Every business finds itself needing additional funds for an investment in continued operations. The Small Business Administration offers many programs that can help businesses obtain financing when necessary. When you need a small loan to meet your company’s financial needs, explore SBA loans like the microloan program.
An SBA loan obtained through the microloan program can help a company secure additional inventory, operating supplies, furniture and fixtures or machines and equipment needed for daily operation. If necessary, microloan funds are also acceptable to use as working capital. The SBA loan process prohibits the use of microloans to pay outstanding debts or for real estate purchases.
The SBA created the microloan program to benefit certain small businesses. The Administration provides funds to third-party lenders who distribute the loans based on eligibility. The maximum amount a company can borrow under this program is $50,000. The SBA reports that the average microloan is approximately $13,000.
The intermediaries who control the distribution of the funds enter into an agreement with the SBA to provide various services to companies who receive these SBA loans. Each lender must provide technical assistance and business education to borrowers. Likewise, when you apply for a microloan, you must complete training and business planning requirements for your application to be reviewed.
The terms of each loan vary based on the amount of money borrowed and the borrower’s needs. Each lender sets their own repayment requirements, but the maximum repayment term for these loans is six years. The credit and collateral requirements will also vary with each lender. Most microloan lenders will require some form of collateral to secure the loan. Explore the available options to be sure you get the best financing for your company.
To apply for funding for your small business, use the form on the right to begin the application process.