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| Micro Business Loans: an Alternative Source for Bad Credit Business Owners |
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Lisa writes, "Microloans may fit the needs of small business owners who only require a small amount of financing and cannot qualify for traditional bank loans. Microloans may also be the only alternative for small business owners with bad credit."
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The micro business loan program fits the needs of entrepreneurs who only need a small amount of financing and cannot qualify for traditional bank loans. This program provides small loans to start-up, home-based or micro-businesses. Loan amounts are available from $1,000 up to $35,000 and must be repaid within six years.
Who can apply
Start-up businesses, home-based businesses, existing and growing businesses.
Maximum loan amount
The average loan amount is $13,000; however, small business owners can borrow from $1,000 to $35,000.
How you can use the loan proceeds
Loan proceeds can be used for working capital, acquisition of materials, inventory, supplies, furniture, fixtures, machinery and equipment. Micro loans may not be used to acquire land or property.
Microlenders
Nonprofit agencies, private foundations and the U.S. Small Business Administration (SBA) operate microloan programs. While the SBA does not provide loan funds directly to borrowers it provides low-cost loans and grants to nonprofit intermediaries such as community economic development and nationwide microloan centers. Loan funds are redistributed to small businesses and loan guidelines are established by the intermediary agency.
Terms, Interest Rates and Fees
The maximum term allowed for a microloan is six years. Loan terms vary according to the size of the loan, the planned use of the funds, the requirements of the intermediary lender, and the needs of the small business borrower. The rates are typically between 8% and 13%.
Collateral
The community based intermediary establishes its own lending criteria. Some intermediaries may require collateral but not likely. A credit report is pulled on the small business owner but it is not the only requirement when considering approval. Bad credit business owners are often approved with a solid business plan and business training.
Training and Assistance
The intermediary is required to provide small business training and technical assistance to the borrower. Small business owners may be required to complete a series of training or a business planning courses as a precondition before the loan is approved and funded.
Where to Apply
Small business owners should apply for a microloan in their community. The difficulty with microloans is that intermediaries distribute the loans in their own communities and if you do not live in an area of an intermediary this type of loan may not be available to you. If this is the case you can research your State and local government agencies as an alternative as some offer loans similar to the microloan program. A nationwide microlender with an online application is www.accionusa.org
For more information visit:
www.rebuildcreditscores.com
About Lisa Phillips
Lisa Phillips is a marketing consultant specializing in business expansion and development. Because many small business owners lack the personal and business credit necessary to grow and expand, she has developed a free website to aid consumers as well as entrepreneurs in rebuilding and taking control of their credit.
Contacting Her:
You can contact her by email at: lisaphillips@rebuildcreditscores.com
You can learn more at: www.rebuildcreditscores.com
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Posted on Apr 22, 2008 21:46pm.
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