When you own a new small or home-based business, it doesn’t always take a huge infusion of cash to get off the ground and gain momentum. You may just need some basic equipment and inventory, but most lenders and traditional banks don’t bother with loan amounts in the tens of thousands. A microloan is most likely the right choice for you.
At most, microloans are approved for up to $50,000, but more often than not, they’re closer to $15,000. They are perfect for when you need much less money than a bank loan, but more than you’re comfortable putting on a business credit card. They are also great for those who have no credit history or who have trouble qualifying for a larger or more traditional loan. Microloan rates vary depending on how much you borrow and your business’ financial circumstances, but when you connect to lenders through the Small Business Administration, they generally range from 8-13%.
Microlenders invest in small businesses that otherwise wouldn’t exist, because communities benefit when businesses thrive.
Accion is a nonprofit microlender-without-borders. They believe in the power of bringing financial resources to the underserved. Their mission is to harness and nurture potential that has thus far been underestimated and ignored–to create, support, and positively influence financial institutions in impoverished areas all over the world.
“We go places and take risks that others do not. We see what works and what doesn’t. We then scale successful models that can harness the capital markets…. We convene and challenge the industry to focus on the obstacles and solutions on the path to financial inclusion.” – Michael Schlein, Accion CEO
Opportunity Fund founder and CEO, Eric Weaver, believes in “economic justice.” He started the nonprofit Opportunity Fund in the mid-90s to give often overlooked potential business owners the capital and advice they couldn’t get anywhere else. A few years later, things were going so well that Opportunity Fund added a “microsavings” program to help families and college students build a strong financial foundation.
“These are loans to women selling tamales and hot dogs from carts on the street, to family-run restaurants and dry cleaners. These are savings accounts for single moms who seek to build stability and strength for their children, and for students who will be the first in their families to graduate from college.” – Eric Weaver
When money is available where it was never available before, the businesses it creates make a huge impact on the community. At VEDC, 75% of borrowers are starting businesses in low to moderate income areas, and 70% of their clientele are female and minority entrepreneurs. They pride themselves on investing in business owners with lower FICO scores who couldn’t get approved for funding anywhere else.
More Choices in California and Beyond
These three lenders specialize in microloans. Other lenders like AmPac Tri-State and Small Business Finance offer microloans along with their larger loan programs. AmPac Tri-State works with state and local initiatives to offer programs specifically aimed at helping community centered and healthy food-based businesses take root. Small Business Finance provides support for small businesses at every stage in the growth cycle from new, to established, to expanding.
Click here to find an SBA-approved microlender in your state.
Access to Capital: Small Business Workshop
Tuesday, March 30, 10am-1:30pm UCR Palm Desert Center
The Center will be hosting an educational event at the UCR Palm Desert Center: “Access to Capital – Small Business Workshop.” Our sessions will include Managing Your Personal and Business Credit, Cash Flow Analysis for Lending, and Funding Sources for YOUR Business. These sessions will be presented by industry professionals, many with decades of experience helping small business owners. Look forward to presentations by Experian, Pacific Western Bank, and an entire panel of lenders – all ready to answer YOUR questions! Click here to register.