Women and minority-owned businesses are getting more resources available to them through the Small Business Administration. These firms often start out with less capital than businesses begun by white men. Women businesses get less financing than male-owned firms. A minority-owned business can struggle to find financing because they don’t have the collateral assets that other firms have. To help, Congress expanded the SBA Microloan program.
What Is a Microloan?
Microloans are usually small loans up to $55,000 or so to entrepreneurs to start or add to a business. Under the SBA program, the average microloan is about $13,500. Terms vary, but they’re usually around five years with favorable interest rates to give a minority-owned business a way to build credit and their business.
Microloans are usually made at the local level, even though the program is through the SBA. The lender is approved by the SBA to offer a microloan. The SBA backs the loans, which reduces the risk to the lender. Generally, the business owner won’t need stellar credit, as they might for a regular SBA loan. Loans are easier to obtain.
How Can You Use Your Microloan?
In general, microloans can be used for working capital, inventory, furniture, machinery, and equipment. Typically, you can’t use the money to pay off debt or to purchase real estate. Although there are eligibility requirements, these requirements are not as stringent as for other loans.
Use the Resources Available to You
The SBA has many programs for minorities and women in business to help them find contracts and funding. Most larger cities have resource centers where you can find mentors and learn how to compete in today’s global marketplace.
It isn’t always easy to ask for financing. Mossberg Strategic Capital has financing for a minority-owned business. Contact us today for more information.