Online business, home based business, and other business opportunities
requiring minimal initial investment are ideal candidates for the Small Business
Administration Microloan
Program.
The SBA Microloan
Program is not a direct loan to companies. Rather, the Small Business
Administration makes funds available (via loans and grants) to non-profit
organizations. These non-profit organizations lend the funds to qualified
small businesses.
First, the funds
are minimal. A small business must be small. A $35,000 loan is the
maximum available under this program, and an average loan is about $10,000.
The small business could be either a new company, or an existing one.
As an added bonus,
there is also management and technical assistance available to the recipients of
the loans.
What Companies
Qualify?
Nearly any small
business will qualify -- any type of business and any form of business (sole
proprietorship, corporation, etc.).
The Microloan
Program is NOT available everywhere. Check with your local SBA office to
determine if it is available in your area. See the link below for a listing
of organizations that are currently SBA Microloan intermediaries.
The funds may be
used for working capital, or to purchase inventory, supplies, furniture,
fixtures, machinery and equipment. (No real estate transactions are
allowed.)
What are the
Terms of the Loan?
The terms are
established by the non-profit organization and include consideration of:
l Length
of loan is a maximum of six years, and may be less, depending on need of the
borrower, use of funds, etc.
l Interest
rate. This varies.
l Credit
history of borrower. The borrower is expected to demonstrate that he can
and will repay the loan.
l Character
of the borrower. The borrower must demonstrate a strong commitment to the
business and be of good character.
l Experience
of borrower. The borrower must be experienced; or, if not experienced, she
must be willing to participate in training programs.
l Collateral
requirements. Generally, this is the least significant part of the
application process. The non-profit organization will often accept collateral that
banks typically refuse, such as contracts, supplies, etc.
l Personal
guaranty. Each borrower will be required to personally guarantee his loan.
Special
qualifications may apply in your area. Contact your SBA office to
determine if your company will qualify.
.
Read
what the SBA has to say about the Microloan program.
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Microloan Program
