What is Microloans and how they Work and Where to Get One?

What is Microloans?

Microloans can simply be defined as small loans that are being offered for businesses. It is possible for a business to obtain up to $35,000 through Microloans.

Usually, it is being offered to business start-ups, who are struggling with finances. However, newly launched small scale businesses can also request Microloans for their working capital.

The loan obtained through Microloans can be used for a variety of purposes, such as purchasing supplies, furniture, fixtures, machinery and inventory.

It is possible to obtain Microloans through SBA?

The Small Business Administration is not engaged with the process of lending any money to individuals or businesses.

However, it is possible for you to find several programs, which small businesses can think about using in order to apply for loans and get required assistance.

Moreover, SBA is engaged with the process of providing funds to the nonprofit community lenders.

What are the terms and conditions that are associated with Microloans?

The terms and conditions associated with the Microloan would differ from one lender to another. Usually most of the lenders would ask you to get a personal guarantee from one of the business owners.

The process of obtaining a Microloan is relatively easy when compared to traditional bank loans. If you try to obtain a Microloan from a SBA supported program, you will need to fulfill certain business planning and training requirements.

It depends from one lender to another as well. You will be provided with a clear understanding about the requirements by your lender before you submit an application.

Where to get a Microloan?

In order to get a Microloan, you will need to search for a SBA partnered Microlender. It is possible to find SBA-partnered micro lenders in 46 different states of United States.

It is also possible for you to locate them in Puerto Rico and Columbia as well. Moreover, you can obtain a loan from the other lenders who are not associated with SBA. Opportunity Fund, Kiva and Accion USA are to name a few.

What should you keep in mind?

There are few important things that you should keep in mind when you trying to apply for Microloans. First of all, you need to remember that these loans are not eligible for any tax deductions.

If you want to get away from the hassle associated with approval, you should be equipped with a professional business plan.

The lender would usually ask few questions from you, such as your ability to start and run a successful business and the amount of experiences that you have in your business.

In addition, it would be a good idea to be prepared in order to showcase the special skills, educational qualifications and other professional qualifications that you possess.

If you have personally invested money on something, you will be able to increase your chances of getting the loan approved.

Being prepared when approaching the lender would give you the opportunity to stay away from frustration and obtain the loan.

No matter what your need is or which option you choose, a microloan can help your business push through obstacles.

Call Our experts at (817) 466-9333 to schedule an appointment to discuss more about microloan for your small business.

Video Source:  U.S. Small Business Administration

References:

Microloans: Here’s How They Work

https://www.thebalance.com/microloans-how-they-work-and-where-to-get-one-3515740

http://www.investopedia.com/articles/personal-finance/040715/what-microlending-and-how-does-it-work.asp