such as Detroit. digitalundivided also provides training and resources to help businesses understand their customers, find financing, and choose the right business model.
12. NASE
The National Association of the Self-Employed (NASE) works to provide resources for all self-employed individuals, including Hispanic business owners. They offer Growth Grants of $4,000, which can be used for a variety of business expenses, including marketing, advertising, hiring employees, and expanding facilities.
Besides access to grants, becoming a NASE member allows you to connect with experts who can advise you on subjects like finance, healthcare, strategy, law, and marketing. NASE membership also gives you access to discounts on healthcare, software, tax filing, and business travel.
13. USDA Rural Development Grants
Hispanic businesses located in rural areas that have fewer than 50 employees and less than $1 million in gross revenue may want to consider applying for a Rural Development Grant from the USDA.
Grants vary in size and can be used for a variety of projects that aid business development in rural areas, including training, technical assistance, acquisition or development of land, building construction or renovations, equipment purchases, and pollution control.
14. SBIR and STTR
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are government grants from five different federal government agencies. These competitive grants are focused around tech and science and offer up to $2 million in capital (divided into two phases, though, so check the annual figures) to qualified small businesses.
15. Candid.org
You may be able to find funding for your Hispanic small business through Candid.org’s Foundation Directory Online, which contains information on over 299,000 grantmakers in the U.S. Access to the directory requires buying a monthly subscription, but you can cancel at any time.
16. Comcast RISE
Comcast RISE, which stands for Representation, Investment, Strength, and Empowerment, was a grant designed for businesses that were hit hardest by COVID-19 and now continues to work towards small business transition and growth. The grant is worth $5,000 and is given to small business owners hoping to expand and recover from the effects of the pandemic. Awards go to those looking to uplift their communities with a focus on diversity, inclusion, and community investment.
17. Entrepreneurial Spirit Fund by SIA Scotch
The Entrepreneurial Spirit Fund by SIA Scotch Whiskey awards $10,000 in grants to small businesses owned by people of color in the food and beverage industry. Created by Hispanic entrepreneur Carin Luna-Ostaseskis, one of SIA’s goals is to provide funding, mentorship, and community to small businesses.
18. Amber Grant
If you’re a woman entrepreneur, consider applying for the Amber Grant, named after Amber Wigdahl, who passed at the age of 19 and never got to fulfill her business dreams. Each month, at least $30,000 is given in Amber Grant money. Applying takes just a few minutes and winners are announced by the 23rd of the following month.
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Other Resources
In addition to the grants and loans, there are organizations that can provide technical assistance, training, workshops, and networking opportunities to Hispanic businesses. Below are some you may want to check out.
digitalundivided
With a focus on assisting Black female and Latinx business owners, digitalundivided offers virtual training and a fellowship program for entrepreneurs. It also offers a pre-accelerator program for tech-enabled startup founders who have already begun to build their startup, are pre-revenue, and need assistance in developing their business model, marketing, and strategy.
Minority Business Development Agency
The Minority Business Development Agency is an advocate for Hispanic and other minority-owned businesses, and offers research, conferences, and resources to help entrepreneurs. Its Enterprising Women of Color Initiative is aimed to help minority women succeed in business through various offerings.
USHCC
The United States Hispanic Chamber of Commerce actively promotes the economic growth, development, and interests of Hispanic-owned businesses. Members have access to events and business resources to support them in their growth. In addition, members get listed in the Chamber’s online Hispanic business directory.
SCORE
SCORE is a national organization that connects business owners to free mentors to help them learn and grow their companies. SCORE also offers free workshops and a robust online database of useful business content.
Tips for Getting a Business Loan
Looking for — and applying for — a business loan can feel like an overwhelming task. Here are some ways to simplify the process.
Consider Your Options
Before applying for a small business loan, it’s a good idea to take a look at your credit profile and business financials, as this will give you an idea of what type of loan you might qualify for.
If you have excellent credit, solid revenue, and have been in business at least two years, you may be able to qualify for a long-term, low-interest loan from a bank or SBA lender. If not, you may want to look into financing offered by lenders and grantmakers listed above, as well as online lenders (who often have less strict qualification requirements for loans).
Determine How Much Money You Need
To figure out how much of a loan you need to start or grow your Hispanic business, consider how you would like to use the funds from a loan, then create a detailed budget for your project, adding in some padding to account for unexpected expenses.
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Consider the Best Location for Your Business
If you haven’t yet launched your business, consider what might be the best environment for doing so. You may want to explore the best metros for minority businesses, since they may have established communities of hispanic business owners and resources to help you.
Gather All Your Paperwork
Whatever type of funding you decide to pursue, you will likely need to supply an extensive amount of information about your business in order to apply. This often includes:
• Business EIN
• Industry
• Entity type
• Business license and permits
• Annual business revenue and profit
• Bank account statements (personal and business)
• Personal and business tax returns
• Balance sheet
• Proof of collateral
• Accounts receivable and payable reports
• Existing debt
• Commercial lease
• Purpose of the loan/grant
• Business plan
The Takeaway
Whether you’re looking for a Hispanic small business loan, business line of credit, SBA loan, or equipment financing, you’ve got options.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
How do I qualify for a minority business loan?
To qualify for a minority business loan, your business needs to be at least 51% minority-owned. The lender is going to look at your credit profile, your income, and how long you’ve been in business. Qualifications aren’t always as strict as with other types of business loans, but lenders will still want to see good to excellent credit scores and a solid cash flow to qualify for the best rates.
Can immigrants get small business loans?
Yes, more often than not, immigrants can get a small business loan. If you hold a green card, you’ll usually qualify for a loan from the Small Business Administration. You’ll also need to have been in operation for at least one year in order to qualify.
What kind of financing can I get as a minority business owner?
Minority business owners can get the same type of financing that non-minority business owners can receive, in addition to loans and grants targeted specifically to minorities. Small business loan options include term loans, business lines of credit, equipment financing, merchant cash advances, commercial loans, SBA loans, and more.
Do Hispanic business grants have to be repaid?
No, business grants — including Hispanic business grants — do not have to be repaid. Small business loans, on the other hand, do need to be repaid in monthly installments.
Photo credit: iStock/svetikd
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