East Bay Access to Capital

Micro-Loan

Microloans are loans up to $50,000 provided to small businesses and nonprofits to start or expand services and product development. The U.S. Small Business Administration administers the Microloan program and partners with local intermediary lenders to provide the credit to businesses. The lenders tend to be community based nonprofits and there are approximately 200 lenders across the U.S. Each intemediary lender has their own lending and credit requirements. Nonprofit intermediaries usually require collateral and a personal guarantee from the business owner. Microloans can be used for working capital, inventory or supplies, furniture or fixtures and machinery or equipment. Proceeds from SBA loans cannot be used to pay existing debt or the purchase real estate. To prepare for a Microloan, have a business plan ready, ensure you can make monthly payments, work with a local lender and demonstrate a willingness to invest personal money into the business. Microloans are beneficial for businesses that have never borrowed from a bank and have low capital requirements. Interest rates for Microloans can be higher than standard business loans and it can be difficult to find an existing local lender.