Government Small Business Loans For Women and Minorities!

Many Government & Private Loan Programs Available

Minority and Women's Pre-qualification Loan Program

Up to $250,000!

Minority Pre-qualification Loan Program and the Women's Pre-qualification Loan Program

The Minority Pre-qualification Loan Program and the Women's Pre-qualification Loan Program use intermediaries to assist minority and women owned small businesses in developing viable small business loan application packages and securing small business loans. 

The Women's Pre-qualification Loan Program uses only nonprofit organizations as intermediaries. The Minority Pre-qualification Loan Program uses for-profit intermediaries as well.

Maximum Amount of Loans

For most Small Business Administration loans there is no legislated limit to the total amount of the loan. However, the maximum amount the Small Business Administration can guaranty is generally $750,000. Thus, with a loan applicant requesting the maximum Small Business Administration guaranty of 75 percent, the total loan amount available under this program generally would be limited to $1 million.

Eligible small businesses include: 

* Small businesses at least 51% owned, operated and managed by minorities or women; 

* Small businesses with average annual sales for the preceding three years that do not exceed $5 million; 

* Small businesses that employ fewer than 100, including affiliates.

Small Business Administration Loan Maturities

Small Business Administration loan programs are generally intended to encourage longer term small business financing but actual loan maturities are based on the ability to repay the loan, the purpose of the loan proceeds, and the useful life of the assets financed. However, maximum loan maturities have been established: 25 years for real estate and equipment; and, generally 7 years for working capital. 

Small business loans for working capital purposes will not exceed 7 years, except when a longer loan maturity (up to 10 years) may be needed to ensure repayment. The maximum maturity of loans used to finance fixed assets other than real estate will be limited to the economic life of those assets - but in no instance to exceed 25 years. The 25-year maximum will generally apply to the acquisition of land and buildings or the refinancing of debt incurred in their acquisition. Where business premises are to be constructed or significantly renovated, the 25-year maximum would be in addition to the time needed to complete construction.

Interest Rates Applicable To Small Business Administration Loans

Loan interest rates are negotiated between the borrower and the lender but are subject to Small Business Administration maximums, which are pegged to the Prime Rate. 

Loan interest rates may be fixed or variable. Fixed rate small business loans must not exceed the Prime Rate. (Prime + 2.25%) if the loan maturity is less than 7 years, and (Prime + 2.75%) if the loan maturity is seven 7 years or more. For small business loans of less than $25,000, the maximum loan interest must not exceed (Prime + 4.25%) and (Prime + 4.75%), respectively; for loans between $25,000 and $50.000, maximum loan interest rates must not exceed 3.25% and 3.75%, respectively.

Fees Associated With Small Business Administration Loans

To offset the costs of the Small Business Administration's loan programs to the taxpayer, the Small Business Administration charges lenders a guaranty and a servicing fee for each loan approved. These fees can be passed on to the borrower once they have been paid by the lender. The amount of the fees are determined by the amount of the loan guaranty. 

When the guaranty portion of the loan is $80,000 or less, the guaranty fee will be two 2% of the guaranteed portion; for loans more than $80,000 but less than $250,000, a three 3% loan guaranty fee will be charged; for the next $250,000 of the guaranteed portion, a 3.5% loan guaranty fee will be charged; for any portion greater than $500,000, a 3.875% loan guaranty fee will be charged. 

In addition, all loans will be subject to a 0.5% annualized servicing fee, which is applied to the outstanding balance of Small Business Administration's guaranteed portion of the loan.

Small Business Loan Guaranty Percent

For those small businesses that meet the Small Business Administration's credit and eligibility standards, the Small Business Administration can guaranty up to 80% of loans of $100,000 and less, and up to 75% of loans above $100,000 (generally up to a maximum guaranty of $750,000). 

Collateral

Holders of at least 20% ownership in the small business are generally required to guaranty the loan. Although inadequate collateral will not be the sole reason for denial of a loan request, the nature and value of that collateral does factor into the loan granting decision.

Once the small business loan package is assembled, it is submitted to the Small Business Administration for consideration. A decision usually is made within three days. If the application is approved, the Small Business Administration issues a letter of pre-qualification stating the Small Business Administration's intent to guarantee the loan. The maximum amount for loans under the Women's Pre-qualification Loan Program is $250,000; under the Minority Pre-qualification Loan Program is generally the same. With both, the Small Business Administration will guarantee up to 90 percent. 

Intermediaries (usually small business development centers) may charge a reasonable fee for loan packaging. Fees charged by for-profit organizations will be higher.