Minority business loan resources and guide.

Jul 21 2020 | PayPal Editorial Staff

Like many small business owners, a challenge minority businesses face is access to capital, or the ability to borrow money for business growth and expansion. Small business loans for minorities exist, but there are additional requirements for getting approval.
Minority businesses continue to be an indispensable part of our economy. According to the U.S. Senate Committee on Small Business & Entrepreneurship, there are now more than four million minority-owned companies in the United States, with annual sales totaling close to $700 billion.1

Understanding what financing options are available can help business owners during difficult times and times of growth.  There are different programs and loans designed specifically for businesses considered minority businesses. According to the
 National Minority Supplier Development Council (NMSDC), which certifies that businesses are minority owned, to qualify for the classification of a “minority business,” a company must be at least 51% minority owned, operated and controlled. 

When a small business loan is a smart move.

Some small business owners bootstrap their companies, scrimping and making do with what they have in the early years to avoid overspending or going into debt. But operating on a shoestring budget long-term may limit growth.

If your small business can't keep up with demand for products or services and could generate higher revenues if you had money for raw materials, production, marketing, or labor, then you could consider a business loan, which may help increase your business’s revenues.

Differences between a personal and a business loan.

Some small business owners choose to apply for personal loans to fund their businesses based upon their personal credit score, income and sometimes collateral (such as their home). Although interest rates are sometimes lower for personal loans than business loans, you may risk losing your home if you use it as collateral and you default on your loan.

Some small business loans require a personal guarantee, which means that you're still personally responsible for repaying the loan whether or not your business succeeds.  For these loans, the decision to approve or deny the loan will partly depend on the success of your business and partly on your personal financial history.

Requirements for getting approved for a business loan.

When evaluating your loan application, business lenders may weigh three factors:
  • Your personal credit score.
  • How much revenue the business generates.
  • How long you've been in business.
Depending on the results, lenders may also consider:
  • Your business's credit score.
  • What kind of collateral your business has (assets like property and equipment that can be sold in the event of a default on the loan).
  • The type of small business you're operating (some lenders may not lend to particular industries, such as real estate investors).  

Financing options to consider when looking for a minority business loan.

Loans come in different shapes and sizes. The type of loan you apply for may depend on how you plan to use the money.

Do you need financing to purchase a building or equipment? Do you need money to expand your exporting efforts? Or do you need a loan so you can hire more employees?

Check the lender’s description of the types of loans that they offer before you invest time in filling out paperwork to be sure your planned use qualifies.


A line of credit is similar to a credit card, where, if approved, the lender offers you a maximum loan amount, but allows you to use it when you need it. Some businesses apply for a line of credit to have it "just in case" they need it.

A term loan is a traditional lump-sum loan, where, if approved, you receive a specific amount to be used immediately to buy what you need, such as a delivery truck, and then you repay it in installments.

An operating loan is used to finance a business’s everyday operations, such as payroll, raw materials or utility bills, rather than investing in equipment or other products.

Common minority business loan providers.

A good place to start when looking for a business loan is the bank where you have your business checking account. Your odds may be better there.

Tip:  The Small Business Administration (SBA) itself does not make loans; to assist small business, the SBA does guarantee certain loans made to small businesses by private and other institutions. 


Types of SBA loans include:
  • Microloans: These are smaller loans of up to $50,000 (the average amount is $13,000) that must be repaid within six years. Businesses and not-for-profit childcare operations can apply.
  • 7(a) loans: These are loans of up to $5,000,000.00 with several variations that determine the maximum loan amount and repayment period.
  • Community advantage loans: Business owners who live in under-served communities may qualify for loans up to $250,000.00 based on their zip code.

If you decide to work with the SBA, you might want to consider applying for the 8(a) Business Development Program. This program is designed help small, disadvantaged businesses succeed by providing technical and managerial services like mentoring, counseling, and executive development. Members of the 8(a) Business Development Program are also given an opportunity to bid on federal contracts federal contracts under the guidance of a Business Opportunity Specialist.

Other loan programs exist for the companies of minority business owners that are headquartered in certain states or cities, such as:
  • The Minority Business Development Agency provides resources for loans, grants, trusted guidance, etc. geared specifically for minority owned small businesses.
  • The Business Consortium Fund Loan for NMSDC certified minority companies.
  • The Asian Pacific Islander Small Business Program that works to develop small and micro businesses in Los Angeles with a particular focus on the Chinese, Korean, Japanese, Thai and Filipino business communities, especially those of low income immigrants.
  • Meda, a Minnesota based service provider connecting minority-owned businesses with business opportunities, access to capital, and business consulting.
If you think a business loan could provide the resources your company needs to be even more successful, start now to identify potential lenders and clean up your finances in preparation for your loan application.
 
