4 PPP Loans Tips for Minority-Owned Businesses
If you’re a minority-owned business who is looking for financial relief, there’s finally some good news—the new round of PPP has money set aside just for you. But if the last round was any indication, that money will run out fast.
So how do you get your application in? And what else do you need to know before you apply to increase your chances of getting approved?
Below, we’ll break down the essential information you need to get the funds you deserve including what’s available for minority-owned businesses, when to apply, and how to get started.
PPP Loans for Minority-Owned Businesses: What to Know
In the initial round of the Paycheck Protection Program, minority-owned businesses were approved for loans at a lower rate than other businesses. To help fix these disparities, the SBA set aside funds for minority-owned businesses and other disadvantaged groups.
Here’s what that means for you.
1. You can choose from lenders who serve your community
There’s $15 billion set aside for those who apply through community financial institutions, as these banks usually serve women- and minority-owned businesses.
If you’re looking to apply for PPP, these institutions are great options for you. If you don’t yet have a relationship with one, here’s a list of community financial institutions near you.
In addition to the community banks, there’s another $15 billion available to lend from Insured Depository Institutions, Credit Unions, and Farm Credit System Institutions. That applies to both first time loan recipients and those who are applying a second time.
2. Didn’t apply or receive a loan the first time? There are funds available just for you
If you’re a first time borrower or participant in the program, there’s $35 billion in funds for businesses like yours.
Of that $35 billion, $15 billion is available for businesses with 10 employees or less or for those who need loans of $250,000 or less in low or moderate income communities.
3. You can apply again
If you happened to receive a loan last time around, you can apply again, as long as you can show a loss of 25 percent or more, have used all of your first loan, and have less than 300 employees.
If that applies to you, there’s $25 billion set aside for second draw PPP loans for those with 10 employees or less or for those seeking loans of up to $250,000 in low or moderate income communities.
4. You can (and should!) apply early
You can apply for funding now through community financial institutions, whether you’re a first time borrower or applying for your second set of funds.
Reach out to your community bank asap, as the program will open up to other lenders soon.
To get started, be sure to prepare your paperwork, review the applications for first time borrowers and second time borrowers, and connect with your accountant or banker. You’ll want to act quickly, as funds may run out.
If you have questions about applying or want to know more about options for minority-owned businesses, check out the below resources:
- COVID-19 Relief Package: 8 Ways to Access Funding
- Paycheck Protection Program
- SBA Guidance on Accessing Capital for Minority, Underserved, Veteran, and Women-Owned Business Concerns
- COVID Relief for Underserved Small Businesses
Minority-Owned Businesses: Apply ASAP
Hopefully, these additional set asides can help businesses like yours get the funding you need. Just remember to get started as soon as possible for the best shot at approval and whenever possible, work with a community or local bank.
Will you or have you applied for this round of PPP? What do you think about the funding resources? Share in the comments.