A Financing Source That Probably Applies To YOUR Business. Useful Facts to Be Aware of
Finance July 30th, 2009The SBA’s Micro-loan Program provides short-term loans of up to $35,000 to small businesses and not-for-profit child-care centers for working capital or the acquisition of inventory, supplies, furniture, fixtures, machinery and/or equipment. Proceeds cannot be used to pay existing debts or to buy real estate. A very significant factor that you need to know about and considered to be one of the most critical for you while dealing with this subject is that the SBA makes or guarantees a loan to an intermediary, who in turn, makes the micro loan to the applicant. These organizations besides provide management and technical assistance. The SBA does not guarantee the loans. The micro loan program is presented in selected locations in most states.
Small businesses and not-for-profit child-care centers needing small-scale financing and technical aid for start-up or growth
Particularly designated intermediary lenders (nonprofit organizations with experience in lending and in technical assistance) actually lend you the money.
To provide you with more details and therefore better awareness of the matter it should be pointed out that the Microloan Program provides incredibly small loans to start-up, newly established, or growing small business concerns. Under this program, SBA makes finances available to nonprofit community based lenders (intermediaries), which, sequentially, make loans to suitable borrowers in amounts up to a most 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.
The maximum term allowed for a microloan is six years. But, loan terms alter according to the size of the loan, the planned management of funds, the requirements of the intermediary lender, and the needs of the small business borrower. The maximum loan quantity is $35,000, however, the usual loan quantity is around $13,000. Interest rates vary, depending upon the intermediary lender and costs to the intermediary from the U.S. Treasury. Normally these rates will be between 8 eight percent and thirteen percent.
Each intermediary lender has its own lending and credit requirements. Though, business owners contemplating application for a microloan should be aware that intermediaries will generally require some sort of collateral, and the individual guarantee of the business owner.
Each intermediary is required to provide business based training and technical aid to its microborrowers. The truth is that persons and small businesses applying for microloan financing may be required to fulfill training and/or planning requirements before a loan application is considered.
In conclusion it should be pointed out that small businesses that are interested in applying for a microloan should make contact with a microlender in their area. In order to find out a micro loan lender in your state you just need to use internet and in few seconds you will be provided with all necessary info.
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