Micro Business Loans: Meeting The Criteria

Micro business loans are loans designed to help very small businesses. The most accessible micro business loans are offered through the Small Business Administration (SBA) which is a U.S. government-sponsored agency.

The Local Level

The SBA functions as the overseer of micro business loans by doling out funds to various non-profit groups, known as intermediary lenders. These intermediary lenders are then in charge of distributing the loans to applicants in their communities. This means that your application and specific terms of the loan will be dealt with by the local intermediary lender. This also means that criteria vary from state to state and sometimes even from city to city. You can find a list of intermediary lenders throughout America on this SBA page.

Loan Selection Criteria

Though the specifics of micro business loans vary from location to location, there are some overarching criteria that all applicants must meet. In general, as a micro-borrower you will have to put down collateral of some kind as well as provide a personal guarantee of the loan. Additionally, you may have to complete training and/or planning requirements before an application for a micro business loan will be considered.

The Final Details

The SBA offers a maximum micro business loan of $35,000 with the average loan around $13,000. The maximum term for the loan is six years and the interest rate on the loan will be between 8% and 13%. If you wish to apply, check out the link above for the SBA's list of intermediary. You will apply on the local level, so contact the lender appropriate for your area.