The lending landscape presents unique challenges for female-owned businesses, including lower loan approval rates, limited access to credit, and increased vulnerability to predatory lending.Understanding the lending landscape is crucial for effectively navigating your funding options.Key Takeaways: 

1. Choose the Right Lender: Selecting a lender who aligns with your business goals and values is essential for growth and sustainability.
2. Understand the Lending Landscape: Women face unique challenges, such as lower loan approval rates and limited access to credit. Familiarizing yourself with different lenders can help you navigate these challenges effectively.
3. Explore Diverse Funding Options: From traditional banks and credit unions to online lenders and community development financial institutions (CDFIs), various funding sources cater to different needs.
4. Prepare Essential Documentation: Gather key documents including financial statements, tax returns, and a business plan to enhance your loan application credibility.
5. Know the 5 C’s of Credit: Character, Cash Flow, Capital, Collateral, and Conditions are crucial factors lenders consider when assessing your creditworthiness.
6. Beware of Predatory Lending: Stay vigilant against lenders offering unclear terms, hidden fees, or aggressive tactics. Always ensure transparency in loan agreements.
7. Leverage Community Resources: Networking with other women entrepreneurs and seeking mentorship can provide invaluable insights and opportunities for funding.
8. Educate Yourself: Empowerment through knowledge about financing, loan terms, interest rates, and repayment schedules equips you to make informed decisions for your business’s financial future.

Understanding the Lending Landscape

For women small business owners, navigating the lending landscape is crucial to securing the funding necessary for your growth and sustainability.An ideal financial partner provides essential capital, aligns with  goals and values to facilitate expansion and resilience in challenging times, and supports business owners holistically through education and coaching.Understanding the various types of lenders available can empower you to make informed decisions that align with your unique business needs. Different loan programs cater to a wide range of financial needs and businesses, so consulting with lenders to find the most suitable program for your circumstances is essential.

Understanding Business Loans for Women

As a woman small business owner, accessing capital to grow your business can be a challenge. Understanding business loans and the options available to you is crucial to making informed decisions about your business’s financial future. In this section, we will explore the different types of business loans available to women, the benefits and drawbacks of each, and provide tips on how to navigate the loan application process.

Funding Options to Start and Grow Your Business

Funding can come from a variety of sources, including personal savings, loans, grants, and investors. It’s vital to identify which type of capital best fits the unique needs of your business. Understanding the loan term is crucial when evaluating different funding options, as it affects your future financial commitments and obligations, including your business’ cash flow.Accessing capital is crucial for women small business owners as they work toward growth and sustainability. Understanding the various funding options and being well-prepared is essential to securing the necessary financing.

Various Types of Lenders – What To Know

Traditional Banks

These institutions are well-established and offer a wide range of loan products. They tend to have strict eligibility requirements and longer application processes, which can be challenging for some small business owners . However, if you have a solid business plan, in most cases at least two years in operation, and good credit, traditional banks can provide reliable financing. With all loans, it is crucial to thoroughly review all loan documents to ensure you understand the terms and can avoid any potential predatory lending practices.

Credit Unions

Often seen as more community-focused, credit unions are nonprofit institutions that serve specific demographic groups, like their local area, military veterans, or professional associations and to qualify for a small business loan you need to be a member. They typically offer lower interest rates and more personalized service compared to traditional banks, making them an excellent option for women business owners who prioritize community support.Additionally, credit unions provide a variety of loan programs tailored to meet diverse financial needs, which can be highly beneficial for businesses seeking specific funding solutions. These include:

• Equipment Financing: Loans specifically designed to purchase or lease essential equipment for the business.
• Commercial Real Estate Loans: Financing options for purchasing or refinancing commercial properties.
• Business Lines of Credit: Flexible funding that allows businesses to draw on funds as needed, ideal for managing cash flow fluctuations.
• Microloans: Smaller loan amounts aimed at helping startups and small businesses that may not qualify for traditional financing.
• SBA Loans: Partnerships with the Small Business Administration to provide guaranteed loans with favorable terms for qualifying businesses.
• Inventory Financing: Loans designed to help businesses purchase inventory, allowing them to stock up without straining their cash flow.
• Working Capital Loans: Short-term loans to help businesses cover day-to-day operational expenses.

Online Lenders

Known for their fast and convenient application processes, online lenders can provide quick access to funds. They often utilize technology for underwriting, which can be beneficial for small business owners needing rapid financing. However, understanding the loan terms and interest payments is crucial when dealing with online lenders, as these factors significantly impact your financial commitments. Please be vigilant about comparing terms, as their interest rates can vary widely and aren’t always reported in terms of APR, which makes them difficult to compare with other offers.

Community Development Financial Institutions (CDFIs)

CDFIs are dedicated to serving underinvested markets, including women-owned businesses. They often provide mentoring and resources tailored to help you succeed in your business journey besides access to capital.Additionally, CDFIs offer a variety of loan programs that cater to different financial needs, making them a valuable resource for women-owned businesses seeking suitable funding options. Some CDFIs (like AOF) are digital first, which means that  they offer online loan application processes  presenting diverse loan offers and  transparent terms.

Peer-to-Peer Lenders

This innovative funding model connects you directly with individual investors through online platforms. While these lenders can offer favorable terms, it’s essential to understand the importance of the loan term and interest payments when dealing with peer-to-peer lenders. Additionally, researching and choosing reputable platforms is crucial to avoid potential pitfalls.Popular platforms include:

• Kiva: A platform that allows individuals to lend money to low-income entrepreneurs and students in over 80 countries.
• Kickstarter: A crowdfunding platform that enables creators to fund their projects by receiving contributions from backers.

These platforms provide opportunities for businesses to access funding directly from investors, often with unique terms compared to traditional lenders.

Key Considerations When Choosing a Lender

Small businesses may be denied a loan because of bad credit, an unstable business industry, or borrowing below the loan amount threshold set by traditional lenders, like banks.Alternative lending provides additional options. Each type of lender comes with its own benefits and drawbacks.By understanding these different types of lenders, you can better position yourself to find the right financing solutions that support your aspirations and goals as a woman business owner.When selecting a lender, you should consider several key factors to ensure that the partnership aligns with your goals and financial needs. You also need to look for lenders that comply with federal law, which mandates necessary disclosure forms to be sent to loan applicants, ensuring transparency and legal compliance during the loan application process.

• Reputation and Reliability: Before anything else, assess the lender’s reputation in the market. Look for reviews, testimonials, and any warnings from other borrowers. A lender with a solid track record of ethical practices and positive customer service is more likely to provide a satisfactory experience.
• Financial Health and Lending Criteria: Assessing the lender’s financial stability is crucial as it can impact your loan experience. Start by reviewing the lender’s overall reputation and customer feedback to ensure reliability. Look into their lending criteria, such as credit score requirements, debt-to-income ratios, required financial documents, and overall income. Understanding these criteria can help you identify which lenders are more likely to approve your application and offer you the most favorable terms, allowing you to make informed decisions before you ever apply (and receive a hard credit pull).
• Loan Types and Repayment Terms: Different lenders offer various loan products, including long-term loans, short-term loans, lines of credit, and more. Evaluate the types of loans available to choose one that fits your business model and cash flow needs.
• Consider the repayment terms: interest rates, origination fees, payment schedules, and any potential penalties for late or early payments. A clear understanding of these terms will enable you to manage repayments effectively and avoid future financial strain.

What Documentation Do You Need to Get a Loan?

To effectively access the capital needed to achieve your business goals, follow these steps:

Prepare Necessary Documentation:

• Gather essential documents, including:
  • Business Financials:
    • Financial statements (profit and loss statements)
    • Tax returns
    • Bank statements
      • Business Plans and Forecasts:
      • A comprehensive business plan outlining your goals, strategies, and financial projections

Understand Your Credit Score:

• Your credit score significantly influences your ability to secure financing.
• Lenders use your credit score to assess their risk when lending to you.
• To improve your credit score before applying:
  • Pay down existing debtsMake timely payments
    • Address any errors in your credit report
  • A better credit score can lead to improved loan terms and accessibility.

Assess Your Business Stage:

• Understanding where your business stands is critical for selecting appropriate funding options.

Choose Reputable Lenders:

• Research lenders to ensure they have a solid reputation.
• Look for reviews and ratings to gauge the experiences of other borrowers.

By following these steps, you can enhance your credibility with potential lenders and streamline your loan application process.

Consider the resources available at each stage.

Start-ups may rely heavily on personal savings, friends, and family for initial funding.  Established businesses might qualify for loans from community banks and credit unions.  Alternative lenders may help fill gaps for growing businesses, but be cautious of their terms and ensure they align with your long-term goals.

 

Review the Terms and Conditions of your Potential Loans

When choosing a lender, it’s essential to carefully review the terms and conditions of any loan agreement to ensure it aligns with your business needs.

• Balloon Payment: This is a specific type of payment that comes at the end of a loan. It’s usually much larger than the regular payments you made before. This can change how you manage repayments over time.

For funding, here’s how various businesses might find help:

• Start-ups: These businesses often rely on personal savings, along with money from friends and family, to get started.
• Established Businesses: Once a business is up and running, it might qualify for loans from community banks and credit unions, which can provide more support.
• Alternative Lenders: For businesses that are growing, these lenders can help fill in the financial gaps. However, it’s important to be careful and check that their loan terms match your long-term goals.

Interest Rates vs. APR

Understanding the difference between interest rates and the Annual Percentage Rate (APR) is critical. Here’s a breakdown:

Interest Rate:

• This is the cost you pay each year to borrow money.
• Expressed as a percentage of the loan amount.
• May be reported as daily, weekly, monthly, or annual rates.

Annual Percentage Rate (APR):

• This includes the interest rate plus any additional fees or costs associated with obtaining the loan.
• Provides a more comprehensive view of the total cost of borrowing over a year.

Interest Paid:

• Refers to the total amount of interest a borrower pays over the course of a year.
• This is indicated in the IRS 1098 Mortgage Interest Statement.
• Has significant financial implications for borrowers and their tax obligations.

When comparing these two rates:

• The interest rate gives you a basic idea of borrowing costs, but it does not account for additional fees, so it may appear lower than the actual cost.
• The APR, being annualized, provides a clearer picture of what you’ll actually pay for the loan, including all fees.

Be cautious: if a lender does not provide the APR and clearly list all fees, it may indicate predatory lending practices. Always compare both rates to understand the true cost of borrowing and protect yourself from unfavorable loan terms.

Understanding Loan Repayment Schedules

Familiarizing yourself with your loan’s repayment schedule is essential. Here’s a breakdown of important terms and concepts:

Principal Balance:

• The amount of debt remaining on a loan, excluding interest.
• Crucial for understanding your loan agreement and repayment schedule.

