Benefits of Microloan in Financing Your Small Business
Do you want a helping hand to expand your small business and take it to the next level? If so, you have stumbled upon the right place. Here we will reveal to you the best kept secret to obtain the loan you want at the cost you can afford to grow your small business and also double your revenues.
Whether you are starting up a small business or are already managing one, you cannot sustain its activities without availability of adequate funds. The trouble with startup firms and small business companies is that they have low revenues and profits. You need to inject funds from external sources to keep the operations going.
However, this is easier said than done. Obtaining funds is probably one of the hardest tasks for entrepreneurs. And this is especially the case with small business enterprises and startup firms. If this is the case with you, then the best solution for you is to obtain a Microloan.
What is a Microloan and How can it Help you Grow Your Business?
Microloan is a short-term debt with low finance charges that is usually extended to start-up companies. The loan started out as a solution to impoverished individuals in undeveloped countries who couldn’t afford traditional loans that entails high interest charges. But now they are gaining popularity among business owners particularly online, freelance, and home based firms.
Entrepreneur can use the funds to pay for:
• Inventory and supplies
• Computer Equipment and Accessories
• Working Capital
• Furniture and fixtures
• Machinery or equipment
• and various other expenses
Remember that you cannot use SBA microloan to pay existing debts or buy a real estate property.
Salient Feature of Micro Loans
Microloans programs are loans with smaller amount as compared to traditional loans. The average microloan amounts to about $13,000. The maximum loan amount varies from lender to lender but usually they provide up to $50,000 to small business and NPO owners.
The maximum period allowed to repay these loans is usually six years. Rates on the microloans vary but usually lie in the range of 8-13%.
When applying for a microloan, you have to provide details about your business, planned use of the funds, monthly costs of operations, and fulfill other information as requested by the lender. Each lender has its own lending and credit requirements. You need to provide personal guarantees and collateral to obtain the loan. Moreover, you may also have to fill certain documents to obtain the loan.
Summing up, microloans can prove invaluable for small business owners and startup firms. They don’t require large funds to finance their operations. The problem with taking out conventional loans is that the high rates on loans prove costly for them. Microloans are the best option for these budding entrepreneurs as they can be obtained at very low rates.
In case you have more questions about microloan, you can submit your query with us or give us a call at (888) 745-1114 and we will gladly help you in solving your small business finance needs.