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Funding, Minority Businesses

3 Ways Minority Business Loans Offer Support

In this current economic climate, it can be tough for small business owners to find funding. Sadly, it’s even tougher for business owners who also happen to be minorities. At the same time, businesses may have trouble operating and growing without adequate financing. This may be true for members of all sorts of minority groups, including ethnic minorities, women and even veterans.

How to Level the Playing Field for Minority Business Funding

Why is it tougher for minority businesses to get loans? According to Nerd Wallet, the average credit scores of minority business owners are lower than the average for all business owners in the United States. In addition, coming up with collateral is also more challenging for some minorities.

Why Access to Funding is Critical for Minority-Owned Businesses

There are many valid reasons why minority-owned businesses need to be able to access funding. These include benefits for the business, for the surrounding community and for the economy.

3 Benefits of Minority Business Loans

  1. Support minority communities: In many case, the need for business funding is the greatest in the communities where it is the hardest to obtain. Overall, American small businesses offer the greatest number of jobs for workers. Thriving small businesses have the money to hire more people and help their neighborhood and city prosper. Minority business loans can help these small and startup companies grow.
  2. Facilitate cash flow management: Most companies can’t realize a positive cash flow during their early stages of growth. Even later, a business owner might hope to make an investment in a company that will make it tougher to meet operating expenses. Access to minority loans can make sure that the company can keep their equipment in good condition or take advantage of an opportunity to buy inventory at a discount without worrying about meeting payroll.
  3. Invest in the future: Many enlightened business owners hope to invest in their communities in the same way that they have invested their time and money into their business. Thriving companies usually make an effort to support local government, charities and other worthwhile causes. They do this to make their own communities better and also because they might generate good will with their potential and current customers. Businesses need adequate funding to manage operations, grow their companies and to help invest in their surrounding communities.

Sources of Minority Business Loans

Getting a loan approved might be challenging for a minority-owned business for multiple reasons. However, there are some sources of minority small business loans that won’t discriminate because of credit scores, owner stakes or even the neighborhood a business is located in. It’s important for minority business owners to consider different sources of funding to figure out which ones are best for their own company and likely to approve an application. Of course, this depends upon the type of business and how long it has had its doors open.

If you are a minority-owned business, it might be a good idea to consider a platform lender. This type of lender differs from a traditional bank. For example, Kabbage can use a variety of information to approve loan applications, and there is no minimum credit score or owner equity to make it tough to get approved. Kabbage also does not require any collateral.

Business owners can complete the application entirely online. The online system can pull data from payment processors, bank accounts or even online retailers.

Why Minority Business Owners Should Consider All Lending Sources

It’s challenging for small and startup business owners to find the right sources of funding. This isn’t a problem that’s limited to minority business owners, but it might be particularly acute for women, veterans and ethnic minorities. If you could use some extra cash to help your business grow, learn more about alternative lenders and how you can get access to the funds you need today.

 

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Kabbage Team

The Kabbage Team is here to not only fund the small business loans you need, but to help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at content@kabbage.com.

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