The Microloan program offers small loans that usually range from between $500 and $50,000 to small business owners, including veterans, minorities, low income business owners, and women through a network of about 160 intermediaries all over the country. Under this program, the SBA (Small Business Administration) makes the funding available to nonprofit intermediaries. These intermediaries then make these funds available to small business owners. The funds can be used for the usual business purposes including the purchase of additional inventory, equipment, supplies, equipment, fixtures, furniture, or as working capital.
Real estate can’t be purchased with a small business microloan. The intermediary and the small business owner negotiate the interest rate. Seven years is the maximum term for a small business microloan. The program also provides technical assistance and business based training to small business owners who use the microloan program to help them with their startup business or expanding their business. This technical assistance and training might include industry specific training, assistance with business planning, general business education and other kinds of training support.
The current downturn in the economy is the primary reason why small business owners have such a difficulty time obtaining a loan for working capital or to expand their small business. A little more access to some working capital is one thing that this economy needs, although the proposed tax breaks by the president also sound good.
Small businesses are having a difficult time as a result of the current recession. Conventional financial institutions that offer traditional loans frequently consider small business loans high risk and some small business owners don’t have the best of credit. One answer to this problem is alternative financing for small businesses. Small business microloans can be the answer for small business owners that will allow them to maintain the daily business operations and even expand and grow their business.
Many lenders of microloans can also provide additional services, such as workshops and free advertising, which can help small business owners learn management techniques for small business finances. Small business owners can benefit greatly from these services. Oftentimes, small startup business owners will be unsuccessful, primarily because that didn’t take advantage of these services and only took advantage of the loan for the working capital.
Some lenders of microloans will report the payments which will help small business owners build their credit. In the future this can help the small business owners obtain larger loans that have much better terms. However, this isn’t true for all lenders of microloans and small business owners should carefully read all of the terms and conditions of the microloan.
Small business owners shouldn’t be discouraged if they have a low credit rating and not apply for a small business microloan. The reason for this is that some lenders of microloans won’t use the personal or business credit rating in the determination for approval of the small business microloan. However, increasing the small business credit rating should always be the objective of all small business owners.
Small business microloans can help the small business owner during these difficult economic times. They can help cover the cost of the daily business operations when sales are slow and also help small business owners grow and expand their small business.