Repayment Schedule:

• Details the frequency and amount of payments you need to make until the loan is fully paid off.
• Common payment frequencies may include:
  • Monthly
  • Bi-weekly
  • Weekly
• Amortization:
  • This means breaking down your loan into a series of regular payments over time.
    • The process of spreading out a loan into a series of fixed payments over time.
    • Each payment typically covers both principal and interest, gradually reducing the principal balance.

Understanding these terms is critical as they relate to your business metrics:

• Cash Flow Management: Knowing your repayment schedule allows for better cash flow management. It ensures that you have enough funds available to make timely payments without disrupting daily operations.
• Impact on Revenue and Profit: Accurate forecasting of loan repayments helps you align your business revenues and expenditures. This planning can assist in ensuring that profits are retained for business growth rather than being depleted by unexpected repayment obligations.

By recognizing how loan repayment schedules impact your finances, you can make informed decisions that support your business’s overall financial health and sustainability.

Importance of Clear Communication and Transparency

Ensuring that your lender communicates clearly and transparently is vital. You should have a thorough understanding of your loan terms, including any fees, penalties, and repayment options. Reputable lenders are willing to provide detailed explanations, answer all your questions, and offer documentation outlining all aspects of the loan. Open communication helps prevent misunderstandings and potential financial pitfalls in the future. Before applying for a loan, be sure to ask questions of potential lenders to understand their application and loan repayment process. This will help you know what they are looking for in loan applicants and ensure you are well-prepared. Additionally, keep documentation of your communications for reference throughout the loan process.

Key Questions to Ask When Seeking Funding

When seeking funding for your business, it is essential to ask yourself and potential lenders the right questions to ensure any capital you receive aligns with your needs and goals. Consider the following key questions…

Questions to Ask Yourself:

What do you need the money for?

• Clearly define the purpose of the funds, whether for start-up costs, operational expenses, or growth initiatives. This understanding helps you choose the most suitable financing options.

How much money do you need?

• Be realistic about the amount required. Consider both immediate expenses and future capital needs. Thorough calculations help prevent underfunding or overborrowing.

How quickly do you need the money?

• Determine your timeline for obtaining funds. Some financing options may take longer to process than others, so understanding your urgency can guide you toward the right lender and product.
• It’s crucial for small business owners to recognize the importance of applying for a loan before they find themselves in urgent need of funds. Waiting until a cash crunch arises can limit options and lead to hasty decisions that may not align with their best interests. By proactively exploring financing solutions and applying when you do not urgently need the capital, you allow for better planning, improved terms, and the opportunity to secure funding that’s right for your business, ultimately contributing to your long-term success. Understanding this key principle can transform how small businesses navigate their financial landscapes.

Questions to Ask Potential Lenders:

What are the interest rates and fees associated with the loan?

• Understanding the total cost of borrowing is crucial. Ask for a breakdown of all costs involved.

What is the repayment schedule?

• Inquire about the frequency and amount of payments. This knowledge helps you plan your cash flow effectively.

Are there any penalties for early repayment?

• Knowing whether there are any fees for paying off the loan early can influence your decision.

What are the requirements to qualify for this loan?

• Ask about the application process, credit score requirements, and any necessary documentation.

How long will it take to process the loan?

• Understanding the timeline can help you manage your expectations and financial planning.

Can you provide references from other borrowers?

• Speaking with other customers can give you insight into the lender’s service, reliability, and transparency.

By asking these questions, you can gain a deeper understanding of your funding options and ensure that both your needs and those of the lender align effectively.

Predatory Lending

Predatory lending refers to the practice of imposing unfair and abusive loan terms on borrowers. This can manifest in several ways, such as using deceptive language that obscures unfavorable rates, or extending loans to individuals who are unable to qualify for traditional financing due to poor credit history.Predatory lending is a serious concern for small business owners. Women small business owners often face difficulties in securing loans from traditional banks, they may turn to alternative sources that have predatory lending practices, which can be detrimental to their business growth. Inadequate income can make borrowers vulnerable to predatory lending practices, as businesses with lower revenue are more likely to face urgent cash needs, leading them to seek loans from predatory lenders who exploit their limited options and financial need.Lenders may present offers that seem appealing at first glance but can include hidden fees and costs, ultimately jeopardizing the borrower’s financial stability. Additionally, interest rates may not be clearly represented as APR (Annual Percentage Rate), which can obscure the true cost of borrowing and lead to financial strain for the borrower.

How to Recognize and Avoid Predatory Lenders

To protect your business from falling victim to predatory lending practices, be vigilant for the following warning signs:

1. Unclear Pricing and Terms: If fees and interest rates are not clearly presented or are difficult to understand, this may indicate a lack of transparency designed to confuse borrowers.
2. Aggressive or Abusive Broker Practices: Watch out for brokers who pressure you into accepting a loan or do not fully disclose additional fees.
3. Prepayment Penalties: Be cautious of lenders who impose significant fees for paying off a loan early, which can trap you in a cycle of debt.
4. Easy Approval: If a lender offers fast approval with little documentation required, this lack of due diligence could signify a predatory practice.
5. Abnormal Payment Structures: Payment arrangements that vary from week to week or are based on a percentage of daily sales can complicate cash flow management.
6. Short-Term Loans: Loans that require repayment within a short timeframe, such as payday or title loans, often come with exorbitant fees and terms.
7. Difficulty in Communication: If the lender is hard to contact or dodges questions about terms and costs, this is a major red flag.

To safeguard your business, it is crucial to seek financing from reputable institutions such as traditional banks, credit unions, or accredited microlenders, as they typically adhere to regulatory standards that provide protections for borrowers.By remaining informed and vigilant, you can avoid predatory lending practices and secure the funding necessary for your business’s success.With an awareness of predatory lending practices, it is equally important to understand the specific terms and conditions associated with any loan you consider. Careful scrutiny of these terms will help ensure that the loan aligns with your business goals and financial situation. If you don’t understand something in a loan contract, keep asking questions until you have a full picture of what you are signing up for, before you sign the contract. Reputable lenders should be willing to answer all of your questions before you sign.

Challenges Faced by Women Entrepreneurs and Minority-Owned Firms

Women and minority-owned firms often face significant barriers when seeking funding. These include discrimination in lending practices, limited credit histories, and inadequate access to traditional financial networks. Such barriers can complicate the process of obtaining necessary capital. Challenges in obtaining a mortgage loan can further exacerbate these issues, making it even more difficult for these firms to secure the funding they need.

• Typically Smaller in Size, Starting with Less Capital: Many women entrepreneurs begin their businesses with limited financial resources, making it harder to qualify for larger loans.
• Lower Approval Rates for Bank Loans: Studies show that women and minority entrepreneurs have lower approval rates for traditional bank loans compared to their male or non-minority counterparts.
• More Vulnerable to Predatory Lending: Due to a lack of access to mainstream financing, these entrepreneurs are at higher risk of falling victim to predatory lending practices, which can impose unfair and abusive loan terms.

Understanding these challenges is crucial for women and minority business owners as they navigate their funding options. By asking the right questions and being aware of the barriers, you can better position your business to secure the necessary capital.

Solutions and Strategies to Overcome Barriers

Women entrepreneurs can build a solid financial foundation to mitigate these challenges, leverage community resources, and explore alternative funding options such as microloans or Community Development Financial Institutions (CDFIs). Networking with fellow female business owners can also reveal invaluable opportunities and insights.Establishing connections with mentors and other entrepreneurs is crucial for success. Mentorship provides guidance and support, while networking opens doors to funding sources and collaborative ventures. Engaging with a community of like-minded women allows for the exchange of experiences and resources, strengthening your business journey.

The 5 C’s of Credit

In addition to understanding documentation and business stages, it’s important to familiarize yourself with the following key topics:The 5 C’s of Credit: Lenders typically evaluate your creditworthiness based on five factors:

Character:

• This refers to your credit history and reliability in repaying debts.
• Example: This includes your credit score and credit report, which show how well you’ve managed your previous loans.

Cash Flow:

• This is the revenue available to repay the loan.
• Example: It’s shown in your bank statements and reflects how your income compares to your other debts or loans.

Capital:

• This is the amount of personal investment you have made in your business.
• Example: This includes how much money you have personally put into your business to get it started or help it grow.

Collateral:

• These are the assets you pledge as security for the loan.
• Example: This could be things like real estate, vehicles, or major equipment that you own.

Conditions:

• These are external factors that could impact your business success.
• Example: This might include the current state of the economy, the outlook for your industry, and any regulations that could affect your business.

By understanding these five factors, you can better prepare yourself for discussions with lenders and improve your chances of securing the funding you need.

Empowerment Through Knowledge and Community Support

Choosing the right lender extends beyond merely obtaining funds; it involves finding a partner who aligns with your business vision and understands your goals. Strategic lender selection, characterized by fair terms and transparency, can pave the way for sustained growth. Most importantly, it’s about finding the right match for your business and your specific needs. This ensures that the financial support you receive is conducive to your success and long-term objectives.Empowering yourself with knowledge and utilizing community support creates a strong foundation for success. This empowerment enables women business owners to tackle challenges confidently and excel.As you pursue funding for your business, we encourage you to engage with available resources, participate in educational events, and seek out the capital necessary for growth.Remember, you are part of a vibrant community of women entrepreneurs dedicated to uplifting one another. Your success is within reach.

The Importance of Educational Resources and Events

Education plays a vital role in understanding the financial landscape for women small business owners. By equipping yourself with the necessary knowledge, you can navigate the complexities of securing funding and make informed decisions that benefit your business.Gaining a solid understanding of financial principles is essential for women entrepreneurs. Education empowers you to comprehend loan terms, interest rates, and repayment structures, enabling effective engagement with lenders and better negotiation of loan agreements.We provide a wealth of resources to support your ongoing education, particularly in the area of lending, and we are eager to assist you in your journey toward business growth. If you have questions related to coaching or other support, please reach out to our dedicated team for assistance to ensure you receive the help you need.

Embarking on the journey from corporate to entrepreneurship is both thrilling and challenging for small business owners. Whether you’re driven by a lifelong dream or recent inspiration, transitioning successfully requires careful planning and consideration. In this comprehensive guide, we’ll cover the following key aspects to help you navigate this transition with confidence:

• Assessing your readiness to embrace entrepreneurship.
• Identifying valuable skills transferrable from your corporate experience.
• Overcoming common challenges and avoiding potential pitfalls.
• Crafting a transition plan tailored to your goals.
• Cultivating a resilient and entrepreneurial mindset.

