Minority Small Business Loans

Minority Small Business Loan Pre-qualification Program!

Minority-Owned Small Businesses...

* Have received 269 loans under the Minority Small Business Loan Pre-qualification Program since its inception in April 1995?

* Have obtained $26 million in loans, representing an average loan of $98,840, under the Minority Small Business Loan Pre-qualification Program?

Click Here For More Info On Federal Government Small Business Loans For Minorities!

Minority Small Business Loan Pre-qualification Program

The Federal Government's Minority Small Business Loan Pre-qualification Program helps eligible small businesses (those owned and operated by members of racial or ethnic minority groups) access capital. The Minority Small Business Loan Pre-qualification Program is a coordinated effort of both the public and private sectors. It uses local, private sector nonprofit and for-profit organizations as intermediaries to assist in the loan application process.

The maximum loan amount under the Minority Small Business Loan Pre-qualification Program is $250,000.

A prospective borrower works with the intermediary to develop a viable small business loan application. The application is then submitted directly to the Small Business Administration for consideration of a small business loan pre-qualification. On approval, the intermediary also can assist the applicant in locating a competitive lender.

Who Is Eligible For the Minority Small Business Loan Pre-qualification Program?

Businesses that:
* Are at least 51 percent owned and managed by a racial or ethnic minority person(s);
* Meet Small Business Administration 7(a) Loan Guaranty Program size standards and general eligibility criteria; and
* Are not engaged in speculation or investment in rental real estate.

The Small Business Loan Pre-qualification Process

Small Business Loan Document Preparation:
The prospective borrower works with a local technical-assistance organization (intermediary), designated by the Small Business Administration, to prepare a small business plan and complete a pre-qualification loan application.

Small Business Loan Application Submission:
The intermediary reviews credit information, performs a loan analysis, and submits the application to the Small Business Administration.

Small Business Loan Application Review:
The Small Business Administration reviews the completed application to determine whether it meets the requirements for a guaranteed loan and makes an approval decision.

Small Business Loan Qualification:
If the Small Business Administration approves the application, the agency issues a pre-qualification letter. This letter states the Small Business Administration's intent to authorize a small business loan guaranty.

Small Business Lender Selection:
When a small business loan applicant receives the Small Business Administration's pre-qualification letter, the intermediary can assist in locating a competitive small business lender interested in making an Small Business Administration-guaranteed loan.

Required Small Business Loan Documentation:
Business financial statements or tax returns and personal financial statements will be required from all small business owners and guarantors. Applications for new businesses will require submission of a business plan.

If proceeds are to be used to purchase an existing small business, a copy of the terms of sale and a financial statement on the existing business are required, as well as a statement of benefit to the small business as a result of the purchase. If buyer and seller are related, that must be disclosed on the small business loan application.

Use of Small Business Loan Funds:
Loan funds can be used for typical business purposes such as working capital, debt payment, equipment and inventory purchases, construction, and real estate purchases. Proceeds may not be used for distribution to principals or for payment of personal debt. The intermediary will require proof that credit card and refinanced debts are business-related and not personal.

Small Business Loan Interest Rates:
Applicants negotiate loan terms with the lender. Loan interest rates may be fixed or variable and are tied to the prime rate.
* Small business loans of less than seven years, rates may not exceed 2.25% over prime.
* Small business loans of seven years or longer, the maximum rate is 2.75% over prime.
* Small business loans under $50,000 may be subject to slightly higher rates.

Small Business Loan Repayment:
The length of time for small business loan repayment depends on the ability to repay and the use of the loan proceeds. Generally, the loan maturity will be:
* Between 5 and 10 years for working capital;
* Up to 10 years for machinery and equipment; and
* Up to 25 years for real estate, construction, or the purchase of equipment with a useful life of at least 25 years.

Small Business Loan Qualifications & Collateral:
Primary loan considerations include:
* A willingness and ability to pay debts, as indicated by a good credit history;
* The probability that the business has a good chance of achieving success with the requested small business loan.

Normally, business assets will be pledged, and personal assets when warranted. As with all Federal Government small business loan programs, loans will not be declined where inadequate collateral is the only unfavorable factor. All owners of 20% or more of the business are required to personally guarantee the note.

Equity:
The small business loan applicant must have a reasonable stake in the business.

Click Here For More Info On Federal Government Small Business Loans For Minorities!