Small Business Grants and Loans for Minority Business Owners 2025 Guide

Minority-owned businesses are expanding their reach across the country.

In 2025, minority-owned businesses grants and minority business loans are critical levers for growing businesses in the U.S., despite this, access is still uneven. According to the Census Bureau, there are over 12 million minority-owned businesses in the U.S., accounting for more than 35% of all businesses and yet many of them struggle to secure capital.

Still, data shows that businesses owned by minorities are denied loans more frequently and often receive smaller amounts at higher rates, which is where minority small business grants become especially valuable: they provide non-repayable funding that can unlock growth without adding debt.

In this guide, you’ll learn:

• How minority business grants and loans work
• The pros and cons of each funding path
• The top grant and loan programs in 2025 you should know
• And how to qualify, apply, and improve your chances of success

Let’s begin by unpacking exactly what we mean by minority small business grants and loans — and when each makes sense for your business.

What are minority small business grants & loans?

How minority business grants and loans work

Minority business grants are funds awarded to eligible businesses that don’t need to be repaid. They can be offered through a government agency, nonprofits, or even corporations that want to support entrepreneurship and strengthen access to capital for underserved communities. Minority business loans, on the other hand, are borrowed funds that must be repaid over time, often with interest. These loans can come from banks, online lenders, or even community lenders.

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Pros and cons to both

Grants can be a game-changer because business owners don’t need to worry about repayment. The downside is they can be highly competitive and often come with strict eligibility rules. They may also only be available during certain times of the year.

Loans on the other hand, are often easier to find and can be more customized to fit your business’s needs. For example, that might be buying new equipment, opening an additional location, or covering day-today expenses. A loan also helps you build business credit. However, loans need to be paid back, with interest, and you could be denied.

Top minority business grants in 2025

• Government grants:
  • Grants like those from Grants.gov, the federal government’s database of grant opportunities, are available for minority-owned businesses.
  • The Small Business Administration (SBA) also awards startup grants (though indirectly). It funds research, training, and development grants.
• Private/nonprofit grants:
  • The FedEx Small Business Grant Contest awards cash prizes annually to small businesses, and many minority-owned firms have been among past winners.
  • The NASE Growth Grants program provides up to $4,000 for members of the National Association for the Self-Employed to support business growth initiatives. Similarly, the Amber Grant offers monthly awards to women entrepreneurs, many of whom are also minority business owners.
• Industry-specific grants:
  • The First Nations Development Institute Grants are targeted to Native-owned businesses and cultural organizations, providing funding to strengthen community-based initiatives.
  • The National Minority Supplier Development Council (NMSDC) Grants focus on supporting certified minority-owned suppliers across industries, helping them expand opportunities and grow within national supply chains.

Top minority business loans in 2025

• SBA loans
  • SBA 7(a) Loan Program: The SBA’s most common program, offering favorable rates and terms that can help minority-owned businesses expand or refinance debt.
  • SBA Microloans: Loans up to $50,000, often used by startups and very small businesses.
• CDFI (Community Development Financial Institutions) loans
  • CDFIs specialize in serving underserved communities, offering more flexible eligibility criteria than traditional lenders. Many CDFIs have dedicated programs for minority entrepreneurs, with a focus on local impact.
• Traditional bank loans and online lenders
  • Traditional banks: Offer larger loan amounts but may have higher denial rates for minority applicants due to collateral and credit requirements.
  • Online lenders (including Square Loans): Provide faster access to funding with more streamlined application processes, making them an increasingly popular choice for loans for minority-owned businesses.

Grants vs. loans: Which is right for your business?

Choosing between minority small business grants and minority business loans often comes down to your goals, timeline, and risk tolerance. To make the decision easier, here’s a side-by-side look at how the two compare.

If your business is eligible for a specific program and you’d prefer to avoid debt, grants can be a great option, especially in the early stages or when testing new ideas. Loans, on the other hand, are a better fit if you need capital quickly, want flexibility in how you spend it, and are comfortable with repayment. Because every business has unique needs, it’s wise to talk with a financial professional or small business advisor to figure out which path is right for you.

What problems do minority business owners face when it comes to funding?

Accessing capital can be difficult for any small business owner. About sixty percent of small businesses that apply for funding are denied or only partially funded, according to the Federal Small Business 2025 Report on Employer Firms, and many don’t apply at all for fear of denial or because they are debt-averse. For minority-owned firms, the gap can be even wider. 

Despite these challenges, many minority-owned firms do secure funding and the key is knowing what lenders and grantors are looking for. Here’s what you need to know.

How to qualify for minority small business funding?

Used strategically, small business loans can help grow and run your business’s day-to-day operations. (Here are five ways you might use a small business loan.)

You might apply for a traditional small business loan through a bank. But getting a small business loan from a traditional bank can be tough, especially if you’re just starting out.

Eligibility Requirements for Grants

Grant eligibility usually depends on who you are and what your business does. Many programs require that your business be at least 51% minority-owned, and some are targeted to specific industries like tech, healthcare, or demographics such as women entrepreneurs or Native-owned businesses. Most grant programs also require that your business be registered and in good standing, with a clear plan for how funds will be used.

