Financing California Minority-Owned Businesses in 2018

Even in 2018,  there remains some disparity between lending to minority small business owners and those who are not members of minority groups. There have been several notable studies in recent years that have exposed and called out unfair lending practices, and progress toward greater equality in credit access continues in the right direction.

There are efforts being made to improve the lending environment for minorities. There are loan, grant and assistance programs targeted specifically to minority applicants or hold a policy of welcoming them. The Small Business Administration (SBA) is an excellent example of such programs, and their 504 loan is one of the best ways to finance a minority-owned business in 2018. Partnering with a Certified Development Company (CDC) like TMC Financing who makes minority entrepreneurs a priority can also increase your chances of success.  

The SBA Helps Business with Financing and More  

How exactly does the Small Business Administration work as an advocate and resource for minority entrepreneurs? SBA loan programs provide financing from $5,000 to over $5 million, as well as numerous programs to help small business thrive. A budding businessperson wants to learn as much as possible about the business world when they are starting out in it. The SBA’s SCORE program sets up new businesspeople with experienced volunteer mentors. The SBA also sponsors over 900 Small Business Development Centers (SBDC) that provide training in business practices geared to local need.

While the SBA does not loan money, it supports a number of loan programs, including a microloan program for loans up to $50,000. This is a wonderful way for an entrepreneur to start a new business or for a small business to expand. Like SCORE and the SBDCs, the microloan program is open to anyone.

SBA Community Advantage loans are meant specifically for small businesses in underserved communities. It provides loans of up to $250,000 through agencies, including TMC Financing. Businesses owned by U.S. citizens who are economically and socially disadvantaged and located in underutilized districts can qualify for the HUBZone program, which allows eligible businesses to compete for set-aside government contracts. The government sets aside a certain percentage of its contracts (3-5%) for eligible businesses. The 8(a) Business Development Program also gives businesses access to set-aside government contracts and a range of mentoring and technical support services.

Other Sources of Assistance for Minority Businesses in California

One of the newest initiatives in the Bay Area to provide financing to minority-owned businesses is the Entrepreneurs of Color Fund. This project was begun two years ago in Detroit. After its tremendous success there, the program was recreated in the San Francisco area at the beginning of this year, due to the need for greater support for minority-owned business here. The fund provides technical assistance and loans from $50,000 to $1 million.

TMC’s sister organization, Working Solutions, is one of the participants in the Entrepreneurs of Color Fund. In addition to that, Working Solutions has provided microloans totaling more than $15 million since 2004, and 49% of its clients have been business owners of color. Those loans ranged in size from $5,000 to $50,000 and also came with technical assistance: mentoring, training, networking opportunities and other services.

The SBA 504 Loan Programs Are A Boon For Businesses

One of the largest loans that the SBA facilitates is the 504 loan program. A 504 loan provides fixed-asset financing to:

The 504 loan program is administered by a nonprofit CDC such as TMC Financing, and loans are granted in conjunction with a conventional lender (bank or credit union) that provides 50% of the total project cost. The borrower and that lender determine the conditions of that loan. The CDC facilitates the SBA loan for up to 35-40% of the cost, or $5 million ($5.5 million for manufacturing projects or if the project is eligible for the Green Energy Program), at a fixed, below-market rate. The borrower provides 10-15% of the cost as a down payment.

The 504 loan has terms of 10, 20 and 25 years, and it is fully amortized (so there are no balloon payments). Because they are in first position in a 504 loan, their exposure and risk are limited and conventional lenders find this program advantageous. This makes the applicant more attractive for financing.

For an example of how the 504 loan can help a minority business flourish, look no further than TMC clients Jaime and Sylvia Martinez. Their La Bonita supermarket started out as a single Hispanic supermarket in Las Vegas, NV in 1991 and applied for an SBA 504 loan through TMC to open its fifth location in 2012. Since then, La Bonita has expanded to a sixth location. It has over 500 employees and just held a job fair to hire another 50 people. TMC financed the acquisition of a 39,138 SF property and improvements for a total project cost of $4.2 million.

The 504 loan is designed to provide maximum accessibility to help small businesses grow, which is great news for minority-owned businesses. You can find out more about it from one of TMC Financing’s 504 loan experts, who are dedicated to ensuring equal access to the SBA’s programs.

TMC is an SBA Premier Certified Lender, and has funded projects worth more than $9 billion across California and Nevada, resulting in the creation of an estimated 60,000 jobs. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.


Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison