|
|
Like this article? PLEASE +1 it! |
|
Microloans
Written by: Start Your BusinessArticle Overview: The Microloan Program provides very small loans to start-up, newly established, or growing small business concerns. Under this program, SBA makes funds available to nonprofit community based lenders (intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $13,000. Applications are submitted to the local intermediary and all credit decisions are made on the local level.
![]() |
Free Download - Lease Equipment By Start Your Business |
Microloans
The Microloan Program provides very small loans to start-up, newly established, or growing small business concerns. Under this program, SBA makes funds available to nonprofit community based lenders (intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. The average loan size is about $13,000. Applications are submitted to the local intermediary and all credit decisions are made on the local level.
Terms, Interest Rates, and Fees:
The maximum term allowed for a microloan is six years. However, loan terms vary according to the size of the loan, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. The maximum loan amount is $35,000, however, the average loan amount is around $13,000. Interest rates vary, depending upon the intermediary lender and costs to the intermediary from the U.S. Treasury. Generally these rates will be between 8 eight percent and thirteen percent.
Collateral
Each intermediary lender has its own lending and credit requirements. However, business owners contemplating application for a microloan should be aware that intermediaries will generally require some type of collateral, and the personal guarantee of the business owner.
Technical Assistance
Each intermediary is required to provide business based training and technical assistance to its microborrowers. Individuals and small businesses applying for microloan financing may be required to fulfill training and/or planning requirements before a loan application is considered.
How to Apply:
Small businesses that are interested in applying for a microloan should contact a microlender in their area. The following link contains a state-by-state list of all SBA participating Microlending Intermediaries and their ares of operation. SBA Microlending Intermediaries
Information For Non-Profit Entities Seeking To Become Intermediary Lenders
Applying to become an Intermediary
Organizations interested in becoming Intermediaries should contact SBA for information on the application process and should review the regulations published in the Code of Federal Regulations, specifically sections 120.700-120.716. In order to participate in the program, applicants must meet three general criteria:
* An applicant must be organized as a non-profit organization, quasi-governmental economic development corporation, or an Agency established by a Native American Tribal Governement;
* An applicant must have made and serviced short-term fixed rate loans of not more than $35,000 to newly established or growing small businesses for at least one year; and
* An applicant must have at least one year of experience providing technical assistance to its borrowers.
Applications should contain supporting information describing:
* The types of businesses assisted in the past and those the applicant intends to assist with Microloans;
* The average size of the loans made in the past and the average size of intended Microloans;
* The extent to which the applicant will make Microloans to small businesses in rural areas;
* The geographic area in which the applicant intends to operate, including a description of the economic and demographic conditions existing in the intended area of operations;
* The availability and cost of obtaining credit for small businesses in the area;
* The applicant's experience and qualifications in providing marketing, management, and technical assistance to small businesses;
* Any plan to use other technical assistance resources (such as counselors from the Service Corps of Retired Executives) to help Microloan borrowers.
For More information about participation in the Microloan Program as an Intermediary, applicants should use the following link and also contact their local SBA District Office. Information for Non-Profit Entities seeking to participate in the Microloan Program
Article Tags:
|
About the Author: Start Your Business RSS for Start Your's articles - Visit Start Your's website Starting a business requires you to complete a number of steps and make some key decisions. Though part of your overall plan, you’ll need to select a location, decide on a business structure, and obtain the necessary licenses and permits. In addition, determining which financing options will meet your short-term needs and long-term goals is crucial. Within this section, we’ll provide information on these topics along with guidance on buying an existing business, copyright and trademark issues, and getting support from an outside expert. Click here to visit Start Your's website Loan Package Checklist Purchase Research Exporting FAQs Finance StartUp Certified Development Company 504 Loan Program |
Related Forum Posts
Share this article with your friends. Fund someone's dream.
Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
Make Small Commitments. Get Big Changes.
Starting A Set of Books
10 Reasons Your SBA Loan May Be Declined
Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.



