Microloan Program
by Ryan Kernan
The microloan program from the Small Business Administration, as the name
implies, is targeted towards very small businesses. A new start-up or growing
small business may apply for a Microloan. The average Microloan is $13,000
though borrowers may seek up to $35,000 in funding.
Loans are not made by the SBA, but by Microlenders at the local level.
Microlenders are nonprofit community based lenders who accept applications, make
credit decisions, and disperse the loans with funds made available by the SBA.
Small businesses wishing to apply for a Microloan should contact a local
Microlender in their area. Currently Microlenders operate in 46 states, the
District of Columbia, and Puerto Rico. To locate a Microlender near you, visit
www.sba.gov.
Microloans have a maximum term of six years, though terms vary according to
several factors, including the planned use of funds and the requirements of the
Microlender. Because each Microlender is different, interest rates on Microloans
vary greatly. Borrows can expect interest rates between 8 and thirteen percent.
Each Microlender has its own lending and credit requirements, but borrowers
should be aware that some type of collateral is generally required, and the
personal guarantee of the business owner is also usually requested.
Additionally, the SBA requires that intermediary lenders participating the
Microloan program provide technical assistance and business training to
borrowers. Individuals and businesses applying for a Microloan may be required
by the lender to participate in a training course before a loan is made.
For more information on the Microloan program, and to find you local
Microlender, visit the Small Business Administration’s website at
www.sba.gov.
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May not be copied, reprinted, or reproduced without express permission from
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