Microloans for Business

Microloans are essential for a strong world economy.  There are over 2,000,000 microenterprises in US alone, and hundreds of millions more in other parts of the world.

It is hard to believe that microloans have received so little attention in the world's economic summits.  Gradually that is changing, thanks in large part to Dr. Mohammed Yunnus.

The Grammeen Bank (Bank of the Poor)

Dr. Mohammad Yunnus developed the Grameen Bank (Bank of the Poor) in the country of Bangladesh in 1976.

The bank was established the with the practice of making micro business loans to the poor – predominantly women --to help them obtain economic self-sufficiency. Its success rate is unparalleled in the world of banking.  Over 99% of its loans are repaid on time.  That's a record that any bank would envy.

Gradually other areas of the world are embarking on microloan programs as well.

Count Me In  

Count Me In is one of the organizations that grants microloans for business purposes through its "Millions to Micros" program.

Lenders for Community Development

Lenders for Community Development focuses on small businesses in Northern California, specifically Santa Clara, San Francisco and San Mateo.

It grants microfinance loans in the $1,000 to $100,000.  While $100,000 doesn't sound like a microloan, in Northern California it is a small enough amount that most banks don't want to hassle with it.  So Lenders for Community Development have stepped in.

Community Development Financial Institutions

About 1,000 CDFIs in all 50 states make microloans for business startups in low-wealth, low-income communities, serving both rural and urban areas. Use the handy CDFI State Locator at the non-profit CDFI Coalition website to find one near you. Some CDFI examples:

* The Utah Microenterprise Loan Fund, a certified CDFI, is making loans of up to $25,000. Their motto is ”Building brighter futures through small business.” A $10,000 micro enterprise loan from the Utah fund helped Somer Gardiner get her Salt Lake City yarn store, Soul Spun Yarn, off the ground.

* Enterprise Corporation of the Delta, a CDFI in Jackson, MS, has helped train or fund thousands of entrepreneurs in the Mississippi Delta region it serves. It helped back Computers, Inc., a small business owned by three women. Computers, Inc. installs custom equipment for schools and businesses.

* Self-Help, a CDFI in North Carolina, provides small business loans in several southeastern states and elsewhere around the country. Loans range from a few thousand dollars and up to start, buy or expand a business or non-profit.

SBA Microloan Program

The SBA Microloan Program is an on-again off-again program.  It should stay ON.  This is a hugely worthwhile program that accepts all sorts of alternative collateral for small loans.

Check the SBA Microloan Directory for a lending institution near you.  This is a listing of over 160 lenders who are part of the SBA Microloan Program.

Nevada Microenterprise Intitiative

Nevada is one of the few states that has formed an organization to address the lack of microloans.  It's Microenterprise Initiative is a boon for small businesses there.

Utah Microenterprise Loan Fund

In Utah a microloan program has been established to earmark $1,000 to $25,000  for small business, whether or not the business owner is the primary income generator for the family.  This opens up the fund to many work at home parents.

The Utah microloan program provides workshops too. Potential borrowers are encouraged to attend an orientation meeting

Accion USA

ACCION USA makes microloans to people who need them. It is part of the U.S. ACCION Network, which has loaned over $154 million to more than 16,000 entrepreneurs since 1991. These loans range from $500 to $25,000 and serve as a vital resource for small businesses and entrepreneurs throughout the United States who may not have access to traditional bank credit.

Accion USA helps small businesses get started and keep growing with timely business loans.

Accion USA is based in Boston, but does nationwide lending.

• Loans ranging from $500 to $25,000 for most business needs
• For a new business (i.e. less than one year of operations), the maximum loan amount is $10,000.
• A business plan and one year of cash flow projections are required.  
• Competitive interest rates
• 1 - 60 month terms
• Easy application process

Kiva

Kiva.org has been our favorite charity for quite some time, and we have featured an ad on our home page since our inception.  Kiva is a worldwide organization that lends money to entrepreneurs, sometimes as little as $100.  "Giving" in Kiva is actually making a loan.  The failure rate is exceptionally low, and partners throughout the world work with these entrepreneurs to help them manage their businesses.

Kiva has now begun offering loans to US entrepreneurs as well.  It was a controversial decision within the organization, but the final decision was that there are indeed disadvantaged entrepreneurs in the US who need microloans too.

Rather than lending directly, Kiva works through community organizations.  This is a rapidly expanding organization, so check with them to see if there is an organization in your area.

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