Requirements for a Mini-Bond

There are different loan requirements for qualifying for a mini-bond. The requirements are set by the financial institution that is backing the bond. There are many government programs that have mini-bonds. The bonds are aimed at small businesses. There are a few requirements that must be adhered to qualify for this type of bond:

Small Business Status

Most if not all mini-bonds are aimed at small businesses. You must be able to provide sufficient financial records to qualify for some mini-bonds. Your business net worth must be within certain guidelines. Every lender has established their guidelines.

Bond Amount

The amount of the bond is what helps to define it as a mini-bond. It is typically for smaller loan amounts, ranging from $100,000 dollars to $2 million dollars in funding. You may be able to receive multiple bonds from different lenders to fund a project that requires more money than that. You must check the individual qualifications of each lender.

Credit Rating

The credit rating of the small business will be taken into consideration. However, it is not the only form of eligibility. Many companies with a high amount of risk are still able to get mini-bonds.

Project Plans

Mini-bonds may be offered in conjunction with beautification efforts of a city or town. For instance a city has a project that must be completed, and gets a local bank to back a bond for the winning bid. The contractor gets the bid and is able to finance the project because of the bond. The bank gets its money from the contractor, when the city pays the contractor. All parties benefit from bonds for public projects.

Area of the Company or Project

A qualification for a bond may also be based on the company’s location. Local governments always prefer to keep money within the local community. It can help to create jobs in the local market and help a slowing market to stabilize.

Assumed Risk and Liability

If a business has had many issues with credit, or demonstrates a downward movement, there are some programs that may consider that company a liability. However, with a bond, you will not be automatically disqualified. A bond lender will consider many factors. There are requirements that are built into the description of the bond, as well as those required by the financial institution.