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What is a Microloan?

An SBA Microloan is simply a small loan amount between $100 to $35,000 for an existing business, entrepreneur or a start up. The loans are made through non-profit intermediaries and have a repayment term of up to 5 years. The loan was first introduced in the 1990s and has been a staple of the Small Business Administration.
Uses of the Microloan

This loan may be used for working capital or the purchase of equipment. It is designed to help launch a small business or expand an already existing one. For many small businesses, this loan could make difference between success and failure.

The SBA Microloan program will require the business owner to provide personal guarantees that he or she is willing and able to repay the funds. Also, the lenders (although different for each intermediary) typically need some type of collateral. The collateral used for securing the capital could be cash flow, equipment or personal credit.

In spite of the requirements, the Small Business Administration and the non-profit intermediary have made the process worth the effort. With reasonable terms (and in most cases funding within a few days), an SBA Microloan could be much easier to acquire than the usual bank loan.
What is a SBA Microloan?

The SBA Microloan program is all about the small business getting access to capital to start or grow businesses in the local community. SBA Microloans are designed to help minorities and rural community businesses owners that cannot obtain traditional financing. Simply put this is a loan for owners that cannot fund a small business start up or to grow. Most small businesses have relied on credit card financing, this in many cases is not an option any more. The SBA Microloan is a way for startups and growing businesses to get involved in the more traditional financing methods that have been abandoned in the past for much easier ways of capitalization. The process will help these small business become better run and in eventually a more successful concern. The history of what a Microloan is and how it can improve the local community and employment has encouraged the SBA to expand this type of lending.

Learn about the SBA Microloans and get the cash injection for your next project

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