Introduction
Microloans are surprisingly effective.
In fact, the winner of the 2006 Nobel
Peace Prize, Dr. Muhammad Yunus made
his mark by making miniscule loans of
as little as $20 to his fellow citizens
of Bangladesh to help them start successful
businesses.
I’ve extensively outlined the
steps you need to take to write a
business plan. Once it is ready you
have several options to consider with
the SBA, the federal government agency
that cultivates small business.
This posting will look at the SBA
Microloans. This program is administered
by 101 non profit organizations in
all fifty states except Wyoming.
Instructions
Difficulty: Easy
Steps
Step One - Determine if
the size of the Microloan Program
is right for you.
The term "small business"
covers a range of activities. In the
United States a small business can
have up to 100 employees. If you’re
a one person shop just getting started
the microloan program could be just
what you need. If you have to make
payroll for 99 employees to float
a new technical innovation, look elsewhere.
The SBA Microloan program provides
small loans to start ups, or growing
small businesses through local non-profit
intermediaries. Loans top out at $35,000.
The average loan runs $13,000.
Step Two - See if you can
handle the costs.
The maximum term for the loan is
six years. Rates vary depending on
the prevailing prime rate, but they
are generally between 8 and 13%. In
contrast, if you have equity built
up in your home, you can probably
pick up a home equity line of credit
for less than 8%
Step Three - Be Prepared
to Put up Collateral
Each local lender has its own requirements;
however you should be prepared to
put up some collateral as well as
the owner’s personal guarantee.
Step Four - Take Advantage
of the Training and Technical Assistance
provided
Every local intermediary must provide
technical and business training to
its borrowers as a precondition of
participating in the program. Your
lender might require you to take additional
business training or flesh out your
business plan in greater detail before
approving your loan.
Step Five - Contact a Microloan
Intermediary.
To apply for an SBA Microloan contact
a lender in your state. Cut and paste
this link to your browser for a state
by state list of lenders in PDF that
you can download: http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_fa_microloan.pdf
|
