Black-owned businesses continue to be a crucial part of the U.S. economy, representing an increasing share of small enterprises. According to recent data published by the U.S. Census Bureau, roughly 3.3% of all U.S. businesses were majority Black-owned in 2022. That number has continued to rise in the years since that study as more entrepreneurs launch and sustain business ventures.
Even with this growth, significant disparities persist, especially when it comes to access to funding. Black business owners are more likely than their peers to face higher denial rates, receive smaller loan amounts, and encounter financing terms that feel predatory. For example, one survey found that only 32% of Black small business owners received the full amount of funding they requested, compared to 40% of small business owners overall.
Fortunately, the system is evolving, and there are more options than ever for Black-owned businesses. Learn more about the funding options that can help you launch or grow your business in 2026.
Grants and Loans for African American Business Owners
Grants.gov
Grants.gov is the primary source for information about federal grant opportunities. Grants are excellent options because, unlike business loans, they don’t have to be repaid. While the federal government typically doesn’t provide direct funding, you can use Grant.gov’s search tools to find funding opportunities that support minority-owned companies. Federal grant cycles often open once or twice per year and require registration through the System for Award Management (SAM) and a Unique Entity ID.
Minority Business Development Agency (MBDA)
MBDA is the only federal agency tasked with promoting the growth and competitiveness of minority-owned businesses. The MBDA operates various annual funding competitions and pilot programs that award federal grant money to support business centers, accelerators, and initiatives. These competitions, such as the Technical Assistance Funding Awards, which were announced in 2025, have specific application periods and eligibility criteria. The best way to stay informed is to monitor the MBDA website for notices about funding opportunities. The MBDA generally closes applications in June, so plan accordingly.
The DOT Disadvantaged Business Enterprise (DBE)
The DOT program promotes nondiscrimination in the awarding and administration of DOT-assisted contracts in the Department’s highway, transit, airport, and highway safety financial assistance programs. In general, to be eligible for the DBE program, persons must own 51% or more of a small business, establish that they are disadvantaged within the meaning of DOT regulations, and prove they control their business.
To apply, simply contact the local transportation entity with which you want to work. The entity will request additional documentation, verify ownership control, and perform an on-site visit. There is no deadline for this option, which means you can apply at any time.
National Minority Supplier Development Council
The NMSDC is a corporate member organization focused on increasing business opportunities for certified minority-owned businesses. It operates the Business Consortium Fund, a nonprofit business development program, which offers financing programs and business advisory services for its members.
Small Business Administration 7(a) loans
SBA loans are known as the “gold standard” in small business funding due to low rates, long terms, and very low monthly payments.
SBA 7(a) loans are not exclusively for minorities, and any qualified business owner can apply. However, the number of SBA loans given to Black-owned businesses has more than doubled since 2020.
There is a common misconception about SBA loans. They do not lend money directly to small business owners. Instead, the SBA provides a guarantee on at least a portion of the loan, ensuring that the lender can recover a portion of the funds should the borrower default. This lowers the risk for lenders and encourages them to offer these loans to more small businesses.
An SBA 7(a) loan may be used for a variety of purposes:
- Working Capital – Purchase equipment, increase inventory, add marketing programs, use for operating expenses, or to hire additional staff.
- Debt Consolidation Loans – Refinance merchant cash advances, short-term business loans, high-interest business loans, daily or weekly payment loans, or business credit cards.
The 7(a) Working Capital Pilot (WCP) program
The 7(a) Working Capital Pilot program was recently launched and was designed to serve as the premier working capital program within the SBA 7(a) loan structure. The program offers monitored lines of credit to support a wide range of financing needs. While not exclusively available to minority business owners, the program allows borrowers to access funds more quickly than they would be able to with a traditional line of credit. This program is only available to businesses that can show 12 months of operations.
SBA Microloan Program
The SBA microloan program is for small business owners in need of $50,000 or less. The program is open to any eligible small business owner, but it can be a good place to start for minorities. Paying back an SBA microloan responsibly can help build credit, which strengthens your position should you need to borrow money in the future. Microloans are made through third-party nonprofit lenders. For more information, contact your local SBA District Office.
SBA 8(a) Business Development Program
The SBA 8(a) Business Development Program doesn’t provide funding. It’s a certification program to help minority-owned businesses get access to federal contracts. To level the playing field for disadvantaged business owners, competition is limited for some contracts to businesses that participate in the 8(a) Business Development program.
In order to qualify for this program, your business must be 51% owned by someone from a socially and economically disadvantaged background. Minorities are presumed to be socially disadvantaged under federal law. On the economic side, the owner’s personal net worth and average gross income for the last three years must be $250,000 or less, and their assets must be $4 million or less. Business owners who qualify can get certified online, and free business mentorship and training are available through the program.
Business Lines of Credit
A business line of credit allows you to borrow funds up to a limit based on your credit, typically smaller than a term loan. You only pay interest on the amount you use, and you can continue borrowing as necessary until you reach the set maximum. These loans are usually unsecured, meaning that you won’t have to provide collateral to qualify. For in-depth information, read this post from the SmartBiz® Blog: Small Business Lines of Credit Pros and Cons.
Business credit cards are revolving lines of credit. The main distinction is that they don’t terminate once the predetermined limit is reached. They function like personal credit cards, with varying spending rewards and offers depending on the lender.
Merchant Cash Advances
A merchant cash advance (MCA) is most often used by small businesses that accept credit and debit card sales. You receive a specific sum in advance that is repaid either by a percent deduction from daily transactions or through daily or weekly payments.
Keep in mind that MCAs often lead to extremely high annual percentage rates. Even the minimum within the range can be several times larger than term loan annual percentage rates. Some APRs can reach up to well over 300%.
Bank Term Loans
Bank term loans have repayment plans typically extending beyond one year. These loans typically have fixed interest rates. SmartBiz® currently offers term loans through banks in the SmartBiz® network for working capital, debt refinance, and new equipment purchase. Additional details include:
- $30,000 to $200,000 loan amounts
- 2- to 5-year repayment terms
- Monthly repayments
- No pre-payment penalties
SmartBiz Bank® is here to help
Contact SmartBiz Bank® today to find out about more programs designed to help Black-owned small businesses, which are a foundational aspect of America’s economy.
FAQs
Are there grants specifically for Black entrepreneurs, and how do I apply?
Yes, many grants specifically target Black-owned businesses. Utilizing Grants.gov is the best way to find a comprehensive list of these grants, though other online search tools can work. Each grant has different eligibility requirements and application deadlines, so thorough research is crucial.
How have SBA loan programs changed for Black business owners in 2026?
SBA loans continue to be the most popular funding option for small business owners. In 2026, some eligibility requirements have changed. While the SBA does not issue grants directly to businesses, it still backs small business loans that can be used for working capital and growth.
What credit or financial requirements are needed to qualify for funding?
For both grants and small business loans, requirements vary by program but often include documentation of business ownership, consistent financial records, and a clear use of funds. Most grants require applicants to provide a detailed forecast of how the funds will benefit the business as well as the community. When it comes to SBA loans, sustainable revenue patterns and a solid business plan can be just as important as meeting minimum credit thresholds.
When do most Black business grants open and close each year?
Black business grant timelines vary widely by program type and sponsor. Many corporate and nonprofit grant cycles open in the first quarter of the year and close by late spring while others run annually in the fall or every quarter. For example, some micro-grant programs open at the start of each quarter and close at the end. Signing up for MBDA alerts is a great way to stay informed about many of the grants offered to minority business owners.
