Loans Dedicated for Minority and Women Owned Businesses Given by SBA

October 13, 2011 by  Filed under: Loans 

Women and minority prequalification pilot loan program is being ran by Small Business Administration, SBA, which helps business owners that are women or minorities achieve business loans from another agent. In order to qualify for the program a majority, in other words 51%, of the business must be owned by either a minority or woman. The terms of the loans are usually up to twenty five years for real estate and about seven years for inventory or equipment loans. Owners that qualify for this program are eligible for a maximum of $250,000.

However, there are some conditions that are required before applying to the program. The business can not have over one hundred employees, including any partners. Also, the business can not earn over $5 million in each of the prior three years. If the business can meet the requirements SBA will meet up to 75% of the loan if it is over $100,000 and will promise 80% if it’s fewer than 100,000. This program is a great choice if you are looking to start up a business and look forward to growing.

A program like this may sound too good to be true, there must be some sort of catch right? After reading about the program you may have thought the interest on this must be ridiculous. Well SBA has thought of this issue, the interest rate is negotiated amongst the lender and borrower and is decided with the assistance of an intermediary, which is usually a non-profit business. For a small business loan 2.75% is the magical interest rate that cannot be surpassed if it is over $25,000 if it matures in seven or more years. Now if the loan is matured in less than seven years the interest rate is only 2.25%. However, there may be a domino effect with some fees that are charged to the lender by SBA which may also be handed down to the borrower.

Like in other aspects, being diverse is always better and SBA works really hard to make the workforce as diverse as possible. Now what better way to make the workforce diverse than to help out women and minority business owners earn small business loans so they can succeed and grow. They plan on reaching this goal by making guarantees to lenders and giving borrowers a good amount of options that have nice low interest rates and great terms to help start up a new business. Therefore, if you are a woman or minority owning a business this program is definitely the way to go.

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