The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision.

1 Minority Entrepreneurs, U.S. Senate Committee on Small Business and Entrepreneurship. 

Was this content helpful?

Frequently asked questions.

Because your automatic repayments get deducted as a percentage of each PayPal sale, the amount you repay each day changes with your sales volume. The more you sell, the more repayment progress you’ll make that day. On days without sales, you’ll make no payments, but there is a minimum repayment requirement every 90 days.

Depending on the loan terms you choose, you must pay at least 5% or 10% of your total loan amount (loan + the fixed fee) every 90 days.

The 5% minimum applies to loans estimated to take 12 months or more to be repaid, based on your business’ past PayPal sales and other factors. The 10% minimum applies to loans estimated to be repaid within 12 months.

For most of our customers, regular automatic repayments easily cover the minimum and this is never an issue. But if you do get behind, you can make additional payments on the PayPal Working Capital website.

If you do not meet the minimum payment requirement and your loan goes into default, your entire balance could become due and limits could be placed on your PayPal account.

Please see Section 12 (Account Terms) of our Terms and Conditions to learn more about default.

Tip: You can make additional payments or even pay the loan in full without any penalty.
No, you cannot get additional funds added to a PayPal Working Capital loan. To get more funds, you’ll need to apply for another loan. The lender issues PayPal Working Capital loans one at a time and we don’t currently offer a way to add funds to an existing loan. You may be eligible to apply for another loan after you pay any existing loan in full.
 

Why was my 2021 PPP loan transferred?

WebBank, the lender of your PPP loan, transferred ownership of your PPP loan to Customers Bank. As a result, the servicing of your PPP loan was transferred from PayPal to Customers Bank.

Who is Customers Bank?

Customers Bank is one of the nation’s top PPP lenders and a top-100 SBA (7a) lender. Learn more 

When was my PPP loan transferred?

The ownership and servicing of your WebBank PPP loan was transferred to Customers Bank on September 17, 2021.

Were all WebBank PPP loans serviced by PayPal transferred to Customers Bank?

No. The transfer to Customers Bank included only 2021 WebBank PPP loans where a loan forgiveness application had not yet been started. All 2020 WebBank PPP loans and 2021 PPP loans not included in the transfer to Customers Bank will continue to be serviced by PayPal.

I also have a 2020 WebBank PPP loan. Was that loan also transferred? Why not?

The transfer to Customers Bank included only 2021 WebBank PPP loans where a loan forgiveness application had not yet been started. All WebBank 2020 PPP loans are not included in the transfer to Customers Bank and will continue to be serviced by PayPal. PayPal acts as a service provider for PPP loans originated by WebBank. WebBank is the lender for the PPP loan made available through PayPal.

Have any of my loan terms changed?

No. The terms of your loan have not changed.

Who do I contact if I have questions about my PPP loan?

Loan servicing and repayment will be managed by Customers Bank. You can contact Customers Bank by calling , Monday through Friday, 8 AM to 11 PM ET or by emailing at pppsupport@customersbank.com.

How and when do I apply for PPP loan forgiveness?

Customers Bank will be contacting you by the end of September with details on the loan forgiveness application process. You can also contact Customers Bank as outlined above.

Who do I contact if I need help with my PPP loan forgiveness application or have questions regarding my loan that was transferred to Customers Bank?

Please contact Customer Bank, the new owner and servicer of your PPP loan by calling , Monday through Friday, 8 AM to 11 PM ET, or by emailing pppsupport@customersbank.com.

 

Important

Our customer service agents can’t provide loan status through any of our contact channels, including phone and messaging. To check the status of your loan or for additional questions, please go to the Paycheck Protection Program loan site.
 

Q1. How do I apply for Paycheck Protection Program (PPP) loan forgiveness?

If you received your WebBank PPP loan through PayPal, additional information about the loan forgiveness application process and eligibility criteria is available on our PPP Loan Forgiveness website. To get started, log into our online portal.
 
If you did not receive your PPP loan through PayPal, please contact your loan provider for information and instructions on how to apply for loan forgiveness.
 

Q2. What does loan forgiveness mean?

Loan forgiveness means that you don’t have to pay back the portion of your PPP loan that is forgiven by the SBA. PPP loans may be forgiven in full or in part by the SBA, based on satisfying SBA requirements. The amount of loan forgiveness will depend primarily on whether your use of the PPP loan funds meets the SBA’s loan forgiveness requirements. For more information and requirements regarding loan forgiveness, go to our PPP Loan Forgiveness website or visit the SBA PPP loan forgiveness website for all details.
 

