Is a Microloan Right for You?
If you've been tossing around an idea for a small business, but wondering where you'll find the money you need to get started, perhaps you should consider a microloan. Microloans are ideal for getting a new business off the ground. A microloan can also provide an infusion of cash to help an existing small business grow.
The term "microloan" refers to a business loan smaller than most banks care to process, often to a borrower no bank would consider. The term came into vogue during the 1980's, as funders began to realize that $200 loaned to a cooperative of women in a third world country could empower those women to start a business capable of supporting their families.
In the United States, a microloan is usually between $2,000 and $35,000. Most microloans in this country are made by non-profit organizations funded by the Small Business Administration, a government agency. The SBA established a pilot program for microloans in 1992, and the program was made permanent in 1997. To date, more than $112 million has been made available to small businesses under the microloan program.
Virtually any kind of small business can apply for a microloan. The form of the business, whether it is a sole proprietorship, a partnership, or a corporation, is not a determining factor. Non-profit daycare centers are also eligible to apply.
Loan funds can be allocated as working capital. The funds can also be used to purchase inventory, supplies, furnishings, fixtures, machinery or equipment. The one restriction is that the funds may not be used to purchase or make a down payment on real estate.
Perfect credit is not necessary, although the credit requirements vary according to the requirements of the lender. Often lenders require collateral, but may be very flexible in terms of what they accept as collateral. For example, a lender may accept jewelry, office equipment, or used cars to collateralize the loan.
Interest rates vary, but they are usually slightly higher than rates for conventional bank loans. Terms vary according to the size of the loan, the planned use of the funds, the requirement of the intermediary lender, and the needs of the borrower. The maximum term for repayment is six years.
One of the real benefits of securing a microloan has nothing to do with the money. The non-profits that serve as intermediary lenders also provide a significant level of management training and coaching. For example, a lender may require a prospective borrower to participate in a class and receive assistance in writing a business plan.
Another benefit is speed. The process of applying, qualifying for, and obtaining a microloan usually ranges between a few days and three weeks, depending upon the amount of funds needed, the procedures employed by the lender, and the degree of preparation on the part of the borrower. To speed the process along, it's a good idea to assemble as much paperwork as possible in advance. Borrowers should be prepared to provide tax returns, financial statements for existing businesses, bank account records, and proof of collateral.
To find out about lenders in your area, you can phone 1-800-U ASK SBA. Or use the following link to get a list of lenders nationwide: http://www.sba.gov/gopher/Local-Information/Microloan-Lender-Participants
2003 - 2005 © Jillian Coleman Wheeler
Jillian Coleman Wheeler is a Grants and Business Consultant. Her website, http://www.GrantMeRich.com, is a resource site for entrepreneurs, grant writers and consultants, and offers online training for grants consultants. She is also author of The New American Land Rush: How to Buy Real Estate with Government Money. For information: http://www.NewAmericanLandRush.com You may reprint this article, if you credit the author and include this resource box. Please notify the author of publication information: jillian@grantmerich.com
Latest News
 The Money Times | Added Loans to Iceland Will Help Pay Depositors Wall Street Journal - While loans from the International Monetary Fund and the Nordic countries are aimed at supporting Iceland's tottering economy, the British, Dutch and German ... IMF, Nordics pledge $4.6 billion loans to Iceland Iceland welcomes loans from IMF, Nordics and Poland (Roundup) IMF, Nordic Neighbors Agree Billion-Euro Loans for Iceland |
GETTING PERSONAL: Family Loans Serve Multiple Purposes CNNMoney.com - NEW YORK -(Dow Jones)- If you want to help out a family member without giving a handout, consider a family loan. Loans between relatives can help the ... |
Fort Worth's Trinity Bank Profits up 31% MarketWatch - In a day when many banks are fighting for their existence because of bad loan decisions, we are fortunate that we have yet to have one loan loss or one ... RMG Capital Corporation Reports Third Quarter Earnings |
