Microloans - Small Business Financing Opportunities

Aug. 22, 2011 - PRLog -- If you are a small business you know it is not easy to get a bank loan. But there are more finance options available to small businesses than ever before especially small business loans called Microloans... which may be bigger than you think.  

If you are familiar with the term Microfinancing, $50 and $100 loans to entrepreneurs in third world countries  … this article is not about that.  It was a trendy topic a few years ago when the United Nations declared 2005 the “Year of Microcredit,” Muhammad Yunus won the Nobel Peace Prize, the website www.Kiva.org was born and half of Hollywood was talking about being a banker…   If you are a business owner or entrepreneur in the United States and you are looking for innovative ways to finance your small business and access capital this is the right article for you.

What is a Microloan

A Microloan can be as high as $50,000 or as low as $500 but generally it is financing (a loan or lease) $5000 - $25,000.  Typically a Microloan is made to a Small Business or Owner Operated Business.  Many years ago a small business would go to their local bank, a friend, or family member but today there are a number of options available including credit cards and venture capitalists but often the easiest and fastest place to get a Microloan is from a new breed of independent financial company that specializes

Finding the Micro-Lender or Small Business Financing that is Right for You
Micro-Lenders fit into four buckets:

1. Small Business Administration - The U.S. Small Business Administration has a Microloan Program that provides small, short-term loans to small businesses and certain not-for-profit child-care centers. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as providing management and technical assistance. These intermediaries make loans to eligible borrowers. The maximum loan amount is $50,000, but the average microloan is about $13,000.

SBA Microloan Program allows funds only for the following purposes:

Working capital
- The purchase of inventory or supplies
- The purchase of furniture or fixtures
- The purchase of machinery or equipment.
(Proceeds from a microloan cannot be used to pay existing debts or to purchase real estate.)

For more information on the SBA Microloan Program.

2. Non-Profit Micro-Lenders – There are currently over 170 not-for-profit organizations that work together with the SBA to help small businesses get funding.  But these private and state run organizations often have their own funding sources and also provide funding separate and apart from the SBA.  Every state has a not-for-profit micro-lender and the best way to get started is to contact the organizations located in your state.  See the Microloan Intermediary List.pdf.

3. Social Lending – Sometimes called person-to-person or peer to peer lending, this is a new option if you’re are looking for a microloan.  Websites such as Prosper and Lending Club allow small businesses and consumers to go directly to people with capital to loan.  Unlike your local bank, this crowd sourcing loan process is typically quick and simple.  You plead your case and lenders choose whether they want to offer you a loan or not.  It may be new but it works. For more information on Social Lending go to Social Lending Network.

4. Independent Small Business Financing and Leasing Companies – With over 200 Independent Equipment Leasing companies in the market place today there is a lot of capital available for small businesses who might not yet qualify for a bank loan but show potential.  Independents provide a breadth of financing options including equipment leases.  Equipment Leases under $250,000 are referred to as “Small-Ticket” Equipment Leasing and it has become big business making up an estimated 35% of the new business finance volume in the US.  Because Independent Leasing Companies are automated and highly service oriented they enable a small business owner to fill out an application in 5 minutes and get rates back in a couple of hours or sooner.  

For more information on Independent Leasing Companies and Small-Ticket Financing go to: Equipment Leasing and Finance Association.

To apply for a Microloan, go to http://www.equipmentleasingnow.com.

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About Equipment Leasing Now
Equipment Leasing Now is an online comparison shopping site for companies looking for the best financing rates and plans. We make financing and leasing equipment fast and easy for businesses. This free service allows you to match their equipment leasing needs with the leading financing companies in the U.S. in less than 2 minutes. YOU CHOOSE which finance companies you want to work with. Get the best rates and leasing plans with NO UNWANTED SALES CALLS.