 

Meet the Experts

Jesse Armenta

Jesse

is a dynamic entrepreneur who, at 43, has transitioned from a successful 13-year career in corporate management at Toyota Motor Sales North America to fulfilling their lifelong dream of entrepreneurship. After careful deliberation, they launched a café in 2019, which has since expanded into food and catering despite the challenges of the pandemic. Their journey, marked by resilience and adaptability, is a testament to the spirit of entrepreneurship.

Gladys Castro

Gladys is a business credit advisor at Accion Opportunity Fund with over 8 years of experience. She helps entrepreneurs launch and expand their businesses by helping them access capital, including loans. She loves to work with entrepreneurs in both Spanish and English.

 

Assessing Your Readiness for Entrepreneurship

Transitioning from the corporate world to entrepreneurship demands careful introspection and evaluation. Consider the following aspects to determine if you are ready to make the transition:

• Financial Stability: Evaluate your personal financial situation to determine if you have enough savings or other income sources to support yourself during the initial stages of your business. Experts recommend having at least 6 months of personal savings before quitting your job, but the right amount of savings varies from person to person.
• Passion and Vision: Reflect on your passion for entrepreneurship and the clarity of your business vision. Assess whether your business idea aligns with your values and long-term goals. Be realistic about the work it takes to run a successful small business.
• Risk Tolerance: Assess your comfort level with uncertainty and risk. Entrepreneurship often involves navigating unforeseen challenges and setbacks. It requires resilience and adaptability.
• Time Commitment: Consider the time and energy you can dedicate to your business. Assess whether you’re prepared to invest significant time and effort into building and growing your venture, especially during the early stages.
• Skills and Knowledge: Evaluate your skills relevant to entrepreneurship. Identify areas where you may need to acquire additional expertise or seek external support. For example, many business owners choose to hire a bookkeeper or accountant early on in their entrepreneurial journey.

Knowing when you are ready to go full time in your business is a decision each business owner must come to on their own, keeping in mind their unique needs. For many, the pivotal moment comes when they feel confident in their business. For others the thrust of the decision will come from changes in their personal life or from reaching a certain place in their career journey.

Leveraging Corporate Skills in Entrepreneurship

Whether you’ve always known you would start your own business or you only started to consider entrepreneurship recently, with the right plan in place, you have the skills and knowledge to make your dream a reality. Many skills acquired in the corporate world are invaluable assets in entrepreneurship. Here’s how you can leverage your corporate experience:

• Project Management: Utilize your experience in managing complex projects and deadlines to effectively plan and execute tasks in your business. As a small business owner, you will wear many hats at the same time.
• Leadership and Team Management: Apply your leadership skills to inspire and motivate your team, fostering a positive work environment and driving productivity. Create a culture of learning from your mistakes, owning them, and moving on without beating yourself up. Unfortunately, not everything has this experience in a corporate role, but, as a small business owner, you can learn from both what worked and what didn’t work in your corporate job.
• Problem-Solving: Draw upon your experience in problem-solving and decision-making to address challenges and identify opportunities for innovation in your business.
• Communication: Leverage your communication skills to build strong relationships with customers, partners, employees, and stakeholders, effectively conveying your business vision and value proposition.
• Networking: Capitalize on your existing network from the corporate world and grow your network of fellow small business owners to establish connections, seek mentorship, and access resources that can support your entrepreneurial journey. Don’t be afraid to reach out to other small business owners to ask questions and share resources.

Overcoming Common Challenges During the Corporate to Entrepreneurship Transition

Navigating the transition from corporate to entrepreneurship involves addressing various challenges head-on. Here’s how to overcome some common hurdles:

• Preparation: Begin by creating a business plan that outlines both short-term objectives and long-term goals. Develop an action plan to guide your daily activities and milestones, and utilize tools like calendars to stay organized and accountable.
• Value Proposition: Avoid the pitfall of confusing passion with a viable business idea. While passion is essential, ensure your business concept aligns with market demand and offers a clear value proposition to your target customers. Identify their needs and preferences, and carefully craft your offerings accordingly.
• Feeling Alone: Entrepreneurship can be isolating. Building a supportive community is crucial for success. Cultivate relationships with fellow entrepreneurs, seek mentorship from experienced professionals, and engage with local business networks to foster collaboration and camaraderie. Consider connecting with a business coach, like those available through Accion Opportunity Fund, to receive personalized guidance and support.
• Funding: Securing adequate funding is a common challenge for aspiring entrepreneurs. Begin by determining the exact amount of capital required for your venture and explore various funding options, such as business loans, grants, or crowdfunding. Proactively engage with lenders to understand their requirements and evaluate your financial readiness. Additionally, consider using personal savings and assets to support your business. Remember to maintain a realistic budget and financial plan to ensure sustainable growth and minimize financial strain.

Navigating the Shift: Corporate to Entrepreneurship

Transitioning from the stability of a corporate career to the dynamic world of entrepreneurship requires careful preparation and strategic foresight. Here’s how to prepare for the shift and navigate the uncertainties of entrepreneurship with confidence:

• Stay Organized: Establish effective organizational systems and processes to manage your time, tasks, and resources efficiently. Utilize tools such as calendars, task lists, and project management software to stay on track and prioritize your activities effectively.
• Have Contingency Plans: Anticipate that everything may not go as planned and prepare contingency plans to address potential challenges and setbacks. Build buffers into your budget and timelines to accommodate unexpected expenses or delays, ensuring that you have the flexibility to adapt to changing circumstances.
• Invest in Professional Expertise: Recognize the value of investing in professional expertise, such as hiring a skilled accountant or financial advisor. A knowledgeable accountant can provide valuable insights into tax regulations, financial planning, and business strategies, helping you optimize your financial management and maximize your profitability.
• Remain Adaptable: Flexibility and adaptability are essential qualities for success in entrepreneurship. Recognize that your business will evolve over time, and be prepared to pivot, innovate, and adjust your strategies in response to changing market conditions, customer needs, and competitive pressures.
• Consistency is Key: Establish consistent habits and routines to maintain momentum and progress towards your goals. Whether it’s setting aside dedicated time each day for business development activities or consistently monitoring your financial performance, prioritize consistency in your actions to drive long-term success.

Transitioning to entrepreneurship requires courage, resilience, and a willingness to embrace uncertainty. By staying organized, planning for contingencies, investing in expertise, remaining adaptable, and prioritizing consistency, you can prepare yourself for the challenges and opportunities that lie ahead on your entrepreneurial journey.

Crafting a Transition Plan

Embarking on the journey from corporate life to entrepreneurship requires careful planning and strategic foresight. Here’s how to craft a comprehensive transition plan to guide you through this transformative process:

Business Plan

Start by developing a detailed business plan that encompasses your vision, mission, and objectives. Outline your products or services, target market, competitive analysis, and marketing strategies. Establish clear financial projections, including revenue forecasts, expenses, and break-even analysis. Your business plan serves as a roadmap for your entrepreneurial endeavors, providing direction and clarity amid uncertainty.

Marketing Plan

Formulate a robust marketing plan to effectively promote your brand and attract customers. Identify your target audience and tailor your messaging to resonate with their needs and preferences. Utilize various marketing channels, such as digital advertising, social media, content marketing, and networking events, to enhance your visibility and reach. Implement strategies for customer acquisition, retention, and engagement to foster long-term relationships and drive growth.

Financial Plan

Develop a comprehensive financial plan to manage your business’s finances effectively. Determine your startup costs, operating expenses, and cash flow projections. Explore financing options, such as loans, investors, or bootstrapping, and assess the associated risks and benefits. Establish financial controls and systems to monitor your business’s performance and ensure financial sustainability. Regularly review and adjust your financial plan as your business evolves to adapt to changing market conditions and opportunities.

Realistic Expectations

Set realistic expectations about the challenges and opportunities that come with entrepreneurship. Recognize that building a successful business takes time, effort, and perseverance. Anticipate setbacks and obstacles along the way, but remain resilient and adaptable in the face of adversity. Set achievable milestones and celebrate small victories to stay motivated and focused on your long-term goals.

Adaptable Mindset

Cultivate an adaptable mindset to navigate the uncertainties of entrepreneurship effectively. Embrace change and innovation as opportunities for growth and learning. Remain open to feedback, insights, and new perspectives from customers, mentors, and peers. Continuously evaluate and improve your strategies, processes, and business model to stay competitive and relevant in your industry. Don’t be afraid to experiment and try new things.

Crafting a transition plan that encompasses these key elements will empower you to navigate the challenges and opportunities of entrepreneurship with confidence and resilience. By staying focused on your goals, you can successfully transition from corporate life to entrepreneurship.

Top Tips for Making the Leap

Making the leap from corporate to entrepreneurship requires careful planning and courage. Here are some top tips to guide you:

• Gain Industry Experience: Acquire relevant industry experience through internships, part-time jobs, or volunteering to gain insights into your target market and industry dynamics.
• Seek Mentorship and Community: Connect with experienced entrepreneurs or industry professionals who can offer guidance, advice, and support as you navigate the challenges of entrepreneurship. Build community around your business.
• Validate Your Business Idea: Conduct market research to assess the demand for your product or service, identify potential competitors, and refine your business model accordingly.
• Build a Strong Support Network: Surround yourself with a supportive network of friends, family, mentors, and fellow entrepreneurs who can provide encouragement, feedback, and emotional support.
• Stay Resilient and Persistent: Prepare for setbacks and challenges along the way, but remain resilient and persistent in pursuing your entrepreneurial dreams. Learn from failures, adapt your strategies, and stay focused on your long-term vision.

Conclusion

Transitioning from a stable corporate position to entrepreneurship is a significant but rewarding endeavor. By leveraging your corporate skills, planning, and seeking support when needed, you can navigate this transition successfully and build a thriving business.

Ready to embark on your entrepreneurial journey? Schedule a session with a business coach today and take another step towards realizing your dream.

External financing can be a great way to help you reach your business goals, but with so many different terms, rates, and fees, it can be difficult to compare financing options. So, how much does a line of credit cost, and how does that compare to the cost of a term loan?

Term Loan Vs Line of Credit:Typical Uses

While they are both types of debt capital, lines of credit and term loans have very different uses in small business finance. For a deep dive into the differences between term loans and lines of credit, check out our article: Term Loans and Lines of Credit: What’s the Difference?

In general, lines of credit and term loans are best used for the following small business expenses:

Line of Credit

• Inventory
• Payroll
• Seasonal working capital
• Short term costs

Term Loan

• Equipment
• Real estate
• Start-up capital
• Larger costs
• Longer time needed to repay

Term Loan and Lines of Credit Cost Comparison

Interest rates

, annual fees, principal, and credit scores can make for a confusing time when it comes to comparing term loan and line of credit cost. To help you determine the best financing option for your business, we’ve broken the costs down into a side-by-side comparison.