LendingTree Loans Selects IBM for Loan Fulfillment Services MarketWatch - LendingTree Loans(SM), the company's consumer direct online mortgage lender, to provide comprehensive, private label mortgage loan fulfillment services. ... LendingTree inks deal with IBM LendingTree Loans Selects IBM for Loan Fulfillment Services IBM to provide loan fulfillment services to Tree.com's LendingTree ... |
 New York Times | December 22 Is Deadline to Apply for SBA Economic Injury Disaster ... MarketWatch - The deadline to file applications for Economic Injury Disaster Loans (EIDLs) is December 22, 2008. Small businesses and small agricultural cooperatives that ... Loans tougher to get but still available Loans available for September storm damage Low-interest loans available for Sept.-Oct storms |
 International Business Times | Fitch Downgrades 1 Class of JP Morgan Chase, Series 2001-A ... MarketWatch - In addition to the largest loan, Fitch has identified three other Loans of Concern, which includes the specially serviced asset. ... Fitch Affirms Bear Stearns 2000-WF1: Assigns Outlooks Fitch Downgrades 1 Class of Banc of America Commercial Mortgage ... |
 Boston Globe (registration) | Congress Delays Action on Auto Industry Loans Voice of America - The chiefs of General Motors, Ford and Chrysler asked for twenty-five billion dollars in new loans. Congress already approved twenty-five billion in ... Ailing automakers plead for $25b in loans Big 3 automakers warn of crisis without bailout Republican Leader Presses Compromise as Auto Chiefs Renew Plea |
SBA loans drop, rationing under way Bizjournals.com, NC - US Small Business Administration-guaranteed loans for the 24 counties south of Orlando were down almost $150 million in fiscal year 2008, which ended Sept. ... Allegan, Barry country residents hit by flood eligible for loans Small business loans dwindle SBA steps aimed to fuel small-business lending |
UAW may give up jobs bank to revive auto loans Detroit Free Press, United States - 2 for how the loans might be used to transform them into viable companies, promising to bring Congress back into session Dec. 8 if the plans measure up -- a ... Congress: Auto execs must show 'significant sacrifices' Detroit's fight hits home in Wisconsin Big Three's plea for aid fizzles in Congress |
 CharlotteObserver.com | Who's Getting $2 Trillion In Fed Loans? CBS News, NY - The Federal Reserve Board has been quietly providing $2 trillion in "emergency" loans to banks, and the pace has been quickening, Early Show National ... Video: Consumer Prices Drop Record 1 Percent in October Can the Fed fight deflation? How? Depressing Times |
Resources
-
Bad Credit Loans, Bad Credit Credit Cards - YoureApproved.org!
Personal Loans, credit cards from bad credit lenders including bad credit Loans - high risk unsecured bad credit cards - debt consolidation Loans - payday Loans!
-
Bad Credit Loans - Personal Loans - Credit Cards - Home Loans - Auto Loans - Credit Repair
Bad credit Loans and credit cards - personal Loans - high risk Loans - credit repair - free government grants - government auctions - police auctions - debt consolidation - filing bankruptcy
-
#9654; The Complete Online Guide to Free Government Grants, Business Grants and Government Loans
Government Grants - US government grants provides free government grants, business grants, Government grants.
-
Government Grants, Loans, Federal grants and Grant Money
Government Grants find out how to qualify for Free Business Grants, Government Loans and Free Government Money
-
US Government Grants - Online Directory for Info and Links.
US Government Grants - information on how to obtain free government grants.
-
Government Grants - Free Government Grants - Free Government Cash Grants - Cash Free Government Gran
Free Government Grants and Free Government Money from Government Grants. Guaranteed Government Grants.
-
After Bankruptcy Credit Solutions
Discover how to qualify for credit and Loans after bankruptcy in as little as 30 days!
-
Business Credit Secrets Revealed! - Get Business Credit Cards and Loans
Business Credit Secrets Revealed!
-
The Real Estate IRA: Use Your "Self-Directed" IRA, Roth or 401(k) + Loans to Buy Investment Property
Invest in Real Estate using an IRA, Roth IRA, or Individual 401(k) Plan. Buy Investment Real Estate like houses, condos, apartment buildings, foreclosures and land. Use Loans to leverage your investment. New eBook reveals the real estate information and l
-
bad credit home loan, refinance mortgage loan, cash loan, cash advance loan, california home loan, p
Online bad credit home loan, refinance mortgage loan, cash loan, cash advance loan, personal loan, debt consolidation loan, payday loan, bad credit loan, home improvement loan, second mortgage loan, online loan, unsecured personal loan Search.