Starting a Business and Need Money – Microloans May Be the Answer
Posted by Michael Beauchemin on Tue, Sep 25, 2012 @ 03:44 PM
Most businesses don’t start out requiring hundreds of thousands of dollars to get started. Instead most businesses start off on a shoestring budget operating out of the house. An owner, to get started, may requires as liitle as a few thousand dollars to less than $50,000.
If you are starting a small bussiness or have already started a business and want to to access some cash to support the business, consider a Microloan.
The purpose of the Microloan is to fund business owners, that may not have sufficient funds or access to cash for their business. Here are some places to start seeking out lenders of Microloans:
- Nonprofit Organizations – Action USA, Kiva Communities at Work Fund
- Microlender Search Portals -Association for Enterprise Opportunity or Microfinance Gateway
- Small Business Administration (SBA) Intermediaries
The lenders work with owners to provide short term loans to small businesses and certain not- for-profit child care centers. Loans vary from a few thousand dollars to a maximum amount of $50,000. The average loan amount is approximately $13,000.
Microloans cannot be used to purchase real estate or pay off debt. It can be used for:
- Working capital
- The purchase of inventory
- The purchase of furniture or fixtures
- The purchase of machinery or equipment
As part of the condition of the loan, an owner may be required to put up some type of collateral, as well as personally guarantee the loan. Most lenders will require the owner to complete some training and/or particpate in some business planning before accepting the loan application.
Terms of the Microloans vary, but the maximum length of the loan is six years.