!function(e,i,n,s){var t=”InfogramEmbeds”,d=e.getElementsByTagName(“script”)[0];if(window[t]&&window[t].initialized)window[t].process&&window[t].process();else if(!e.getElementById(n)){var o=e.createElement(“script”);o.async=1,o.id=n,o.src=”https://e.infogram.com/js/dist/embed-loader-min.js”,d.parentNode.insertBefore(o,d)}}(document,0,”infogram-async”);

What is the Prime Interest Rate?

Prime or the prime interest rate

is the prevailing interest rate that traditional banks charge to customers with excellent credit scores. The prime rate is usually the same as the interest rate set by the US Federal Reserve. If your credit score could use some improvement, you will likely be charged more than prime.

Merchant Cash Advance (MCA)

Merchant Cash Advances or MCA are another common type of business financing. When a small business owner takes out a merchant cash advance, they’re given cash up front, which they repay through a predetermined percentage of their daily debit and credit card sales. This can be a great lending option for businesses with fairly stable debit and credit card sales, but it is also a common vehicle for predatory lending practices. If you are considering a Merchant Cash Advance, make sure you read and understand the terms carefully before agreeing to the loan.

Cost vs Flexibility

All three of these popular loan options have pros and cons that you need to consider before choosing a loan for your business. The chart below helps you consider the total cost of a loan verses the flexibility of it’s repayment terms (i.e. how much and how often you will make payments).

Which is Right for Your Business?

Comparing the cost of term loans and lines of credit can feel a bit like comparing an apple and an orange. If you are considering an MCA as well, the decision can get even more confusing. The best way to decide what is right for your business is to start with what your business can afford in terms of monthly or weekly payments, what the loan will be used for, and what loan terms work best for your business’s financial situation. Once you have that list, you can start comparing it to different financing options to find the best fit for your business.

Financing with Accion Opportunity Fund

If you do decide that a term loan is right for you and your business, consider working with Accion Opportunity Fund. At Accion Opportunity Fund, our goal is not only to help you get the funding and support you need to launch your business, but to help you grow and thrive once you’ve got your foot in the door. Accion Opportunity Fund is a government-regulated, non-profit financial institution with a mission to help small business owners reach their goals. Find out more about our small business loan program and apply online today.

Disclaimer: Average interest rates and typical loan terms can change rapidly, so please thoroughly check with any provider to confirm rates and terms.

Learn More About Business Financing

When it comes to your finances, you want clear guidance and easy to implement tools based on your unique needs. Visit Accion Opportunity Fund. to get started strengthening your financial management and meeting your goals.

Experience a different kind of financial education. Learn with AOF has flexible, on-demand courses developed by small business owners, for small business owners. Learn on your schedule, with no time commitment or limit. Save your progress any time to fit courses into your busy schedule.

Research shows that diversity in business leads to economic development and growth. If racial income disparities were to be eliminated, America’s annual GDP would be $2.1 trillion higher—a 14% increase. However, systematic barriers persist, making it difficult for entrepreneurs of color to get the funding and business resources they need to set up and grow their companies. And that doesn’t even account for the hardship caused by the pandemic.

But don’t lose hope. Where there are challenges, there are people and organizations willing to step up. And in this article, we’ll show you how to access the many minority small business grants available to entrepreneurs just like you.

10 Small business grants for minorities

Dozens of organizations offer general-purpose grants to entrepreneurs of all backgrounds, but some go the extra mile to support diverse businesses. These 10 grants exist specifically for minority and women entrepreneurs.

1. Stacy’s Rise Project

Since 2017, Stacy’s has provided funding, resources, and mentorship to thousands of women entrepreneurs, including entrepreneurs of color. Together with Hello Alice, a company that helps small businesses thrive, and Hello Sunshine, a media company founded by Reese Witherspoon, Stacy’s is currently offering $15,000 in business grants to women founders in the packaged food and beverage space.

In addition to a cash prize, each winner will receive mentorship from a PepsiCo executive, visibility on Stacy’s platform and those of its partners, and access to a peer network with other women entrepreneurs. To be eligible, you must:

• Identify as a woman entrepreneur or a woman entrepreneur of color.
• Be the leading executive (founder or co-founder) of the business.
• Operate a for-profit, U.S.-based business selling consumer packaged goods.
• Must have $25,000 to $1 million in annualized sales.
• Must be at least 50% woman-founded or currently 50% woman-owned.

2. Coalition to Back Black Businesses

The Coalition to Back Black Businesses is an annual grant initiative administered by the U.S. Chamber of Commerce Foundation that’s promised to endow a whopping $14 million to support Black-owned small businesses in economically distressed communities.

The program opens for its final year of funding in August 2023. In September, a handful of randomly selected finalists and waitlisted finalists will be asked to complete a full grant application. (Special consideration will be given to Black women-owned businesses, which must make up at least 25% of the awarded grants.) Winners of the $5,000 grants are announced in October 2023. These winners are eligible to apply for additional $25,000 enhancement grants the following summer.

3. The SoGal Black Founder Startup Grant

With the support of several partners, the SoGal Black Founder Startup Grant awards Black women and Black nonbinary founders with several $10,000 and $5,000 cash grants each year. Awardees also receive fundraising help and technical assistance, as well as “ask-me-anything” access to the SoGal Foundation and SoGal Ventures teams. To qualify, you must:

• Self-identify as a Black woman or Black nonbinary entrepreneur (inclusive of multiracial Black women and multiracial Black nonbinary folks).
• Have a legally registered business.
• Plan to seek investor financing in order to scale, now or in the future.
• Have a scalable, high-impact solution or idea with the ambition to be the next billion-dollar business.

4. Fearless Strivers Grant Contest

The Fearless Strivers Grant Contest is a collaboration between Mastercard and the Fearless Fund (a venture capital fund that invests in businesses led by women of color who are seeking pre-seed, seed-level, or series-A financing). The grant will give $10,000 grants to 11 small businesses across the country.

Winners will also receive tools to support their online business growth, and one-on-one mentorship. While the national program awards a single monthly $10,000 grant, additional grants are often available to residents of specific cities throughout the year.

To qualify, you must be a Black woman who is a legal U.S. resident, 18 years old or older, and the principal owner of a U.S.-based small business.

5. digitalundivided’s BREAKTHROUGH Program

If you need help with growth marketing or leveling up your customer analytics, this grant could be your big break. Each company accepted into digitalundivided’s annual BREAKTHROUGH program receives mentorship on these topics as well as a $5,000 cash grant.

The program itself is a partnership between digitalundivided, a nonprofit organization dedicated to catalyzing economic growth for Latina and Black women entrepreneurs, and JPMorgan Chase’s Advancing Black Pathways, an initiative to help the Black community achieve economic success and empowerment. Keep an eye on digitalundivided’s website for information about upcoming grant cycles. To qualify, each applicant must:

• Identify as a woman
• Identify as Black or Latina (or both)
• Be 18 years of age or older
• Have a business that’s been registered for at least a year
• Have majority ownership of an established business
• Have a technology component to the business (like a website or mobile app)
• Generate a minimum of $50,000 in annual business revenue

6. The Power Forward Small Business Grant

The Power Forward Small Business Grant is a combined commitment of $1 million from Vistaprint, the Boston Celtics Shamrock Foundation, and NAACP. The $25,000 grants are awarded on a rolling basis to Black-owned small businesses across New England. Recipients will have opportunities to be featured on national co-branded platforms and receive marketing and design resources customized to their specific needs.

To qualify, you must be a Black-owned business with a maximum of 25 employees and be based and operating in Massachusetts, Maine, New Hampshire, Rhode Island, Vermont, or select areas of Connecticut.

7. EnrichHER Small Business Grant

EnrichHER provides grants of $5,000 to entrepreneurs who are women or people of color. The company itself is a Black woman-owned FinTech lender, and has so far given out $14 million in capital to minority-owned businesses from 47 U.S. states. The cash can be used for anything from rebranding your company to developing a new product or service.

8. Comcast RISE Investment Fund

In 2020, Comcast NBCUniversal announced a multi-year plan to help fight injustice and inequity. To do that, they promised to allocate $75 million in cash and $25 million in media over the following three years. The Comcast RISE Investment Fund is part of that initiative. The program will provide 500 grants of $10,000 each. The grants are available in five cities:

• Chicago, IL
• Miami, FL
• Oakland, CA
• Seattle, WA
• Washington, D.C.

Each city is allotted 100 grants. To qualify for one, your business must be at least 51% owned and operated by someone who identifies as a person of color, including Black, Indigenous, Hispanic, and Asian American owners. All women entrepreneurs are also eligible for this grant.

9. Galaxy of Stars Grant

Galaxy of Stars is a community for minority and women entrepreneurs. It’s a great source of networking opportunities, and it gives business owners a space to support one another in reaching their business goals. The organization’s $2,750 Galaxy Grant is open to ethnic minorities and women who currently own their business or plan to start one. As a testament to the Galaxy of Stars’s emphasis on mutual support, they have an added perk for referrals: if you refer a friend to the grant and they win, the grant amount is doubled, and both applicants get a cash prize.

10. Wish Local Empowerment Program

Wish is an ecommerce platform that allows brick-and-mortar stores to become pickup locations for online orders through a program called Wish Local. To help promote diversity among American businesses, Wish has promised to give 4,000 Wish Local small business partners grants between $500 and $2,000.

There are no specific requirements for spending the grant money, which means you can use it for anything from real estate or equipment procurement to working capital. Applicants must be Black-owned stores that have 20 or fewer employees and an average annual revenue under $1 million.

Minority business grant FAQs

Finding grants is just the first step of the funding process. The next step is making sure you understand how grants work, what purpose they serve, and how you can improve your chances of getting one. Here are some frequently asked questions about minority business grants.

What is a minority business grant?

A minority business grant is a grant given to minority-owned businesses, often in underserved communities. The term “minority” can refer to ethnic groups such as African American, Hispanic, Native American, and Asian-American business owners, but it also encompasses low-income communities, members of the LGBTQ+ community, and veterans. American women from all ethnicities are also considered a minority group by many grant-making organizations.

What is the difference between a small business grant and a small business loan?

There are a few key differences between a small business grant and a small business loan:

• While a business loan has to be repaid according to a specific schedule and usually with interest, a grant is free money. There’s no interest rate, and you never have to repay it.
• Grants are typically offered to qualifying businesses on a competitive basis. Loans, on the other hand, are offered based on your business’s financial stability or revenue generation.
• Grants are often used to further a mission. That could be elevating economic opportunity for a particular group, creating a level playing field for founders of color, or supporting businesses in a particular industry. Loans, on the other hand, are offered to help individual businesses, usually without specific ideals in mind.
• Grants are typically offered through a one-time contest or annual assistance program. Loans are available on an ongoing basis.
• With grants, you’re competing with other businesses for a limited pool of money. But with loans, the lender judges your business independently, solely on the basis of your credit history and entrepreneurship record.

