If there is one thing the majority of small business owners have in common, it's the fact that at some point your small business is going to need a new influx of money. That's where small business loans come into play. There are many different types of small business loans. There are times, such as at the start-up of your business, when you need a big loan from a major lender. However, other circumstances may lean more toward a microloan. Today the Rules of Thumb blog from MoneyThumb would like to discuss microloans, what they are, where to get one and why it may be the best type of loan for your small business needs. We found some great info in an article at Small Biz Trends that will help you better understand microloans, along with a couple of popular microlenders and how to go about applying for a microloan for your small business needs.
Microloans are small loans that are issued to businesses by individuals opposed to credit unions or banks. The Rules of Thumb blog from MoneyThumb often discusses this type of private lender. The concept of microcredit originated in the developing world, as a means of helping people in smaller economics have the ability to launch their own business. Microlending subsequently took off around the world, and today, small business microloans are an effective way to lend entrepreneurs and small businesses in the U.S. with the funds they need to start and develop their business.
The average amount of microloans lend is around $10,000. Businesses can use microloans to borrow as little as $500, making these types of loans a good option for small businesses needing to get their hands on smaller funds. One of the key attractions of a microloan is that they are generally easier to qualify for than a traditional small business loan. Specific eligibility criteria vary from lender to lender and can be influenced by the type of industry the business operates in.
Rather than being solely about credit scores, microloans work more closely with the small business owner applying for the loan, to find out about the business and its goals and objectives. The lender uses such information to determine whether they will lend the applicant the funds.
This type of loan is usually borrowed by a startup to help them fund the items required to get the venture up and running, such as equipment, the lease of an office, or employees’ salaries. Microloans are also sometimes used to provide small businesses with working capital to enable them to manage cash flow more proficiently, such as to cover outgoings as they wait for invoices to be paid, to develop a comprehensive marketing program, or to stock up on inventory when it is at a reduced price or in time for a busy holiday season. Since we are in the very midst of the holiday season, this could be the perfect time for your small business to apply for a microloan, especially if you sell items people may be shopping for at Christmas.
If you are a small business owner who is serious about applying for a microloan to help your business get through the holiday season, right now is the time to apply. We would like to suggest you read this in-depth study of microloans from Fundera where you learn everything you need to know about microloans, step by step instructions for applying, and where you will also find details of the Microloan Program of the Small Business Administration, along with several alternative microlenders.
When you arrive at the point in the microloan process where you need to convert your small business bank statement for easier access by microlenders we highly suggest you use our PDF financial file converters to make the microloan process run much more smoothly. This will help assure that the microlender you are applying to has all the financial information they need for a faster microloan approval.
We would love it if you would share this post to your social media pages so that your small business peers can also take advantage of the above information about microlending.
The Rules of Thumb blog and the MoneyThumb team hope all of our readers have a very safe and Happy Thanksgiving!