Showing posts with label SBA. Show all posts
Showing posts with label SBA. Show all posts

Monday, June 1, 2020

Maybe the U.S. Small Business Administration (SBA) wasn’t best choice to deliver PPP benefits to minority businesses.

"Committed though the government might be too small and minority-owned contractors, from the contractor standpoint making a living is never easy. Now they’ve got the COVID-19 situation. For what the landscape looks like for minority-owned businesses, Federal Drive with Tom Temin turned to Creative Investment Research economist and principal William Michael Cunningham."

Friday, April 13, 2018

Minority Business Lending, 2018

Being a minority small business owner can be particularly challenging due to issues that other business owners don't face, like racial and gender discrimination, having low (or no) collateral and having a low credit scores. These factors definitely make it harder to finance a business. There are, however, resources that can help make financing your business easier, given these constraints.

Here are a few:

SBA Loans

While we have not been impressed with the outcome of their efforts focusing on African American businesses, the Small Business Administration (SBA) offers services and programs you need to know about if you are looking to start or fund a minority business. To begin with, SBA’s 8(a) Business Development program is focused on small businesses that are 51% or more owned and controlled by members of disadvantaged subgroups by ethnicity or race. The program offers a plethora of business support services, including financial assistance, business counseling, and mentoring. The SBA also has the Community Advantage Loan Programme which provides credit, management, and technical assistance to small businesses in underserved markets. Qualifying for this program, unlike traditional loan programs, is dependent on the amount of collateral held by or the balance sheet of the business. The program offers management and technical assistance and up to $250,000 in credit with a maximum interest rate of 6%. Business owners looking for smaller loan amounts should consider the SBA microloan program, which provides loans of $50,000 or less.

Private Financial Institutions and Loan Funds

Several private financial institutions and loan funds target minority entrepreneurs. For example, the Business Center for New Americans’ Microloan Program provides loans and microloans to small businesses who are unable to borrow from traditional lenders despite demonstrating an ability to repay a loan. Reasons for rejection can include too small loan amount or a low credit score . These loans range in size from $500 to a maximum of $50,000. The loan term can be for up to three years.

Another option is the Union Bank Business Diversity Lending program for people of Native Hawaiian, Pacific Islander, African American, Asian, American Indian, Alaskan Native, Hispanic or Latino descent. The program helps minority business owners meet financing requirements. The business must have been operating for two years and lending is not available to business with sales exceeding $25 million. The maximum loan amount is $2.5 million.

Online Lenders

This option is for owners with low credit or low capital who need quick short-term loans. Some examples of these include Kabbage, LoanBuilder and Fundbox. See:


Grants represent a cheaper way to finance your business since they do not, in most cases, require repayment. While there are several grant programs targeting minority entrepreneurs, there is a lot of competition for them. Further, each grant has strict guidelines concerning eligibility and, upon succeeding, how the money can be spent.

This short guide indicates that there are a range of financing options for minority business owners. Review the data and the websites mentioned and choose the option(s) that suits you best..


Monday, June 19, 2017

Liberty Bank, SBA and US Black Chamber Loan Guarantee Program by Kari Nelson, Impact Investing Intern, University of Virginia

On Wednesday June 14, New Orleans-based Liberty Bank, a black-owned bank, announced that it is partnering with the Small Business Administration (SBA) and the U.S. Black Chambers (USBC) to guarantee loans for black business owners.

The groups hope this partnership will boost access to capital by solving one problem many black business owners experience – they cannot get capital when they need it. According to the U.S. Census Bureau, in 2014 only 47% of black business owners who requested funding from banks got the full amount requested, compared with 76% of whites. Statistics such as this are discouraging, and black business owners feel disheartened by the situation – with 57% of black business owners who don’t seek capital citing fear of being rejected as their reason. The credit gap is obviously a huge issue for black business owners and there is a lot of room for improvement in how banks and the Government address the issue. This new initiative by Liberty Bank with the SBA is an attempt to address this issue more effectively.

On June 14, I attended USBC’s School of Chamber & Business Management and heard the Senior Vice President of Liberty Bank & Trust Company, Ann Duplessis, discuss this new initiative. It was obvious that she and Liberty Bank are excited about the venture and confident that it will make a difference, and from the positive response she was got from the audience, you could tell that many of the business owners in the room had either experienced or were familiar with the capital-access problem black-owned businesses face and felt that this might be the answer they’d been waiting for.

Some basics (according to Biz New Orleans):
In order to apply, a business owner must be a member of their local black chamber of commerce.
Loans can range from $5,000 to $100,000.
Loans can be used for equipment financing, business debt refinance, leasehold improvements, and working capital.
The program will be piloted in 11 cities nationwide.

This program seems promising. SBA-backed lending shields banks from riskier loans – a label given if the bank has low capital or if the business owner has a low credit score or business revenues – so banks can lend to small-business owners who may not quality for more traditional business loans.

SBA-backed lending makes perfect sense as a means to address the credit gap between white and black business owners because statistically black-owned banks and black business owners are more likely to have the characteristics that would lead a loan to be labeled as riskier. This leads to a significant disadvantage for African-American businesses trying to access capital and thus leads to the credit gap.

It seems to me that the solution, SBA-backed lending, perfectly fits the problem: the loan risk factors present in black-owned banks and businesses and the resulting credit gap. I’m optimistic that this pilot program by Liberty Bank, the SBA, and the USBC may help close the credit gap by giving more black business owners the confidence and the means to request and receive funding.  

(For more information call Ann Duplessis at Liberty Bank and Trust at (504) 240-5182, or email - ed.)

Sunday, June 27, 2010

Creative Investment issues comments for the Small Business Federal Contracting Forum

Creative Investment Research, Inc. issued comments for the Small Business Federal Contracting Forum public meeting to be held on Monday, June 28, 2010. The purpose of the meeting is to encourage public comment on small business issues.

On April 26, 2010, President Obama established an Interagency Task Force to develop proposals and recommendations for enhancing the use of small businesses in Federal contracting, including businesses owned by women, minorities, socially and economically disadvantaged individuals, and service-disabled veterans of our Armed Forces. The Memorandum establishing the Task Force is available here.

Creative Investment has long been familiar with the problems that small and minority businesses encounter when attempting to contract with the federal government. We reviewed our experiences in our comments. In addition, we noted which Federal agencies are doing the best job in their small business outreach strategies.

We noted that doing business with the Federal government would be easier and more attractive if the Government could facilitate direct access to equity capital for qualified small businesses, including businesses owned by women, minorities, socially and economically disadvantaged individuals, and service-disabled veterans of our Armed Forces. Our recommendation for government and private action to facilitate small business equity capital formation is detailed in our comments.