Q3. There are several different SBA PPP loan forgiveness application forms. How do I determine which loan forgiveness form I should use?

Borrowers with loans of $150,000 or less should use the new, streamlined SBA Form 3508S. Borrowers with loans of more than $150,000 will use either the 3508EZ or 3508 form.
 
Information about the different PPP loan forgiveness application forms, including an explanation of when each form is appropriate for use is available on our PPP Loan Forgiveness website.
 
You can also access information about loan forgiveness directly from the SBA PPP loan forgiveness website.
 

Q4. Do I have to submit supporting documentation with my loan forgiveness application?

Documentation is required to be submitted to support your application in certain circumstances.
 
First draw loans of $150,000 or less:
  • No supporting documentation is required to be submitted with your loan forgiveness application.
Second draw loans of $150,000 or less:
  • No supporting documentation is required to be submitted with your loan forgiveness application.
  • Gross receipt reduction documentation will be required to support second draw loan eligibility, if not previously submitted at the time of loan application.
First draw loans of more than $150,000:
  • Supporting documentation is required to be provided along with your loan forgiveness application.
Second draw loans of more than $150,000:
  • Supporting documentation is required to be provided along with your loan forgiveness application.
Information about the PPP loan forgiveness application forms, SBA eligibility criteria and documentation requirements is available on our PPP Loan Forgiveness website, or directly from the SBA PPP loan forgiveness website

 
Q5. When can I apply for PPP loan forgiveness?

PayPal is accepting loan forgiveness applications for PPP loans disbursed in 2020 and 2021.
 
In general, you have between 8 and 24 weeks from the date your loan was disbursed to spend your loan funds on SBA forgiveness eligible expenses. 
 
You should carefully evaluate your particular circumstances to determine if utilizing the full available 24-week period would be beneficial to you in maximizing your loan forgiveness.
 
If you don’t submit a loan forgiveness application within 10 months after the end of the 24-week period beginning on the date your loan was disbursed (approximately 17 months after your loan funds were disbursed), your loan will go into repayment status and monthly loan payments will be required. We will send you an email with payment details prior to any payments being due.
 
Information about the PPP loan forgiveness application forms, SBA eligibility criteria and documentation requirements is available on our PPP Loan Forgiveness website, or directly from the SBA PPP loan forgiveness website
 

Q6. How long will it take to process my loan forgiveness request? 

PPP loan providers have up to 60 days from receipt of a complete loan forgiveness application (including, as applicable, receipt of all required supporting documentation) and a final signed SBA Loan Forgiveness Application form to issue a forgiveness recommendation to the SBA. Once a recommendation has been issued to the SBA, the SBA has up to 90 days to review it and inform the PPP loan provider if it is in agreement with its recommendation. We will keep you informed on the progress of your forgiveness application and will inform you of the outcome of the SBA’s review, once permitted to do so by the SBA. 
 
To get started, simply log into our online portal and we’ll guide you through the process. Once you’ve provided the requested information and documentation (if necessary), we’ll prepare your SBA Loan Forgiveness Application form for your review and electronic signature. We’ll contact you if we need to clarify the information you’ve provided. To check on the status of your application or access your Loan Forgiveness Specialist contact information, you may also log into our PPP Loan Forgiveness Portal.
 

Q7. I applied for PPP loan forgiveness, but have not received a decision on my request.

PPP loan forgiveness application status and updates will be provided via email and through your Loan Forgiveness Specialist. To check on the status of your application or access your Loan Forgiveness Specialist contact information, please log into our PPP Loan Forgiveness Portal.
 

Q8. I’ve already applied for PPP loan forgiveness, but my application was declined by the SBA, or the SBA determined that I did not qualify for loan forgiveness in the full amount of my PPP loan. Can I reapply for forgiveness using the new one-page, SBA Form 3508S that does not require documentation? Can I reapply and include the new categories of forgiveness eligible expenses? 

No. Based on SBA guidance, once the SBA has issued a decision on your loan forgiveness application you cannot reapply using the new form.
 
 
IMPORTANT NOTE: The SBA continues to produce new and revised guidance on the forgiveness aspects of the Paycheck Protection Program. The information on this web page is provided to assist PPP loan borrowers in generally understanding the process by which their loan may be forgiven, in whole or in part, but should not be relied upon as legal, tax, or financial advice. Please check the SBA website for published guidance and details. 

 
The lender for the Paycheck Protection Program Loan through PayPal is WebBank, Member FDIC. 

We’ll use cookies to improve and customize your experience if you continue to browse. Is it OK if we also use cookies to show you personalized ads? Learn more and manage your cookies