How can I improve my chances of winning a minority small business grant?

When you apply for business grants, you’re not just being judged on your personal business acumen. Instead, you’re being compared to other businesses that have applied for the same funding opportunities. To increase your chances of winning the grant:

• Check that you meet all the qualifying criteria. Some grants can get very detailed, and you don’t want to waste time applying for ones that aren’t a good fit.
• Take your time on each app. While it’s tempting to apply for a large number of grants quickly, you’re more likely to get a grant if you take your time on a select few and customize each application to the grantor’s requirements.
• Be specific, not general, when it comes to describing your business, your values, and your goals. The more a grantor can see what sets you apart, the more likely they are to buy into your mission.
• Understand what the grantor is hoping to achieve by awarding these grants. In your application, explain how selecting your business would help the grantor achieve its goals.
• Include a well-written business plan. Some grant applications request a business plan. If required, your business plan should highlight your business goals, marketing strategies, and financial projections. Also include an excellent pitch for why your business should get the grant.
• Follow the application instructions to the letter. If you’re asked to submit one page, don’t go over and submit two instead. This can disqualify you in many instances, so make sure to read and follow the instructions carefully during the application process.

Where else can I find funding resources for minority businesses?

For more funding sources, including loans, check out the following:

• 1. Grants.gov: This is a comprehensive directory of 1,000+ federal grants. Eligibility requirements are listed for each program.
• 2. Minority Business Development Agency (MBDA): The MBDA is the only federal government agency dedicated to the growth and global competitiveness of minority business enterprises. The website includes links to grant programs.
• 3. National Association for the Self-Employed (NASE): With a membership to NASE you’ll get notifications about and access to grant opportunities. NASE also offers $4,000 Growth Grants to four NASE members each quarter.
• 4. U.S. Small Business Administration (SBA): The SBA is a cabinet-level federal agency dedicated to small businesses. It runs a number of business centers and business development programs, including its Small Business Innovation Research and Small Business Technology Transfer (SBIR and STTR) programs. To qualify for these, your small business must be engaged in scientific research and development.
• 5. National Black MBA Association: This association helps create educational, wealth-building, and growth opportunities for historically underrepresented entrepreneurs and professionals. Its annual Scale-Up Pitch Challenge, a competition that connects startups with early-stage investors and venture capitalists, is part of that mission. Each year, three finalists compete, and the winning team takes home a $50,000 grand prize.
• 6. U.S. Department of Agriculture: The USDA keeps a list of grants and loans for small business owners who work in rural and agricultural communities. Many of these funding opportunities cater specifically to family farmers and ranchers who cannot obtain commercial credit from banks and other traditional financial institutions.

Explore funding options with AOF

Grants are a fantastic way to get free financial assistance for your business. However, winning grant money can be extremely competitive. For some of the bigger programs, you could be competing with hundreds of other small businesses to earn a limited pool of funds.

Accion Opportunity Fund also offers small business grants. Visit our program page to view our current small business programs, several of which include grant opportunities.

If you need small business financing fast, consider taking out a loan from a community development financial institution, like Accion Opportunity Fund. Our flexible-term loans allow minority business owners to get the funding and business training they need to start—and grow—their businesses. In fact, 75% of AOF’s borrowers and 82% of the entrepreneurs we coached in 2021 were people of color. Find out more about our small business loan program.

Hispanic-owned businesses are growing more rapidly than others, with Latina-owned being the fastest growing portion of women-owned businesses. Latinx entrepreneurs have been responsible for approximately 50% of net new small business growth over the past decade, according to data from the Stanford Latino Entrepreneurship Initiative (SLEI).

For this pace to continue, Hispanic and Latinx entrepreneurs need easier access to capital and resources. While funding from corporate banks has traditionally been difficult for Hispanic business owners to access, some new models and institutions are opening their doors for new funding opportunities.

What qualifies as a Hispanic-owned small business?

A Hispanic-owned small business is a small business that is a for-profit enterprise owned and controlled by one or more Hispanic persons.

The U.S Census Bureau defines Hispanic or Latino as “a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin regardless of race.”

What is a minority business loan?

A minority business loan is a type of loan or business funding that is offered exclusively to minority-owned businesses. Most federal programs will use the term “socially disadvantaged” when referring to minority businesses, which can include Black Americans, Hispanic Americans, Native Americans (Alaska Natives, Native Hawaiians, or enrolled members of a Federally or State recognized Indian Tribe), Asian Pacific Americans, Subcontinent Asian Americans, and members of other groups designated from time to time by SBA.

Small business loan options include short-term and long-term loans, as well as credit cards, a line of credit, and microloans.

5 Hispanic small business loans

Many traditional bank loans are still largely inaccessible to Hispanic business owners in underserved communities, but there is an increasing number of lenders who want to support this rapidly-growing segment of the nation’s economy. Research shows that Community Development Financial Institutions (CDFIs) have historically been key in providing funds to underserved groups. Here are several loans open to Hispanic and minority entrepreneurs to start off your search.

1. The Latino Economic Development Center

The Latino Economic Development Center (LEDC) is a certified Community Development Financial Institution that helps build and grow local businesses in Puerto Rico as well as the Washington, D.C. and Baltimore metropolitan areas. The LEDC offers three types of loans:

• LEDC Growth Loan: Up to $250k for established small businesses that have been operational for at least two years and are seeking capital to grow or expand operations.
• LEDC Startup Loan: Up to $20k for startups that have been operational for less than two years and are seeking capital to launch or consolidate their venture.
• LEDC Seed Loan: Up to $5k for startups that have been in operation for less than a year or that have plans to launch a company within three months of receiving funds.

2. Camino Financial

Twin brothers Sean Salas and Kenny Salas were twelve years old when their mother lost her chain of Mexican restaurants due to lack of capital and resources. They founded Camino Financial with the mission of helping overlooked entrepreneurs fund their dreams. The organization offers three kinds of loans to small businesses that have difficulty finding funding elsewhere:

• Startup loans: To fund side gigs that need capital to reach the next level.
• Microloans: Designed to finance underserved entrepreneurs and immigrant business owners. This program accepts applicants with no credit history.
• Small business loans: For owners who’ve been in operation for at least nine months, generate $30,000 in sales, and are looking to expand.

3. U.S. Small Business Administration (SBA)

The SBA is a federal government agency that extends financing to small businesses through a network of approved lenders who meet certain guidelines. While there are no SBA loan programs specifically for Hispanic entrepreneurs, there are a number of SBA loans and programs that cater to this segment. Some of these include:

• 7(a) Loans: This is SBA’s most common loan program, which includes help for businesses in special circumstances. The maximum loan amount is $5 million.
• 504 loans: This is a long-term, fixed-rate loan of up to $5 million to help finance major fixed assets that promote business growth and job creation.
• Microloans: These are smaller loans of up to $50,000. They’re provided through SBA intermediaries to small businesses and not-for-profit childcare centers for startup and expansion costs.
• Community Advantage loan program: The SBA launched this pilot program to assist small businesses in underserved markets. The maximum loan size is $350,000 and the program’s current scheduled end date is September 30, 2024.

4. CDC Small Business Finance

CDC Small Business Finance

is a nonprofit organization that has delivered over $165,000 in financing to minorities, women (including Hispanic women) and veterans. There is no collateral required for loans from CDC Small Business Finance. What’s more, they offer the flexibility to waive some requirements for businesses in low-to-moderate income communities, start-up businesses, and businesses that are veteran owned. The two main types of loans on offer from CDC Small Business Finance are:

• Small business loans: These are regular business loans from $20,000-$350,000 that are designed specifically for entrepreneurs and have fixed and variable rates available to meet business needs.
• Credit-blind financing for entrepreneurs of color: While currently only for Black-owned (including Afro-Latino) businesses in Metro Detroit, this pilot program offers loans of up to $100,000 and is looking to expand in the future.

5. Accion Opportunity Fund

Accion Opportunity Fund (AOF)

is also a nonprofit lender, created to support women entrepreneurs and minority-owned businesses. AOF offers loan amounts between $5,000 and $100,000. Because no two businesses and business owners are alike, our loan terms are flexible and personalized to suit the needs of your growing business. Our small business loans include:

• Southern Opportunity and Resilience (SOAR) Fund: For small businesses across the south and southeast who were in business prior to September 2019 and experienced economic hardship as a result of the COVID-19 pandemic.
• Small Business Progress Loan: Loan amounts of $5k to $100k, in partnership with American Express. The terms are flexible and once the loan is approved, you will receive ongoing updates with new business insights, expert advice, and notifications of upcoming events.

Once you apply, we’ll share several offers you can choose from with different term lengths, monthly repayment options, and interest rates. If we don’t have any available options for you, we’ll try and refer you to one of our partners or provide other resources.

5 Hispanic small business grants

While loans are a fantastic way to get your business funded, it may be more suitable for your business to apply for grant programs instead. This is especially true if you’re in the early years of your startup or facing challenging times and don’t have the stable, reliable cash flow you need to pay back the loan. Here are some grant opportunities for Hispanic and Latinx business owners to check out.

1. Comcast RISE

Comcast RISE

is working to support small businesses, especially women-owned and minority-led businesses, that have been economically impacted by the pandemic. In 2021, Comcast announced it would give $11 million in additional grants to 1,100 businesses. In addition to monetary grants, recipients could also win consultations with Comcast’s local Effectv marketing and research teams, media campaign support, the production of a 30-second TV commercial, or a technology makeover. To qualify for grants, businesses must be:

• At least 51% owned and operated by a woman or someone who identifies as a person of color, including Black, Indigenous, Asian American, and Hispanic business owners.
• Independently owned and operated.
• Registered in the U.S.
• In operation for more than a year.
• Located within the Comcast business or Effectv service area footprint.

The deadline for the next small business grant is October 16, 2022.

2. The Entrepreneurial Spirit Fund by SIA Scotch

SIA Scotch

was launched in 2012 on Kickstarter.com by Carin Luna-Ostaseski, one of the first Hispanic entrepreneurs in history to create a scotch whiskey brand. In keeping with the brand’s vision to inspire others to achieve the unexpected and provide small business owners of color, including Hispanic small business owners, with capital, mentorship, and community, SIA Scotch has pledged $110,000 to support entrepreneurs of color in the food and beverage industry. Eleven grants of $10,000 each will be awarded to select for-profit businesses that are majority owned by a person of color.

