Managing a business is rewarding and challenging especially for people with physical or mental disabilities. According to the U.S. Census Bureau survey, 39 million Americans have a disability problem with income lower than the average. Starting a small business can be a flexible option for disabled people to earn a living that a traditional job doesn’t offer. However, managing a small business calls for a constant inflow of capital and securing a business loan can be challenging especially if you’re among the disabled American community. However, it doesn’t mean you cannot have a business of your own. There are multiple funding options and grants available for people with disabilities, as an alternative to secure capital.
Business Loans for Disabled Business Owners
The best business loan option for people with disabilities involves less financial strain and flexible terms. Most people with disabilities count on Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), or other forms of government grants to support their small businesses. Below mentioned are some of the best business loan options for people with disabilities:
- SBA 7(a) Loans
Small Business Administration loans are the best loan options for disabled business owners. SBA does provide the loans itself, instead guarantees the loan made by their network of lenders. Since the government guarantees the funding amount, lenders have the flexibility to provide funding to a wider range of businesses, including those rejected by the traditional banks.
SBA 7(a) loan program is the most popular loan type offering cash up to $5 million with repayment terms of up to 25 years. SBA 7(a) loan typically used to start a new business, expand, and purchase real estate or equipment, and much more. You can also get quick funding with cash under $350,000 via the SBA Express Loan program that is part of the 7(a) program.
SBA Express Loans is a great business loan option for service-disabled veterans with reduced fees. Even if you’re not qualified for reduced fees, you can still get the lowest interest rates and longest repayment terms as a fair deal.
The eligibility criteria for getting an SBA 7(a) loan or SBA Express Loan is tricky. If you have a 605+ credit score, been in business for some years with solid revenue, you’re more likely to qualify for SBA financing. Some lenders might ask for some collateral with several weeks’ loan approval process.
- SBA Microloans
SBA Microloan is another SBA loan program that offers cash up to $50,000, lower interest rates and repayment terms up to six years, being it the best loan deal for microbusinesses and home-based businesses. SBA Microloan can be used to hire workforce, remodeling, or start a new location. The SBA works with a nonprofit organization to provide microloans, with a mission to assist underserved groups like disabled small businesses with fairly priced loans.
The qualification criteria for an SBA Microloan is simple as compared to SBA 7(a) loan program. Business owners with credit scores of 575 or less can qualify for it. SBA Microloan lenders take into account the anticipated business income during the loan term instead of just credit scores.
- SBA Community Advantage Loans
SBA also offers SBA Community Advantage Loans to help small business owners in underserved groups, including the disabled. These loans provide cash up to $250,000 and can be used for large business investments. The qualification criteria for these loans is similar to SBA Microloans. Use the SBA’s Lender Match tool to find a community advantage lender in your area.
- US. Department of Agriculture (USDA) Business Loans
U.S. Department of Agriculture (USDA) also provides business loans for people with disabilities. The USDA doesn’t provide funding directly. Just like the SBA, it guarantees the loans made by their network of lenders and provides funding to mediator agencies. The mission of USDA is to help rural communities with fewer than 50,000 residents to grow and it can be a great funding source for entrepreneurs with disabilities since most disabled Americans live in rural communities.
Business and Industry Loan Guarantee Program is the best business loan program of the USDC. The qualification criteria include good credit score with adequate revenues to qualify for a USDA business loan. Some lenders might ask for collateral with an application process similar to the SBA.
- Assistive Technology Loans
Assistive technology loans are another funding option to run your small business efficiently. As a business owner, you might need some equipment to make deliveries, a location with cameras and devices to shoot a brand campaign or online software to complete a project for your clients. Search for the local lenders near you to get assistive technology loans to help make the needed purchase.
Every lender has slightly different qualification criteria, loan amounts, credit score, and repayment terms. You need to contact your state’s commerce or business department to get more details on these loans.
- Patriot Express Loan
SBA also provides the Patriot Express Loan program to help disabled veterans start or expand their businesses with cash up to $500,000 and can be used for most business-related purposes including purchase real estate or equipment, to pay for licensing and fees and much more.
Patriot Express Loan program has the quickest approval turnaround times with the lowest interest rates ranging from 2.25% to 4.75% above the prime rate, based on the loan amounts and repayment terms. To make a loan application, visit your local SBA center to get more details on this loan program.
- Business Loans for Disabled in Iowa
There is also a specific business loan program for disabled business owners in Iowa, which provides funding to cover the start-up business costs with cash up to $10,000 for qualified disabled veterans. To qualify for this type of funding, visit your local district offices to get more information.
- Short Term Business Loans
Another suitable option for people with disabilities and bad credit is short-term business loans. If you’re in business for some months and making decent revenues, you can qualify for a short term loan even with bad credit. Merchant Advisors is a short-term lender that provides business loans to veterans and service-disabled veterans with cash up to $200,000 and terms up to 36-months.
Many other online lenders provide short-term business with easy application process. Before choosing a lender, make sure you have done your research properly since these loans are considerably expensive than other financing types. If you’re able to pay more, short term loans are best for short-term capital needs.
A sudden disability can seriously harm your credit, and may make it hard to qualify for bank loans. Crowdfunding is another funding option to help start a business or grow. It is somewhat similar to bank loans, where you repay the principal amount plus interest over a fixed period. Some platforms like Kiva provides interest-free loans with cash up to $10,000. Based on the loan size and other factors, borrowers have to invite some people from their own network to lend money to their business and then, pitch their idea to a wider network of Kiva lenders. While using a crowdfunding platform, creating a persuasive description of your business idea can also help inspire public to lend money to your business.
- Business Credit Cards
People with disabilities have fewer chances to make a living and harder to qualify for traditional financing. This is where business credit cards can help. Some business credit cards offer a 0% introductory annual percentage rate (APR) and provides an opportunity for disabled business owners to borrow interest-free money. Some credit cards also offer rewards on purchases, while some in specific categories, like advertising or shipping. With higher credit limits, you can also use your credit card for startup financing or even pay for periodic costs. Remember; don’t mix business and personal expenses on your credit card.
Business Grants for Disabled Business Owners
Applying for business grant is a much better option than a business loan. Business loans require repayment, whereas business grants don’t. If you’re looking for a business loan to start a small business and unable to find one, there are many business grants available to help you get started. And even if you’re unable to qualify for a grant, at least you have the paperwork in order to apply for loans later.
You will find many nonprofits, private lenders and government agencies that are offering business grants for people with disabilities. These grants are highly competitive. However, if you have a persuasive story with a promising business idea, securing grants can be easy.
- Grants.gov grants for technology or science field being the biggest source of federal grants.
- National Arts and Disability Center grants for disabling artists to promote their work.
- Veterans of Foreign Wars grants to veterans with service-related disabilities.
The Bottom Line
Managing a business is challenging especially for disabled communities. Luckily, there are several business loans for people with disabilities, and grants available. Start your search by asking support from your loved ones, then, search for more structured funding options and grant opportunities, both at the state and local levels. In the end, running a creative business with the best product or service will help you grow more and keep customers coming back.
If you need quick financing to grow your small business, Merchant Advisors can help. We believe every business owner whether disabled or not should have an equal opportunity to succeed, participate, and stay self-reliant.