Microloan accomplish small businesses requirement, or can say it becomes a ray of hope for small business. “In order to complete the project, we needed $60,000 to pay for our upfront costs of producing the event,” says co-founder Tamara Francois.
Francois went to an alternative lending nonprofit called Community Capital, which offered microloans. It is a small short-term loans designed to give small businesses working capital. Business plans needs to submit and proof also that they had a signed contract from a major corporate clients.
Microloans can transform business for small companies like The XP Agency. The Small Business Administration has a microloan program that works with nonprofit community organizations across the country. It provides loans to local small business owners.
While microloans are typically $50,000 or less, businesses in regions that have less access to capital may qualify for up to $250,000.
The microloan market has evolved in the last five years, says Antara Dutta, a social entrepreneur and mentor with the Delaware chapter of SCORE. Many nonprofit organizations, foundations and peer-to-peer lending networks have also entered the microloan market.
The types of businesses that need cash for a specific purpose, such as buying new equipment, expanding the marketing program or stocking up on inventory before a busy season can get benefit from microloans, says Siddhanti.
Small business owners can also use microloans to build up their business credit history, Dutta points out. “You borrow small, and pay it back. Then as your business grows, larger banks will talk to you about larger lines of credit,” Dutta says.