Minority Business Enterprise Micro-Loan Program

Back to Atlas

The Minority Business Enterprise Micro-Loan Program is a funding initiative targeted at socially and economically disadvantaged minority and women-owned businesses.
What are the main aims and objectives?

The main aims and objectives of the Minority Business Enterprise Micro-Loan Program are to provide financial assistance to socially and economically disadvantaged minority and women-owned businesses that have been certified as Minority Business Enterprises by the State of Mississippi. The program serves as an empowerment tool for minority-owned businesses, helping them overcome financial barriers that sometimes hinder their growth. By offering fixed interest rates and flexible repayment terms, it ensures that these businesses have a fair chance at success. Its ultimate goal is to support these businesses in their growth and development, thereby promoting economic development and diversity in the local business environment

How does the program work?

The Minority Business Enterprise Micro-Loan Program operates by providing loans to eligible socially and economically disadvantaged minority or women-owned small businesses. To qualify, a business must be organized for profit, perform a commercially useful function, be at least 60% minority or female owned and managed, and be certified as a Minority Business Enterprise by the Mississippi Development Authority.

The loans range from $2,000 to $35,000 and can be used for start-up or expansion costs. The interest rate is fixed at 4% above the Federal Reserve Discount rate, and repayment terms range from three to five years. Applicants must provide collateral and proof of creditworthiness. Eligible projects costs include: purchase of land, purchase of inventory, working capital, purchase of machinery and equipment, purchase and/or renovations of buildings.

Applications can be submitted on specific deadlines, and applicants are charged a one-time credit report fee of $25 and are responsible for all closing costs. The application requires detailed information about the business, ownership, loan purpose and amount, collateral, and financial statements. The program does not support charitable or nonprofit enterprises, media businesses that express editorial opinions, lending businesses, or those intended for debt consolidation or property speculation.

What is the overall cost?

There is currently no available information on the total running cost of the program.

What impact has been measured?

There is currently no information available about the impact of the Minority Business Enterprise Micro-Loan Program.

What lessons can be learned?

It is worth noting that for some startups the loan range of $5,000 to $35,000 may not be enough significantly impact their growth and expansion. The interest rate, fixed at 4% above the Federal Reserve Discount rate, may also pose a challenge for some businesses, particularly those with limited cash flow. Recommendations for similar programs could include relaxing some of the eligibility requirements, increasing the loan amount, simplifying the application process, or offering lower interest rates. The program could also benefit from providing additional support, such as business training or mentoring, to help businesses succeed.

CURATED BY

Tom Hancock

Research Associate
Global Entrepreneurship Network
United Kingdom