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The Benefits of the Small Business Microloan Program

For small business owners, the Small Business Administration backs a variety of loan products aimed at empowering those who may not otherwise qualify for traditional loan packages. The SBA does not give out these loans, but instead works with a variety of credit unions and banks to offer them. In addition to a traditional small business loan in Grand Rapids, some small business loan grand rapids owners might consider the SBA microloan program.

SBA Microloans Can Be Used for a Variety of Needs

SBA microloans can be used for working capital, inventory, supplies, physical assets, machinery, equipment and other items critical to the operation of a small business. There are very few restrictions on what the microloan can be used for, giving business owners flexibility in their spending. Many small business owners may not be sophisticated in their reporting procedures, so loans and grants that come with more regulations may be prohibitively difficult for them to track. SBA microloans cannot be used, however, to either purchase real estate or pay off other debts.

SBA Microloans Can Have Up to Six Year Terms

For small business owners that need flexible repayment schedules, an SBA microloan can be ideal. While the terms depend on the company and the business owner's creditworthiness, loans can have up to a six year repayment schedule. The repayment schedule may also depend on the business owner's plans for the funds and their future projections. Other conventional loans may have a much faster repayment schedule, which will come with higher monthly payments.

 

SBA Microloans Come With Business Training

The application process for an SBA microloan -- in addition to other forms of SBA loan -- come with required business training. Though this may seem like a hurdle to some small business owners, it's an effective way to acquire business skills at no cost. These training and planning requirements can usually be waived if the business owner is already extremely experienced of knowledgeable, but can nevertheless be beneficial to those who want to further solidify their future business plans.

The SBA microloan program is not suited to all needs; companies that require more than the $50,000 limit would be more suited towards a traditional SBA or even conventional loan. However, the SBA microloan program can be perfect for companies seeking a small cash infusion.