Nationwide — Minority business owners continue to face challenges when applying for loans from traditional banks and lenders, but entrepreneurs should consider alternative financing as a primary lending source. This is a much easier way to secure funds without facing race-based discrimination and/or application denials.
Research on minority business lending
A recent study conducted by researchers at Brigham Young University, Utah State University and Rutgers University revealed that treatment of minority business owners seeking small business loans varied greatly from that of white business owners. The researchers used nine “mystery shoppers”, three black, three white and three Hispanic small business owners who wore the same professional clothes, had similar backgrounds and sought $60,000 loans for similar businesses.
While the participants presented similar credentials, the study found that black and Hispanic business owners were given less information on lending terms, offered less application help and were asked more personal financing questions.
Additionally, a 2016 report by The Kauffman Foundation on access to capital by race found that minorities are disproportionately impacted by lack of access to capital and cost of capital. The report also found that profitably of black entrepreneurs was negatively impacted at three times the rate of white entrepreneurs due to lack of access to capital.
Alternative financing options
Alternative financing companies (such as Timestar Lenders) offer minority business owners more options to secure business funds and ultimately increase profitability. Loans are available for a wide range of business needs including technology improvements, emergency repairs, remodeling or general cash flow. This financing option is appealing to many small and minority business owners because the threshold to receive funding is lower and funds are dispersed within days.
For example, in order to receive a loan with Timestar Lenders, business owners must meet four criteria: Be in business for at least six months, have at least a 500 credit score, generate a minimum of $8,000 each month in revenues and not have any open bankruptcies although prior bankruptcies are largely accepted.
While the numbers of minority business owners continue to grow, these entrepreneurs still face large hurdles when seeking loans from traditional lending institutions. Alternative financing companies provide a much-needed funding solution for minority-owned businesses.
Entrepreneurs and business owners that are having challenges accessing the business financing they need should call (888) 405-7949 to learn more about Timestar Lenders alternative lending solutions today. For more details, visit www.timestarlenders.com