SBA Microloan Collateral
Collateral For A Microloan
Because the SBA Microloan financing is done through an intermediary, some small business owners mistakenly assume that the SBA will not need collateral. The fact is in order for the loan to be funded, the SBA’s requires, in part, some sort of collateral. Most conventional loans will also require collateral.
Most established small businesses have some sort of collateral. Do you have any office furniture? What kind of equipment? Do you have any machinery? Does your business have vehicles or trailers? How about computers? This is a short list of possible useful collateral for an SBA Microloan.
You may also be able to use collateral from a partner, or shareholders, if that applies to your company,
The intermediary organizing documents for your loan package may ask for a cosigner. The SBA will require the business owner to sign a personal guarantee. If there is a cosigner, he or she will also be asked to sign a guarantee. In the case of a cosigner, the SBA Microloan intermediary may not require the small business to use any collateral before funding the Microloan.
If you have no collateral, the SBA and the intermediary may still approve your loan if you have superior credit. Keep in mind that the most common reason a Microloan is denied is due to lack of collateral. Do some brainstorming when it comes to collateral. The only way to find out if the SBA and the intermediary will use something of value for collateral is to put together a comprehensive financial asset inventory. Submit the inventory for approval and with any luck the SBA and intermediary will find security in your proposal.
If you need to learn more visit out SBA Microloan center home page
You will also need to read about the SBA Microloan Terms