The Small Business Administration’s Microloan Program is a means for an entrepreneur, start-up, or already existing business to acquire a small, short-term (6 year maximum) loan of up to $50,000 (with the average being about $13,000). They are a relatively easy to obtain and smart alternative to traditional bank loans meant to spur business growth. They are easy to obtain in that they are generally issued to those small businesses that have been denied a bank loan, and smart too, because not only do they provide the necessary capital to start of expand a small business, they also arm you with the know-how to use that capital.
Microloans are mainly issued to provide working capital, but are equally useful for the purchase of inventory or supplies, furniture or fixtures, or machinery or equipment. However, microloans are not all-purpose: they must not be used to pay existing debts or to buy real estate. To obtain a microloan, borrowers must provide collateral and sign a personal guarantee of repayment. Collateral can usually be provided in the form of a business’ current assets, or else by cash flow or personal credit. Overall though, they are designed as a means for small businesses to gain access to capital, and as a result, lenders are very inclusive in who they accept. (For a list of excluded businesses, visit: http://www.sbaloans-123.com/sba-microloan.)
Loans are not acquired through the SBA directly, but through an intermediary. These lenders are non-profit, local companies with business management and technical assistance expertise. This expertise is at your disposal, as the intermediaries are required to offer management and technical assistance training. In fact, many lenders mandate such training before a borrower is accepted for a microloan. To apply for a microloan, visit your local intermediary lender. For help with finding a lender, contact your local SBA office, a list of which can be found here: http://www.sba.gov/about-offices-list/2.
Microloans are not a gift and they do accrue interest of between 7% and 14% depending on the determined degree of risk to the lender. Similarly, the length of the loan is determined by the amount borrowed where the largest loans are given the longest length (again, max 6 years). Still, they exist to encourage small business growth, and as such, are a helpful resource for the entrepreneur looking to get his/her business off the ground.
For for more information, contact Sardar Law Firm LLC.