3. Amber Grant

The Amber Grant was created in 1998 with the goal of empowering female business owners. While it’s not specifically aimed toward applicants of Hispanic descent, it’s a great opportunity for Latina business owners looking for high-dollar grants to help them achieve their goals. The fund currently awards over $30,000 each month to various winners. In addition to a $10,000 monthly grant, there are two $25,000 annual grants available, as well as $10,000 industry-specific grants for businesses in skilled trades, health and fitness, food and beverage, sustainability, animal services, creative arts, and more. There are also several $2,000 mini-grants available throughout the year.

4. National Association for the Self-Employed (NASE)

While not exclusive to Hispanic entrepreneurs, the National Association for the Self-Employed offers business development grants of up to $4,000 to its members. The NASE Growth Grant has awarded nearly $1,000,000 in funding so far to small businesses, and the money can be used for marketing, advertising, hiring employees, expanding facilities, or any other specific business needs.

5. USDA Rural Business Grants

Hispanic businesses and business owners who live in rural areas can check grants from the U.S. Department of Agriculture. The grant money “must be used for projects that benefit rural areas or towns outside the urbanized periphery of any city with a population of 50,000 or more.” To be eligible, a small business must have fewer than 50 new workers and less than $1 million in gross revenue.

Am I eligible for a Hispanic small business loan?

The eligibility criteria for each individual loan program will depend on the institution and the lender, but increasingly, Community Development Financial Institutions and other non-profit lenders are relaxing their terms when it comes to lending to Hispanic and other minority entrepreneurs in order to give them access to much-needed capital.

Latino communities, including Latino entrepreneurs, are among the most unbanked and underbanked groups in the U.S., according to the FDIC. Many Latino business owners say they distrust banks or lack the minimum balance to keep an account open.

If you find yourself in this position, search for loan programs that look beyond the credit score to determine your full financial and entrepreneurial potential. Generally speaking, however, most lenders will ask prospective borrowers for the following information:

• Purpose of loan
• Key details about the business, such as how long it’s been trading for
• Key financial figures, such as turnover, profit, and cash flow
• Business and bank account summaries
• Credit history
• A detailed business plan

Other valuable funding resources for Hispanic small businesses

In addition to the loans and grants listed above, here are a few more resources where you can find funding for your business.

1. Grants.gov

With a mobile app, a grants learning center, and a constantly-updated list of government grants from 26 federal agencies, Grants.gov is the one-stop shop for finding both grants to apply for and resources to help you along your journey. The website enables you to apply for grants through its own portal, allowing you to track applications and stay on top of deadlines easily.

2. U.S. Hispanic Chamber of Commerce

The United States Hispanic Chamber of Commerce (USHCC) promotes the economic growth, development, and interests of more than 4.7 million Hispanic- and Latino-owned businesses in the US. The USHCC has a network of more than 250 local chambers and associations nationwide and partners with more than 260 American corporations. Contacting your local chamber can be helpful when applying for a business loan, since many of the chapters work with lenders and banks to administer loan programs for Hispanic entrepreneurs.

3. Minority Business Development Agency (MBDA)

The Minority Business Development Agency or MBDA boasts many grant funding programs that are designed to help keep minority businesses afloat. In 2012, the agency said they’d supported the creation of 5,787 new jobs by assisting minority-owned businesses in obtaining nearly $4 billion in contracts and capital in a single year. The agency maintains a list of open grant competitions on its website.

4. AOF Business Resource Library

Also check out Accion Opportunity Fund’s Business Resource Library, where you can find both general and specific resources for Hispanic small businesses in both English and Spanish in the form of articles, videos, and webinars,  including information on how to apply for small business loans, the various financing options available to Hispanic businesses, and best practices for accessing capital.

5. AOF Programs

In addition to providing loans, free business coaching, and educational resources, we can help you grow your business through our robust programs. Check out the offerings, which include grant opportunities, educational programming, and more.

Explore funding options with AOF

Access to capital is not exclusively dependent on traditional banks and corporate institutions that rely heavily on credit history to make financial decisions. As outlined in this article, there are a number of small business loans and grants that are eager to support your business and help in your company’s growth and success.

At AOF, we work exclusively with small business owners, many of whom have been denied traditional forms of capital, to ensure they have the funding they need to start, sustain, and grow their businesses. A majority (80%) of our clients are diverse, and our fast, flexible model of lending ensures that minority small business owners get the funding they need, when they need it. Explore our available small business loan options and apply here.

Many packaged food products on store shelves started as an idea in someone’s kitchen at home. There are a number of steps entrepreneurs go through to bring their products from their home kitchen to the broader market. If you’re looking to make that move, you might be wondering where to start. Learn more about how Gina Hollingsworth of Southern Okie’s Gourmet Spreads made the jump.

 

Find local resources

When Gina first realized that there was a demand for her spreads, she began researching how to scale her product online. She also asked owners of local stores for advice on getting food products to market. This search brought her to the Robert M. Kerr Food & Agricultural Products Center (FAPC) at Oklahoma State University, which offers resources and training for entrepreneurs in the food and agricultural product industries.

She took a basic training workshop, where she learned a wealth of information on topics like how to package and market her product and how to ensure compliance with local and national food regulations. Her experience at FAPC also exposed her to a number of additional resources available to help her start and grow her business. Gina learned about the Made in Oklahoma Program, which assists Oklahoma agribusiness companies market their products, and the Southern United States Trade Association (SUSTA), which provides funding for business owners to participate in trade shows.

“There’s a ton of resources available, probably right within your state,” Gina said.

 

Get Exposure

Gina began participating in trade shows and craft fairs across Oklahoma and later in neighboring states to market her business. “You make a lot of friends at craft shows,” Gina said, adding that her connections with other vendors helped her identify which shows to pursue next.

It was at a craft fair in Arkansas that Gina met Rita Seckington, former Vice President of Event Planning, Showcase Events and Regional Buying at Sam’s Club. Rita bought some Southern Okie spreads and encouraged Gina to register as a supplier at Sam’s Club Road Show Events. This program allows small business owners and entrepreneurs the opportunity to showcase their unique and/or regionally relevant items that are outside the normal item assortment at Sam’s Club.

After going through the approval process, Gina said she now has the ability to schedule an event at any Sam’s Club location. “It’s a huge opportunity and a great support for small businesses like me looking to get their product to more people,” Gina said. To learn more about possible Road Show opportunities for your business, contact your local Sam’s Club manager for more information.

Rita recalled that first meeting saying, “The thing that I loved about Gina was just her energy and the passion that she had for her business.” “You could truly tell that she had the entrepreneur spirit,” she added.

 

Get help when you need it

Like many new entrepreneurs, Gina said that she has learned how to be very efficient with her time in order to juggle all of the moving pieces involved in running her business. But she has identified areas where she can get help from others and outsource certain processes. She partnered with a co-packer to manufacture her product and she hires part-time employees during the busy season. Her husband also spends his spare time helping Gina with business operations. Finding ways to delegate allows Gina to focus on the creative aspects of her business that she loves most – marketing, product development, and coming up with new recipes that include her spreads as an ingredient.

 

Never give up

Gina recognizes that starting a business means embracing a certain level of uncertainty. “Sometimes you have to just take a risk and not be afraid,” she said.

Gina also maintains a positive attitude, even when that can be challenging. “There are going be some people that love the products and some people that don’t. You can’t take it personal if someone’s not a fan,” she said. “I show kindness to everyone.”

The main key to Gina’s success is her perseverance. “If it’s your passion and your dream and you feel like it’s what you’re supposed to do in life, then never give up,” she said.

Despite the many challenges of starting a business, the number of minority entrepreneurs in the U.S. is growing at a record rate. Over the last 10 years, the number of Latino/a/x-owned businesses has grown 34% — faster than any other demographic. And between 2007 and 2018, women-owned businesses grew 58%. (The number of firms owned by women of color grew at nearly three times that rate.)

For these businesses to succeed, they need access to resources and working capital — something that traditional financial institutions often fail to provide. In fact, minority-owned businesses are more likely than white-owned businesses to be denied credit. They’re also less likely to receive the full amount requested, and more likely to be discouraged from applying for credit for their business needs. Fortunately, there are a number of minority business loans that can provide better alternatives to fast-track your business.

What is a minority business loan?

A minority business loan is a type of financing provided specifically for underserved businesses (i.e., businesses owned primarily by entrepreneurs of color and/or immigrants). As such, minority business loans are usually easier for Black-owned businesses or women-owned businesses to secure than traditional financing. Some minority business loans also offer more flexible terms than traditional loans.

That means that minority business loans can help fill an important gap in funding equity. According to data made available by the US Federal Reserve, one in four Black-owned firms forgoes applying for credit. Of these, 56% say they just don’t want to accrue debt, while a full 60% say they don’t apply because they’re sure they’d be turned down. Women and other minority groups often report similar fears. If that sounds like you, a minority business loan could be an important stepping stone in gaining both financial strength and business confidence.

You can secure minority business loans from a number of organizations, including the U.S. Small Business Administration (SBA). Community development financial institutions and nonprofits are also good sources of financing options for minority entrepreneurs. The funding can usually be used for day-to-day operations, payroll, and purchasing new equipment.

Am I eligible for a minority business loan?

To be eligible for a minority business loan, you’ll need to prove that your business is at least 51% owned and controlled by people from minority communities. Some financing programs, such as the SBA’s 8(a) Business Development Program, require you to certify as a minority-owned business before you can apply. (You can obtain this certification through the SBA at certify.SBA.gov, then submit the certificate as part of your loan application.)

Most federal programs use the term “socially disadvantaged” instead of “minority.” According to the Code of Federal Regulations, this term indicates individuals who “have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities.”

To be considered socially disadvantaged, you have to have faced this kind of adversity because of circumstances outside your control. Traditionally, this includes Black Americans, Hispanic Americans, Native Americans (including Alaska Natives, Native Hawaiians, or enrolled members of a federally or state-recognized Indian Tribe), Asian Pacific Americans, and Subcontinent Asian Americans.

Eligibility requirements vary between lending providers and loan programs. Many loans are exclusively available to designated groups — like Black Americans or immigrants. Other loans have criteria concerning the longevity of the business or the stated use of the funds.

Types of minority business loans, grants, and other funding sources

There are a variety of business funding options available to minority-owned businesses. Here are a few of the most common.

Microloans for minority-owned businesses

Microloans are small, specialized business loans often available to small businesses through community or nonprofit organizations. These organizations usually offer microloans to existing businesses as working capital. The loan amounts frequently range from $500 to $50,000, and are often short-term loans ranging from three to six years.

