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Requirements For A Microloan

SBA requirements for a Microloan have been lowered due to the economic situation many small businesses find themselves in today. The Microloan is for new and existing businesses, and is financed through not for profit intermediaries. Each intermediary has unique lending guidelines and is available to help the small business owner with technical support. Start-up business owners should know that the intermediary lender will want some, if not all, of the following:

  • A new business owner is more likely to receive funding if it is able to show 24 months of experience in the same field as its current business.
  • Any training certifications may be shown to the lender. SBA Microloans are typically given to borrowers that have at least 12 months of training.
  • An explanation of hardship that caused any blemishes to personal credit. It is recommended that there be a clear rationalization for poor credit. If personal credit is first-rate, you may qualify for a traditional loan from a local bank.
  • An owner is required to create a business plan.  The lender will provide some guidance for the financial projections they would like to see. The business plan should be believable and practical.
  • SBA Microloan qualifications will most likely include collateral for the capital that is being requested. In some cases the intermediary will require a co-signer.
  • The business owner should also include a personal expense plan. The lender’s concern here is related to the prospective borrower’s ability to meet his or her own living expenses.

If you have an existing business that has been established for two or more years, many of the requirements will not apply to you. Keep in mind that the financer is a non-profit intermediary whose priority is the best interest of the business owner. Any technical assistance that is required from the lender is free as it relates to qualifying for the SBA Microloan.

Go to the SBA Microloan program to learn more

You will need to know the SBA Microloan Collateral before you contact a lender

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