Inclusivity Matters: Maryland SBA Loans for Minority-Owned Businesses

Small to medium-sized minority-owned businesses have long been marginalized and underrepresented in the business world. One of the key areas where this has been evident is access to funding. Fortunately, there has been a gradual improvement, thanks to initiatives including the Maryland Small Business Administration (SBA) loans.

What Are Maryland SBA Loans?

Black business owner using Maryland SBA loan for fashion businessMaryland SBA loans are administered by the Small Business Administration and backed by the government to help small businesses secure financing. They help finance start-up costs, working capital, expansion, and business recovery. Maryland SBA loans have lower interest rates and have more flexible terms than traditional loans.

How Does Maryland SBA Loans Foster Inclusivity?

SBA has been a clearinghouse for small businesses for decades. Although its services range from business counseling to giving business certifications and training programs, its most significant role is providing funding. The SBA helps minority-owned businesses forge partnerships with government agencies, major corporations, and financial institutions.

As a result of their efforts, there are diversity program initiatives in place to help businesses owned by veterans, individuals identifying as women and other underrepresented minority groups secure loans.

The Diversity Loans Offered by Maryland SBA

Maryland SBA offers several loan programs to help minority-owned businesses access financing. These are the most common:

Maryland SBA 7(a) Loan Program

The SBA 7(a) loan program offers loans of up to $5 million to small business owners. However, 7(a) loans taken out under the SBA Express and Export Express are capped at $500,000.

The SBA guarantees up to 85% of the loan’s value for qualified applicants. Community Advantage Small Business Lending Companies (CA SBLCs) is a popular SBA diversity loan targeting minority-owned businesses in underserved markets. CA SBLCs) are available for up to $350,000.

Eligibility for the Maryland SBA 7(a) Loan Program

For eligibility, businesses must:

  • Be functional
  • Operate for profit
  • Be located in the state
  • Be small as per SBA size requirements
  • Avoid ineligibility criteria
  • Not meet the qualifications for other funding options (non-federal, non-state, and non-local government)
  • Have a good credit score and history

SBA 7(a) loans can be used for many purposes, including for capital, purchase of assets, or debt servicing.

Maryland SBA Microloan Program

SBA microloans are ideal for minority-owned businesses needing a small capital injection to start or expand. The maximum amount for an SBA microloan is $50,000, with the average loan amount being around $13,000.

Eligibility for the Maryland SBA Microloan Program

SBA microloans are usually administered by designated intermediary lenders, meaning lending and credit requirements vary. Generally, borrowers will need to provide collateral, a personal guarantee, and, in some cases, a business plan and financial projections.

Similar to SBA 7(a) loans, microloans have numerous uses, such as for:

  • Working capital
  • Business inventory
  • Equipment and machinery
  • Furniture and fixtures

Maryland CDC/504 Loan Program

504 loans are intended for minority-owned businesses investing in long-term assets such as real estate and machinery. As such, the rates are usually fixed. 504 loans are accessible exclusively through Certified Development Companies (CDCs). CDCs are SBA-certified and regulated non-profit companies set up to finance small business loans and promote economic development in their base communities.

The maximum loan amount for a 504 loan is $5.5 million. However, in some energy projects, the borrower can receive up to a $5.5 million loan per project for three projects. The substantial financial backing enables minority-owned businesses to contribute positively to their communities while meeting business objectives.

Eligibility for the Maryland CDC/504 Loan Program

Maryland SBA Loan Asian BusinessA business must adhere to the following criteria to be eligible for a 504 loan:

  • Operates for profit
  • Have less than $15 million in tangible assets
  • Have less than $5 million annual income after the deduction of federal income taxes for the two years leading to the application

In addition, standard eligibility requirements will apply, including SBA size standards, a feasible business plan, creditworthiness, and qualified management.

Uses of a 504 Loan

504 loans can be used to purchase various assets, provided that they’ll help promote job creation and business growth. Examples are existing buildings, land, facilities, and long-term machinery and equipment. Note that a 504 loan cannot be used for working capital or inventory, consolidating or refinancing debt, speculation, or purchasing rental real estate.

Impact Maryland SBA Loans on Entrepreneurship

The American Dream is rooted in hard work and opportunity. If certain demographics are marginalized in business, the dream becomes a fallacy. The government has intentionally taken measures to create a level playing field through diversity loan programs such as Maryland SBA loans. This has helped stimulate entrepreneurship, resulting in job creation and economic growth.

Apply for a Maryland SBA Loan Through Woodsboro Bank Today

Woodsboro Bank works closely with the Maryland SBA to help minority-owned businesses meet financing needs. As a community bank, its core values are customizing financial services to promote local businesses. Contact Woodsboro Bank today to discuss eligibility for Maryland SBA loans.


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