A microloan program is intended for the newly established small business. Their objective is to boost these businesses up to the point that they can sustain their operations. Microloan lenders can provide as much as $50,000.00 in loan proceeds, but the recorded average of this type of loan is only $13,000.00. This loan has a flexible repayment term of up to six years and can offer a low interest rate that will be just what small businesses need.
Loan Term and Interest Rates
Repayment terms vary from one loan to another. It will depend on the amount financed. Interest rates may range from 4% to 18%, with the decision of the microloan lender as to how much.
Application and completion of requirements for microloans are different from lender to lender. Some may also require collateral or other forms of guarantees. But then again, compared to standard type loans, requirements in microloans is more likely easier to comply with.
Similar to the requirements above, the application will take less effort. Basic essentials such as documentation, financial reports, income and cash flow statements are the only paperwork that microloan lenders may look for. Also, the processing period is much faster than the standard loan; therefore a shorter turnaround time can be expected.
You might find the qualifications for eligibility for this type of loan are much easier to reach than traditional loans. As long as you have a decent credit score and income, you can most probably be approved for this loan. The following circumstances may also apply for microloans:
- The Business is just starting and cannot get loans from the traditional lending programs.
- The Business needs a small amount of funds.
- Minor owners run the business.
If you want microloans, then you should know about the lenders providing microloans. Here are few lenders that can fund your microloans.
- SmartBiz – They provide you loans ranging from $30,000 to $50,000 at lower rates. The turnover period is faster than any other microloan lender.
- Kabbage – They give you microloans in the form of a line of credit. Their loans range from $5,000 to $250,000. They provide a straightforward process for funding. Lenders may ask for an annual income of $50,000 to qualify for this loan.
- OnDeck – This lending platform provides term loans and lines of credit for your business. It includes a term loan of up to $500,000 and a line of credit up to $250,000. They need your biz to have a credit score of 600 and at least three years of experience in the business. Moreover, they need an annual income of $250,000.
- Loan Builder – This company offers short-term loans. They give loan amounts ranging from $5,000 to $500,000. They need a minimum of nine months of business experience and an annual income of $42,000. So, if you are new to business and need a loan, you must opt for this lender.