Microloans are especially useful for minority-owned companies that find it difficult to secure traditional forms of financing. This can be due to biases embedded in the U.S. financial system, or to limited credit history and/or bad credit. Since microloans are smaller and often cater to businesses run by minority or underserved entrepreneurs, they tend to be easier to access and have fewer compliance requirements. They also tend to have lower interest rates than the average loan from a more traditional financial institution.

One of the organizations providing these microloans is Accion Opportunity Fund (AOF). AOF works closely with small business owners to provide them with fairly-priced loans, educational resources, coaching, and support networks. AOF provides these services in both English and Spanish. More than 90% of AOF’s clients are people of color, women, and/or low-to-moderate income individuals.

Community Development Financial Institutions

A community development financial institution (CDFI) is a private financial institution that provides credit and financial services to underserved markets and communities. CDFIs are a big umbrella that include the following:

• Community development banks (CDB)
• Community development credit unions (CDFU)
• Community development loan funds (CDLF)
• Community development venture capital funds (CDVC)
• Community development corporations (CDCs)

Many CDFIs work primarily in low-income or rural areas, as well as with underserved communities. That means many of their loans and other financial products were created with minority or underserved business owners in mind. So if you’re looking for minority-business loans, CDFIs should be on your list.

There are almost 1,000 in the US, operating in every state and the District of Columbia. You can find CDFIs near you at CDFI.org. It is important to note that each CDFI is different because each one aims to serve the needs of its local community.

Lines of credit

Though not limited to minority-owned businesses, a line of credit is another option for short-term financing available through banks, credit unions, and some online lenders. A line of credit is a form of revolving credit that allows you to borrow or pay back any amount of money up to a certain pre-approved amount. This works similarly to a credit card or overdraft: Rather than receiving a lump sum of cash upfront, you have a credit limit with flexible repayment terms.

Having a business line of credit allows you to take out funds to use for supplies, cover payroll, run marketing campaigns, buy real estate, or increase your working capital. Many business lines of credit impose no restrictions on the use of funds. However, lines of credit should only be used as a short-term or emergency solution. They tend to have very high interest rates and are therefore one of the more expensive ways of securing funding.

Your access to a line of credit will also depend on your credit history, which means it will be difficult — and more expensive — to get a line of credit if you have a bad credit score. Like with any other loan, to get a line of credit you’ll need to apply to the financial institution with your business accounts, financial history, and desired amount.

Small business grants

Unlike lending programs, small business grants don’t have to be repaid. That’s one of the reasons they’re so sought after by small business owners. Grants come in a variety of formats and sizes, and from a variety of sources, including the government. Generally, they’re intended to help spur economic development in certain sectors, or to provide a boost for struggling new businesses.

To find federal, state, or local government grants, go to grants.gov, where you can search for currently available grant opportunities. A grant won’t provide funding to start a business, but it can help you through a difficult stretch or to support new or innovative work your company is doing. State and local grants are more likely to cater to specific minority groups and underserved communities than federal grants.

It’s worth keeping in mind that grants specifically for minority-owned businesses tend to be rarer among government grants in general than from other sources. Private grants, however, are extremely detailed in who they’re intended to support. That’s why they tend to offer the best opportunities for minority small business owners. For example, the Asian Women Giving Circle provides up to $15,000 to businesses led by Asian American women. (You can find this and other grants through websites like GrantWatch.)

Accion Opportunity Fund also offers small business programs, many of which include grants. Check out AOF’s educational programs to support small business owners.

SBA loans

The U.S. Small Business Administration is the go-to resource for all things small business. In addition to loans — some of which are offered specifically for minority-owned businesses — the SBA has a learning center for small business owners. This includes a section exclusively for women entrepreneurs. The organization also has small business development centers (SBDCs) all over the country that provide counseling and training to small businesses.

Funding options from the SBA are extensive. The SBA guarantees loans ranging from $500 to $5.5 million. These include:

1. The 7(a) Loan Program is SBA’s most common loan program. It provides financial help to small businesses with special requirements. These loans can be used for short- and long-term working capital or for refinancing current business debt. They can also be used to purchase real estate or equipment.
2. The 504 Loan Program provides long-term, fixed-rate financing of up to $5 million. These loans can be used for any major fixed assets that promote business growth and job creation. Only for-profit businesses are eligible for this loan. Your business’s tangible net worth must be less than $15 million, and your average net income must be $5 million or less (after federal income taxes) for the two years after you apply.
3. The SBA also offers microloans, that is, small-sized loans of up to $50,000. These are offered through nonprofit community-based organizations with experience in lending, management, and technical assistance. The average size of an SBA microloan is $13,000. The funds can be used for working capital, inventory, supplies, furniture, fixtures, and equipment.

In addition to loans for minority businesses in particular, the SBA runs these three programs:

1. The 8(a) Business Development program assists disadvantaged small businesses. Through this program, participating businesses can exclusively compete for certain federal contracts.
2. The HUBZone program also aims to provide federal contracts to small businesses. The goal of this program is to award at least 3% of the total available federal dollars each year to HUBZone-certified companies, i.e., businesses in historically underutilized business zones.
3. The SBA Mentor-Protégé program allows small businesses to get mentorship and business development help from bigger companies.

You may also want to consider the SBA 7(a) loan program or SBA’s microloan program, both of which are open to all small businesses.

Crowdfunding

Crowdfunding is a relatively new source of small business financing. It can be especially beneficial for start-ups that already have strong communities or customer bases. Crowdfunding for businesses is generally done in one of three ways:

• Offering rewards: This is the most traditional form of crowdfunding, and usually takes place on an online platform. If you’re fundraising in this way, you generally offer tiered rewards to people who back your campaign. Kickstarter is the best known of all crowdfunding platforms. The caveat is that most online platforms charge some kind of fee, and some charge a penalty if you don’t raise your goal amount. Be sure to read the fine print before you sign up.
  
• Low-interest loans: Popularized by Kiva, this crowdfunding model allows small-business owners to get no-interest loans that they can pay back on a flexible schedule. Small business owners are able to set the amounts they want and multiple lenders are able to support them with individual loans of as little as $25.
• Equity-based backing: Small businesses seeking larger investments can look to platforms like Seedrs. Seedrs lets you raise capital from investors by offering them equity in your company. (You can learn more about the pros and cons of equity-based financing here.)

Where can I find minority business loans and other funding sources?

Tracking down funding options can be a time-consuming process if you don’t know where to look. Here are some resources to help streamline your search.

Score

On a mission to foster vibrant small business communities through mentorship and education, SCORE is the largest business network in the U.S. It connects volunteer business mentors with entrepreneurs, who then benefit from expert, one-on-one mentoring, both remotely and in-person. SCORE also offers webinars, courses on demand, local events, and a library of online resources.

While not exclusive to minority businesses, SCORE understands that minority business owners may need specialized resources. It aims to provide those through its platform SCORE for All.

The Minority Business Development Agency (MBDA)

The Department of Commerce’s Minority Business Development Agency (MBDA) is the only federal agency solely dedicated to the growth of minority business enterprises. The agency also works to help minority businesses become more competitive in global markets.

To do that, the MBDA helps organize funding opportunities through independent investors. It routinely launches educational initiatives, and it offers networking options to connect minority businesses with contract opportunities.

Your Local Small Business Development Center

Many communities have small business development centers (SBDCs) that provide local knowledge and resources to small business owners. This can include everything from legal and technical assistance to help with government contracting and business planning. New York’s Corporate Alliance Program (CAP) is one good example of a SBDC that provides many of these services for free.

The National Minority Supplier Development Council (NMSDC)

The NMSDC connects minority businesses with both corporations and public sector organizations. The goal is to foster mutual business opportunities, and ultimately advance economic equity for minority business owners. NMSDC’s events and conferences are great ways to build connections that could advance your business.

Accompany Capital

Accompany Capital

was originally part of the New York Association for New Americans, an organization created in 1949 to resettle World War II refugees. Today, it supports immigrant, refugee, and women entrepreneurs in the United States through access to affordable credit, financial education, and training in best business practices. So far, the organization has given out $43,617,527 in small business loans, assisted 8,416 businesses, and created 2,429 jobs.

SECURE FUNDING FOR YOUR MINORITY-OWNED SMALL BUSINESS

Today, minority businesses can work with a variety of lenders, grant providers, and financial organizations that understand their needs. Accion Opportunity Fund is one such organization. AOF supports small, minority-owned businesses through loans in a range of sizes that are customized to meet each business’s individual needs. Find out more about Accion Opportunity Fund loans, and apply today to get financing for your minority-owned small business.

SEE OUR LOANS

According to the 2020 Annual Business Survey, the number of Native American-owned businesses has been steadily growing — but their revenues and employee shares have not. These stats may come as no surprise to Native American business owners, but they illustrate the striking difference between the opportunities offered to Native entrepreneurs and those offered to others.

In fact, Native Americans still face a 27% poverty rate — much higher than the national average. For centuries, Native people have tried to reverse the lasting effects of broken treaties and discriminatory federal policies, but many of those policies continue to affect Native businesses in a very real way. Fortunately, a number of organizations now offer Native American business loans and grant programs that cater specifically to this community of entrepreneurs. Here are a few that could help you launch your business into its next stage of growth.

Business loans for Native Americans

Loans are one of the most commonly utilized sources of business financing. Unlike grants, loans have to be paid back (usually with interest or fees). However, they can be easier to get than grants. They can therefore be a critical resource for small businesses, especially Native American-owned businesses that may have struggled to secure traditional forms of financing, like loans or lines of credit from big banks. These are the best Native American business loans for the coming year.

1. U.S. Department of the Interior Indian Loan Guarantee Program

The Bureau of Indian Affairs (BIA) is a federal agency within the U.S. Department of the Interior (DOI). Among other things, it helps provide business capital to American Indian and Alaska Native Tribes.

One of the ways it does this is through its Indian Loan Guarantee Program. This program isn’t a direct loan, but it does help Indian-owned businesses obtain financing by providing a repayment guarantee to outside lenders.

Basically, if you’re a Native American entrepreneur and take out an eligible loan from a bank or other lender, the BIA will guarantee up to 90% of that loan. This means that if your business defaults on its debt, the lender can ask the government to reimburse up to 90% of the unpaid principal.

This provides an extra level of security for loan servicers — making them much more likely to lend to Native American and Native Alaskan businesses that might not otherwise qualify. To apply for this program:

• The borrower must be either a federally recognized tribe, an individual member of a federally recognized tribe, or an entity that’s at least 51% owned by members of federally recognized tribes.
• The owner must have at least 20% tangible equity in the project being financed.
• The project must benefit the economy of tribal lands, such as a tribal service area or reservation.

