Every small business needs money in order to make money, a fundamental truth of business. Lack of capital is one of the most common reasons small businesses cannot expand, improve and ultimately fail. Finding funding is difficult in the current economy and even more difficult for minority business owners. In the case of start-ups the chances of obtaining minority business funding is even lower given the owners’ lack of experience and credit history.

Minority owned businesses are at even more of a disadvantage for obtaining minority business funding during the current credit crunch in the US. The Minority Business Development Agency found that minority owned-firms were less likely to receive funding than non-minority owned firms especially. Lending standards from traditional lending sources have tightened markedly and minority business funding is harder to come by.

According to the National Small Business Association, only 59% of small businesses are able to procure adequate minority business funding. This number has been steadily declining over the past 5 years. Banks are becoming more and more practical with their lending practices, funding businesses that are more likely to succeed given the information at hand. A business without a good business plan and a solid financial history will not likely have any luck with a bank loan.

For minority business owners this means evening the playing ground when it comes to obtaining minority business funding. While traditional sources may not be an option there are alternatives to bank loans. Minority business owners should consider participating in contests within their industry or other types of business competitions for start-up capital. Finding oriented minority business funding will come in handy as the frustration of being judged on that criteria falls away and gives these minority business owners the edge.

Women and minority business owners should also check their backgrounds to see if that can give them an edge. For example, if a minority owner is struggling to find funding because of a disability there are ways of combining funds from several organizations such as vocational or veteran associations. Native American owners can find grants for up to $100,000 from tribe groups.

Many different types of minority business funding is available to a wide range of entrepreneurs or current owners. The trick is to finding the right one. Many business owners wait till the last minute to look into funding sources. There are several ways of obtaining cash advances and unsecured small business loans quickly. Many of these funding sources have minority business funding programs as well and can provide more lenient standards than banks as well as not requiring collateral.

For minority business funding there are many options but each one can be very different. Some provide funding for start-ups some for improvements, some for only certain industries. For a minority business owner, it can be a daunting task to sort through the options for minority business funding but with a little perseverance the pay off can be very big. Of course all business owners should consider heavily whether seeking alternative financing is the right option. In many cases it can be as it is an extra source of capital to perform the types of expansion that is needed as a business owner.

minority business financing,
minority business funding

Author: XavierJain

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