What is a microloan?
The microloan program offers up to $50,000 in loans to assist small businesses and some childcare facilities that are not-for-profit in their initial and ongoing operations. The average microloan is about $13,000.
SBA funds nonprofit, community-based organizations that are specially designated intermediary lenders; these organizations have expertise in lending and can also provide management and technical support. These intermediaries administer the Microloan program for eligible borrowers.
Each intermediary lender has its own lending and credit requirements. Intermediaries typically need the personal guarantee of the business owner in addition to some kind of collateral.
How do I use a microloan?
There are many uses for microloans that support the growth of small businesses. Use them if your small business needs to be rebuilt, reopened, repaired, enhanced, or improved and your budget is less than $50,000.
Examples include:
- Working capital
- Inventory
- Supplies
- Furniture
- Fixtures
- Machinery
- Equipment
An SBA microloan’s proceeds cannot be used to settle debts already outstanding or to buy real estate.
What do I need to apply?
Certain nonprofit, locally based organizations with expertise in lending and business management support offer microloans. Individual requirements will vary.
Work with a local intermediary who has been approved by the SBA to apply for a microloan. Lenders approved by the SBA determine all credit decisions and microloan terms.
How do I pay back my microloan?
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Please get in touch with your lender directly or the SBA loan servicing center indicated on your account statement if you have any questions about your loan’s terms, account balance, or due date.
FAQ
How does a micro loan work?
A microloan is a small business loan with a maximum amount of $50,000 and a short term (between six months and five years). Although there are many different kinds of microloans, we’ll concentrate on those supported by the Small Business Administration (SBA) since they typically provide borrowers with better terms and protections.
What is considered a microloan?
What is a microloan? The microloan program offers up to $50,000 in loans to support the establishment and growth of small businesses and some non-profit childcare centers. The average microloan is about $13,000.
What are the cons of microloans?
Cons. Small loan amounts. Maybe more expensive than standard loan options, with shorter payback periods and higher interest rates. Your location may restrict your options because many microlenders only work with people in their local or regional communities.
Read More :
https://www.sba.gov/funding-programs/loans/microloans
https://www.govloans.gov/loans/microloan-program/