Native American Small Business Loans in a Nutshell
As a small business owner, you need funds to cover your business expenses and keep your business thriving. Are you a Native American entrepreneur searching for a small business loan to finance your business? DoNotPay can provide you with the right resources.
This article explains what you need to know about Native American small business loans. If you want to make the loan request process effortless, you can and get a formal loan request letter in no time.
Small Business Loans in a Nutshell
Small business loans are financing solutions provided to small businesses and startups to cover their costs. You can use them to pay the following:
- Day-to-day expenses
- Working capital investment
- Real estate acquisition
- Machinery and equipment purchase
Various minorities are setting up businesses in the United States. Currently, there are approximately 11 million minority-owned businesses, 300,000 of which belong to Native Americans. With access to good funding, Native American business owners can work on increasing their profits and creating job positions without making a significant dent in their budget. For this purpose, many small business loans are available to them specifically.
What Types of Small Business Loans Can You Get as a Native American?
The first step in applying for a small business loan is deciding which one is the most suitable for your business. While there are many options available, you must establish why you need to use the loan, what the loan terms are, and how you intend to pay it back.
The following types of small business loans are available for Native Americans:
- Community Development Financial Institution Loans
- U.S. Department of the Interior Indian Loan Guarantee Program
- U.S. Department of Agriculture Business & Industry Loan Guarantee Program
- U.S. Department of Energy Loan Guarantee Program
- SBA Loans
- Short-Term Loans
Community Development Financial Institution Loans
Community Development Financial Institutions (CDFIs) are nonprofit institutions providing loans specifically to minorities. Some CDFIs are certified as Native CDFIs, and most of their funding is targeted towards Native Americans, Alaska Natives, and Native Hawaiians. Other than loans, the institution also provides training and mentorship to entrepreneurs.
CDFIs usually provide short and medium-term loans with an interest rate ranging between 6% and 36%.
U.S. Department of the Interior Indian Loan Guarantee Program
The U.S Department of the Interior (DOI) has an Indian Loan Guarantee Program for Native American and Alaska Native entrepreneurs. The loans are long-term and have a low interest rate compared to traditional loans. To apply for one, you must meet the following criteria:
- Your business needs to be owned primarily by Native Americans
- You (the owner) have to provide a 20% down payment
- The business should benefit the tribal areas in some way
You can get this loan not only from commercial banks like Wells Fargo but also from smaller community banks.
U.S Department of Agriculture Business & Industry Loan Guarantee
You can apply for a USDA loan if you operate in a rural community and fulfill the following requirements:
- Your business should operate in an area with less than 50,000 citizens
- You have to provide an asset as collateral for the loan
The USDA offers a loan of up to $25 million with a 30-year repayment term and market-competitive interest rates.
U.S. Department of Energy Loan Guarantee
It is specifically offered to organizations focused on providing sustainable energy to tribal areas.
You can apply for a Small Business Administration (SBA) loan if you meet the following criteria:
- Have a credit score of at least 650
- Provide 10–20% down payment
- Have a functional business of over two years
These funds are popular because they have a low interest rate and a long repayment term. You can choose between different SBA loan programs, such as the SBA 7(a) or the SBA 504 loan.
Microloans are the perfect choice for your businesses if you need a small amount to cover your costs. Several microloan lenders are nonprofit institutions that help local and minority-owned businesses. The interest rate can range between 10% to 16%, provided you have a credit score of at least 600.
If you do not have a good credit history, short-term loans are probably your best bet. You can apply for this loan even if you have been rejected by traditional lenders. It has a three to 18 months repayment term with a weekly or monthly repayment schedule.
How To Get a Native American Small Business Loan
To apply for a loan, you need to follow the lender’s specific eligibility criteria. Here are specific instructions you can follow to strengthen your application:
|Ways To Increase Your Chances of Loan Approval||Details|
|Solid business plan||Most business owners require a solid business plan with the following information:
|Good credit history||The better your credit score, the more chances you will have of securing a small business loan|
|Business revenue||If you increase your business revenue and profits, you improve your chances of getting a loan|
|Formal loan request letter||You should create a comprehensive loan request letter explaining why you want to borrow the money and how you intend to repay it|
DoNotPay Can Help You Get a Native American Small Business Loan
Applying for a loan can be burdensome, especially if you do not know how to go about it. DoNotPay can facilitate the application process by doing the following:
- Gathering the information about your personal and business score
- Drafting a reliable loan request letter in a matter of minutes
- Forwarding it to the lender on your behalf
Here is what you need to do:
- in your web browser
- Select the Business Loan Request Letter tool
- Enter information about the loan and your business
- Upload the necessary paperwork
If you need help finding a suitable lender, our Find Online Business Loan Lender product provides the best suggestions!
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