Eligibility Requirements for Loans

For loans, requirements vary by lender but generally include:

• Credit score: While traditional banks may look for a score of 680+, CDFIs and online lenders may be more flexible.
• Time in business: Many lenders require at least 1–2 years of operating history.
• Revenue: Lenders often want to see a minimum annual revenue (commonly $50k–$100k, though this varies).
• Collateral: Some lenders may require assets (equipment, property) to secure the loan.

Documents You’ll Need

Both grant applications and loan requests usually require supporting documents. Having these ready improves your chances of approval:

• Business plan or pitch deck
• Tax returns (business and personal, usually 2–3 years)
• Financial statements (profit & loss, balance sheet, cash flow)
• Bank statements
• Proof of business ownership and minority-owned certification (if applicable)

For example, banks may request collateral, that is, physical property that can be claimed by a bank if a loan is not repaid and becomes delinquent. Startup business owners often don’t yet have equipment or real estate that they can use as collateral—and understandably may not be willing to use their personal property either. (Here are some other pain points of applying for a traditional small business loan.)

Luckily, traditional banks aren’t the only avenue for small business owners to secure funding.

For eligible Square sellers, Square Loans provides access to small business loans ranging from $500 – $100,000. Repayment is simple. Square automatically takes a percentage of your daily card sales to align with your cash flow. That means you’ll pay more when you’re busy and less if things slow down.

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The Square Loans application process takes just a few clicks, and upon approval, funds can be transferred into a borrower’s bank account in as little as one business day.

How to apply for minority business grants and loans

Here is a step-by-step process to consider when applying for grants and loans:

For Grants

1. Confirm eligibility. Read the grant synopsis and guidelines closely. 
2. Map the requirements. Create a checklist of documents, deadlines, file formats, and submission portals.
3. Define the use of funds. Write a clear, measurable plan (what you’ll do, timeline, milestones, outcomes).
4. Assemble documents. A business plan, budget, financials, tax returns, key bios, and letters of support.
5. Draft the application . Tie your project directly to the grant’s goals; quantify impact (jobs created, revenue growth, customers served).
6. Prepare your budget. Align every line item to the narrative and allowable costs; include any matching funds if required.
7. Review. Have at least two people check for completeness and clarity.
8. Submit early. Upload a day or two before the deadline to avoid portal issues.
9. Track your application follow-up. Record confirmations and dates. Be ready to provide supplemental info.

For Loans

1. Right-size the ask. Calculate how much you need, why, and confirm your repayment ability.
2. Pick a lender type. Compare CDFIs, SBA-backed banks, and online lenders based on speed, rate, term length, and documentation.
3. Prequalify. A lender can take a quick look at your credit profile to see if you likely qualify. This can help you gauge eligibility without affecting credit.
4. Gather documents. ID, business formation docs, tax returns (2–3 years), YTD financials (P&L, balance sheet, cash flow), bank statements (3–6 months), debt schedule, leases or contracts, and a collateral list.
5. Polish your business case. One-pager with use of funds, revenue model, margin profile, growth plan, and risk mitigations.
6. Apply to your top 1–3 options. Tailor each application to the lender’s criteria.
7. Respond quickly to underwriters. Provide clarifications and additional docs promptly.
8. Review terms carefully. APR, fees, prepayment penalties, personal guarantees, and collateral requirements.
9. Close and deploy funds. Use funds exactly as proposed, and track ROI against your plan.

Resources for minority business owners

It can be helpful to have a little guidance. While not all of these organizations provide funding, they can be invaluable resources for small business owners as they look to grow.

There are a lot of organizations dedicated to helping minorities succeed as business owners and entrepreneurs. We’ve put together a handful that we think are useful, but it’s not exclusive. If you want an organization or group dedicated to your particular industry or focused in your city, do a little searching, you’ll probably find it.

Mentor programs:

• SCORE: The nation’s largest network of volunteer business mentors. As an SBA partner, it provides free one-on-one business counseling, as well as low-cost seminars and online training programs.
• Local incubators and accelerator programs: Many cities and universities host incubators or accelerators. These offer mentorship, workspaces, and investor connections. Programs like these can be especially valuable for minority-owned businesses looking to scale quickly.

Government resources:

• Minority Business Development Agency (MBDA): A federally backed agency focused on helping minority entrepreneurs overcome systemic barriers. With local centers across the U.S., the MBDA provides assistance with everything from accessing capital to networking and procurement opportunities.
• Small Business Administration (SBA): Through its loan programs and partnerships, the SBA supports small businesses nationwide, including targeted programs for disadvantaged owners.
• Small Business Development Centers (SBDCs): Nearly 100 centers across the country that offer free advising and low-cost training on business planning, capital access, and market expansion. Some centers also connect entrepreneurs directly with grant and loan opportunities.
• 8(a) Business Development Program: A nine-year SBA program for firms that are at least 51% owned by economically disadvantaged individuals. Participants receive mentorship, access to federal contracting opportunities, and development resources to support long-term growth.

Networking and community organizations:

National and local chambers of commerce, trade associations, and nonprofit organizations offer minority business owners valuable opportunities to network, collaborate, and advocate for their interests. Groups such as the U.S. Black Chambers, the Hispanic Chamber of Commerce, and regional minority business councils often provide training, events, and connections to new clients or investors.

Getting funding doesn’t have to be a headache. With improved access to capital, through online lending sources like Square Capital, grants, and sponsorships, minorities can knock their business goals out of the park.