SBA Microloans Support Women- and Minority-Owned Businesses
Small businesses play a key role in the economy. So, the government has created several programs to help people apply for small business loans. These programs can offer millions of dollars in some cases. However, they have often been inadequate in helping companies owned by women and ethnic minorities. To help with this and other shortcomings of existing loans, the SBA created the microloan program.
The SBA Microloan Program
The microloan program from the SBA provides sums of up to $50,000 to small businesses. The average loan size in this program is $13,000. While they are small in comparison to previous programs such as 504 and 7a, microloans can provide exactly what small businesses need to survive and thrive.
Although the program’s approval requirements are set by the intermediary lenders, these loans are usually much easier to qualify for. Therefore, businesses do not need to have as much collateral or establishes credit to get funding.
Advantages for Women- and Minority-Owner Businesses
Historically, women and minorities have been underrepresented among business owners. However, in recent years, both groups have become a larger portion of entrepreneurs. Despite this, many still struggle to get access to traditional loans, often due to lower credit scores and less established wealth. Small business ownership should help the driven achieve financial independence but is often difficult for those who don’t already have it.
Fortunately, the microloan program makes it easier to get the funds necessary to start and grow a business. By increasing the number of outstanding loans that lenders may have with the SBA, the program helps to increase access to capital.
How To Apply
You can apply for these small business loans through intermediary lenders. These are banks and alternative lenders who handle the approval process and administer the loan. The SBA simply provides backing for the loan, to enable businesses like yours to receive funding.
The process is similar to applying for any other loan for your business. You will need to provide financial information such as tax returns and bank statements. However, the requirements are relaxed. So, you can often receive money even if your business is only just getting started.
Discover more about small business loans through the SBA’s programs. The microloan program could be a significant boon to small businesses run by historically underrepresented groups. A microloan may be the answer you have been looking for to get capital to grow your business.