2. NDN Fund

The NDN Collective is an Indigenous-led organization that dedicates itself to building Indigenous power. It does this through community organizing, activism, and philanthropy, as well as business lending through its NDN Fund.

One of NDN Fund’s best offerings for small business owners is its Relief and Resilience program. This loan program exists to help business owners move past the financial impacts of the pandemic. It provides small business loans of up to $500,000 to Indigenous businesses and entrepreneurs.

3. SBA Loans

The U.S. Small Business Administration offers a number of loans to small business owners. While SBA’s loans are open to all entrepreneurs, the agency strives to help minorities and underserved communities get the funding they need to make their businesses successful. Historically, nearly one-third of SBA loans have gone to minority business owners. The following funding programs may be a particularly good fit for Native entrepreneurs:

• The 7(a) Loan Program: SBA’s most common loan program provides financial aid of up to $5 million to small businesses with specific purchasing needs, such as paying for real estate.
• 504 Loans: Certified Development Companies (CDCs) are SBA-regulated non-profit organizations. They provide 504 Loans to help businesses purchase major fixed assets that promote business growth and job creation.
• Microloans: The SBA’s microloan program provides loans of up to $50,000 to help small businesses start up and expand.

4. Microlenders

Getting a new business off the ground can be challenging. But if you’re an entrepreneur, you probably already have a vision and some determination. What you may not have is capital. Microlending, a popular alternative to traditional loans, could help you obtain funding for your small business, especially if you don’t have a long business credit history or stellar credit score. Microloans, sometimes called “small-dollar loans,” are around $10,000 on average. Because eligibility requirements are flexible, microloans are often much easier to secure than more mainstream loans.

If you’re a Native American or Alaskan Native business owner in need of funding, Accion Opportunity Fund (AOF) offers microloans for both start-up and ongoing costs. AOF’s small-dollar loans can be used to cover equipment purchases, inventory, leases, supplies, staff, marketing expenses, and more.

Native American Small Business Grants

Both state governments and tribal administrations offer grant funding for Native American-owned businesses. Grants are free money; unlike loans, you never have to pay back a grant. However, many grants have specific eligibility requirements, and you may have to have a certain type of business, business plan, or business goals to apply. Here are some grants to consider as you begin your search.

1. First Nations Development Institute

The First Nations Development Institute is a Colorado-based nonprofit that works to improve the lives of Native Americans. Its business programs put heavy emphasis on business owner education and support, and webinars on everything from the basics of budget management to the inner workings of financial markets.

The Institute also offers several programs designed to support new Native American businesses. Since starting its national grantmaking program in 1993, the institute has given out more than 2,700 grants — a total of $54.7 million — to Native American projects and organizations. Keep an eye on the revolving door of grant opportunities announced through the Institute’s website and social media.

2. Regional Development Corporation (RDC) funding

The Regional Development Corporation (RDC) is a nonprofit that helps drive economic development in Northern New Mexico. RDC’s mission is to increase revenue and create jobs, so if you can prove that your business has potential, you could qualify for funding. To apply, you must have a for-profit business that is headquartered in Los Alamos, Mora, Rio Arriba, Sandoval, San Miguel, Santa Fe, or Taos Counties. Some past funds include:

• Tribal Economic Diversity Fund: This fund caters to businesses owned by federally recognized Indian tribes or enrolled members of such tribes. Grants can be as much as $8,000 and can be used for any critical technical services or equipment.
• Micro-Grant Fund: This fund offers small grants of $500 to $3,000 to help businesses diversify, boost profits, sustain revenue, and leverage other investments. The next application cycle opens in the spring of 2023.
• Technology & Manufacturing (TEAM) Fund: These are no-interest loans of up to $20,000. They’re designed to help manufacturing- and technology-based companies purchase business equipment, consulting services, or specialized software.

3. INDIAN EQUITY FUND (IEF) SMALL BUSINESS GRANTS FOR NATIVE AMERICAN BUSINESSES

The Indian Equity Fund Small Business Grant, offered by the Montana Department of Commerce, was created to assist both start-up and expanding Native American businesses in Montana. In 2022, a total of $260,000 was made available, and applicants were able to request up to $14,000 for big expenses, including the purchase of new equipment.

4. The SBA 8(a) Business Development Program

The U.S. Small Business Administration caters to small businesses of all kinds — including those owned by Native Americans. (In fact, the Office of Native American Affairs is located within the SBA’s headquarters in Washington, D.C.). Aside from the loan programs listed above, the SBA’s 8(a) Business Development Program is one of its most helpful offerings for Native entrepreneurs.

The 8(a) Business Development Program was created to help firms that are owned and controlled by socially or economically disadvantaged individuals. To qualify, businesses must have been operating for at least two years and must be interested in expanding into the federal marketplace. As a technical assistance program, 8(a) provides free training and mentorship to successful applicants, and can give businesses a serious leg-up on securing lucrative federal government contracts.

Native American business development resources

Funding is important, but it isn’t everything. A number of other resources exist to provide Native American business owners with education and guidance. These resources include:

• • 1. SBA minority-owned business programs

If your business qualifies as minority-owned, you likely qualify for the SBA’s guidance and mentorship programs. These can help you gain access to everything from business counseling and training, to help in securing coveted government contracts.

Under SBA guidelines, a minority-owned business is one in which a member of an ethnic minority holds 51% or more of the company in either stocks, assets, or equity. Minorities include African Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans. You can learn more and apply for programs at SBA.gov.

• • 2. The National Center for American Indian Enterprise Development

The National Center for American Indian Enterprise Development (NCAIED) is a non-profit organization committed to helping Native Americans realize their entrepreneurial dreams. NCAIED provides training, advocacy, business development, and other business resources for Native American entrepreneurs.

• • 3. Free online education through Accion Opportunity Fund

If you’re starting your first business, you probably have a lot of questions — but you may not feel like you’re ready to apply to a formal counseling or lending program. If that’s the case, there are plenty of resources online where you can learn more about what it takes to start and run your business.

Accion Opportunity Fund offers a variety of educational resources that cover everything from permitting to hiring to tax planning. You can seek out information from reliable sources like government agencies and nonprofit entities.

Explore funding options with Accion Opportunity Fund

Indigenous Americans have been historically cut off from funding access — a huge hurdle that can keep many talented entrepreneurs from sustaining or growing their businesses. While a significant funding gap remains, there’s now a growing number of loans and grants specifically designed to uplift Native business owners.

Accion Opportunity Fund also offers small business grants as part of our educational programs. Visit our Program Page to learn more about our current business programs.

Accion Opportunity Fund is one of the many organizations working to advance Indigenous businesses. About 90% of our clients are ethnically and socio-economically diverse, and our loans are structured to address each business’s individual needs. If you’re searching for a reliable source of funding to help grow your latest venture, look through our available business loans to see which one may be right for you.

Are AOF’s business loans Right for you?

As a small business owner with a food or beverage product, it can feel intimidating, and certainly be confusing, knowing the ins and outs of how to properly label your product. There are many labeling guidelines out there, with different specifications depending on your product type.

Common FDA Guidelines for Food Labeling

The U.S. Food and Drug Administration (FDA) website is going to be your go-to place for information and guidelines for labeling your product.

Guidelines of the FDA’s Food Labeling Guide discuss label placement, graphics, nutrition labeling, health claims, and more. This document is the Holy Grail of food labeling!

While there are some exceptions for small businesses when it comes to labeling, if you don’t fall within this lucky category, you should submit your labels for authentication through the U.S. Department of Agriculture’s (USDA) eAuthentication Label Submission and Approval System.

 

Common Guidelines from the Alcohol and Tobacco Tax and Trade Bureau on Beverage Labeling

Firstly, be aware that you must submit your alcoholic beverage labels to the Alcohol and Tobacco Tax and Trade Bureau (TTB) before putting it on your packaging!

If you’re producing one of the world’s most consumed beverages-alcohol, you’ll generally have to incorporate the following criteria into your labeling:

• Brand name
• Name and addresses of bottler/packer/manufacturer/producer
• Net content
• Alcohol content
• Presence of coloring materials
• Other additives/agents (like sulfites)
• Government warning

Depending on the type of spirit you’re producing, labeling varies. There are different regulations for wine, beer, and distilled spirits.

Now that you know what should be included, be sure your labels are accurate.

 

Validate all the information on your labels

Be sure to check that what you’re putting on your labels is true. For example, if you’re labeling your beer as a 12 oz. product, make sure it actually contains 12 ounces.

You don’t want to deceive your clients, but moreover, you don’t want to break the law.

Both the USDA and FDA set forth specifications about what certain packaging terms mean. To read up on these, check out The Food Standards and Labeling Policy Book.

In The Food Standards and Labeling Policy Book, you will find guidelines such as labeling wording do’s and don’ts. For example, “Cajun style” might be your mom and pop’s signature seasoning, but depending on its ingredients, formally calling your product “Cajun style” can get you in trouble! In order to use the term “Cajun style,” your product must include: onion/onion powder/dehydrated onion, garlic/garlic powder/dehydrated garlic, white pepper, red pepper, and black pepper.

The Labeling Compliance Guidance also sets forth standards and approvals for labels on your product with terms like “gluten-free” or “organic.” Similarly, you should think twice before using phrases like “good source.” For instance, if you say that your granola is a “good source of fiber,” the implication of this phrase is that there’s enough fiber in your granola to fulfill 10-19% of the daily value. To see if the language you are planning on using may have stricter implications than you may have thought visit the FDA’s Food Labeling Guide to see if the language you are planning on using to market your product may have stricter implications than you may have thought.

And now, let’s move on to the fun part!

 

Make your labels fun:

Labels shouldn’t be boring! Although certain requirements for your labels may seem limiting, like the formatting procedures required by the FDA, there are creative ways to incorporate the required information into your planned packaging.

For instance, while the FDA encourages your Nutrition Facts to be created in Helvetica Black or Franklin Gothic Heavy, try to think of ways to incorporate this black and white element into an appealing packaging design.

In need of some inspiration? Put on your creative cap and take a look at Raaka Chocolate packaging. Here, all the essentials are hit upon, but in such a way that consumers aren’t distracted from the appeal, taste, or look of the product.

Because of the nature of the food and beverage business, customer safety and satisfaction are very important to the success of your small business. In this business, one size fits all doesn’t apply; a chocolate maker and a craft brewer are not going to be following the same guidelines. If interested in selling a meat product, get ready for the list of requirements to lengthen even more! So, check out websites like the FDA, USDA and TTB to read up on requirements specific to the product you are producing. Be sure to include all of the labeling requirements you discover in the products and services section of your business plan. And always remember, if confused, better safe than sorry!