Minority Small Business Grants: 10 Options

Minority small business grants can help to close the business funding gap, delivering funds to business owners belonging to historically marginalized communities. According to a recent LendingTree study, only 14% of businesses in the U.S. are owned by people of color.

Unlike loans, which you must repay in full with interest, minority small business grants are free money that doesn’t need to be paid back, unless you violate its terms. Government and private entities award minority small business grants, each with its own eligibility requirements. We’ll walk you through grant funding available, plus other resources available to minority-owned businesses.

Federal grants for minority-owned businesses

Many federal government agencies offer grants to businesses, though some grants are not specifically reserved for “minority-owned business” – the language that the U.S. Small Business Administration (SBA) refers to businesses owned by historically marginalized communities, including people of color.

The list below are some federal grants available to minority-owned businesses.

1. Grants.gov

Grants.gov is a database of all grants currently offered by federal agencies, as well as useful educational information on how to navigate the grant application process. While there’s no specific search field for minority-owned businesses, you can narrow your search according to your type of business entity and industry.

To apply for a grant, you will need an Employer Identification Number (EIN) and a Unique Entity ID (UEI), obtained on the SAM.gov website. Allow as much as three weeks to obtain your EIN and UEI if you don’t have them already.

2. USDA Rural Business Development Grants

USDA grants, as well as USDA loan programs, target improving the economy and quality of life in rural areas. Like Grants.gov, USDA grants are not limited to only minority business owners, but available to small and large for-profit businesses, as well as nonprofit and tribal entities. USDA Rural Business Development Grants can be used for a wide range of projects, from agriculture innovation to housing, water quality, health care and rural job creation in general.

3. Small Business Innovation Research and Small Business Technology Transfer Programs

The SBIR and STTR programs award grants to small businesses for technology research and innovation. Grants are issued by eleven different federal departments such as Defense, Energy, Health and Human Services and the Environmental Protection Agency. The grants provide up to $250,000 for technology concept development and up to $1.5 million for prototype development.

To be eligible, your company must be U.S. based and controlled, and the grant-funded work must be done in the U.S. While minority business ownership is not required, the program goals include support of women and socially/economically disadvantaged individuals. The STTR grants require partnership with a nonprofit research institution, but this is not required for the SBIR grants.

State grant programs for minority businesses

4. U.S. Economic Development Agency

The U.S. Economic Development Agency is an arm of the U.S. Department of Commerce that strives to foster economic growth and development in local communities. The EDA offers funding for several projects available, though its funding is usually awarded to state governments, agencies or universities, who in turn may fund businesses.

Private grants for minority small businesses

5. National Association for the Self-Employed (NASE) Growth Grants

NASE grants are awarded both for growing your business and for paying for your dependents’ education. Business grants are for $4,000 and can be used for a range of purposes, including buying supplies, training employees or investing in new equipment. Any NASE member can apply for a grant. The organization serves business owners who have up to ten employees.

6. FedEx Small Business Grant Contest

The FedEx Small Business Grant Contest accepts applications each February from small business owners who have demonstrated a need for shipping services. While there is not a minority-based eligibility requirement, at least one award annually is made to a veteran-owned business. Some types of businesses are excluded, such as nonprofits, franchisees and multilevel marketing. For 2023 there will be ten grants awarded of $30,000 each.

7. First Nations Development Institute Grants

First Nations Development Institute Grants are awarded to tribes and Native nonprofits to be used for purposes that strengthen American Indian communities. Past grants have focused on farming, food security, education, ecology, culture and entrepreneurship. New grants opportunities are posted periodically on the website.

8. National Black MBA Association (NBMBAA) Scale-Up Pitch Challenge

The NBMBAA Scale Up Pitch Challenge and the new Collegiate Edition of the Pitch Challenge grant cash prizes up to $50,000 to support wealth building opportunities for NBMBAA members, with focus on businesses with the potential for rapid growth on a large scale. To be eligible, a business must be in the very early stage and its founding team must all be U.S. residents and include at least one NBMBAA member and at least one founder of Black African descent. Applications are typically due in the summer and awards are made in the fall.

9. Comcast RISE

Comcast RISE grants are aimed at helping small businesses accelerate growth. While not restricted to minority-owned small businesses, the grants are part of Comcast’s Project UP program, which targets communities disadvantaged by the digital divide. Details about upcoming grant amounts and award criteria will be posted on the RISE website when new grant applications open again.

10. Coalition to Back Black Businesses

The Coalition to Back Black Businesses offers grants of $5,000 to Black-owned small businesses. Several applicants may be invited to apply for $25,000 enhancement grants. To qualify, your business needs to be at least 51% Black-owned, have three to 20 employees and be located in a community facing economic hardships, as defined by the Distressed Communities Index.

Grants for 2023 haven’t opened yet, but the 2022 grant application cycle opened in August, so check their website for future announcements.

Other resources for minority small businesses

In addition to applying for grants, minority-owned small businesses can benefit from participating in entrepreneurship coaching and referral programs, as well as seeking small business loans.

SBA 8(a) Business Development Program

The Small Business Administration 8(a) Business Development Program helps firms owned by socially and economically disadvantaged individuals by providing training and assistance and the opportunity to compete for government contracts. The program does not offer direct cash grants or loans.

To be eligible, you must apply to be certified as a minority-owned business. Criteria include being a small business at least 51% owned and controlled by U.S. citizens who are both socially and economically disadvantaged and who have a demonstrated potential for business success.. Certification of social disadvantage includes membership in a socially disadvantaged group as defined by race, ethnic origin, gender, physical handicap or other social disadvantages experienced in American society that have negatively impacted the applicant’s advancement in the business world.

Minority Business Development Agency

MBDA grants are used to run Minority Business Centers in several U.S. cities. These centers provide guidance to minority-owned businesses which can help you navigate the process of applying for government grants and loans. MBDA grant money is not given directly to minority-owned businesses.

Guides to state-funded small business grants that are available directly to minority and other business owners are published by the U.S. Economic Development Administration and the Council for Community and Economic Research. Small Business Development Centers, which are a department of the SBA, also provide small business owners with assistance in finding and applying for local grants.

Operation Hope Programs

Operation Hope aims to help start, grow and scale one million black owned businesses by the year 2030, by providing mentorship, free coaching and education on topics including entrepreneurship, money management, disaster recovery and home ownership. It also provides connections to some business services, such as accounting and ecommerce software at free or reduced cost.

National Minority Supplier Development Council (NMSDC)

The NMSDC supports communities of color (Asian-Indian, Asian-Pacific, Black, Hispanic, and Native American) by helping connect minority business enterprises to potential sources of capital, contract opportunities and supply chain partners. To take advantage of its resources, minority-owned businesses must apply and pay for Minority Business Enterprise certification, which enables them to be listed in NMSDC’s Minority Supplier Management Information Database.

Small business loans

Since grants likely won’t meet all your funding needs, you may want to explore small business loan options, including loans to minority-owned businesses and loans for startups. Unlike grants, loans must be paid back in full with interest.

Typical loans that may be available to minority small business owners include:

• Term loan: a lump sum of cash repaid with interest in fixed installments. There are short-term business loans, lasting only a few months up to a few years, and long-term business loans with repayments extending as long as 10 years or greater.
• Line of credit: a flexible form of funding that can be borrowed against and paid off as needed, like a credit card.
• Equipment loans: equipment financing is available when you buy vehicles, machinery and other types of equipment.

Working capital loans: working capital loans are used for short-term operating expenses, such as financing your inventory and accounts receivable.