Raising Money - Part 2 - Micro-Lenders to Build Funds for Your Work from Home Business

Since unemployment rates have gone up in the recent years, more and more have resorted to starting their own small businesses.  And like all businesses, there involves some start up capital to fund and kick start its operations.  Many banks have been much stricter with their lending requirements, thus making it more difficult for small business enterprises to get a loan approval.  The bright side however is that micro lenders, organizers that release loans to small enterprises, are still continuously lending.

The important thing to remember when getting a loan approval from a micro lender is to be able to ensure that the small business will see through, not only the current recession, but also grow in the future.  Micro lenders want as minimal risks to none as possible so the key to be able to demonstrate the concept of the small business and ensure its growth over a period of time.

The web has a vast amount of information on micro lenders and searching for one by merely typing in “micro lenders” will take the surfer anywhere from peer lending sites to economic development agencies.  The SBA or the Small Business Administration says that micro lenders are non-profit community based lenders that may release loans to up to $35,000 for approved borrowers.  The same organization also offers technical assistance, from classes to one on one counseling.  The SBA gets its resources from donations and which then provides funding for these organizations.

To be able to find a micro lender in a specific area, it would be good to start with the SBA website and click on Services and then Financial Assistance, which will then take the searcher to SBA Loans.  There they will see a section on Micro Loans.  It will open up to around 160 neighborhood micro lenders, economic development associations, and other organizations.  The average loan amount released to approve borrowers is $13,000 with a maximum term of six years.  There may be varying interest rates but they all usually come in between eight to thirteen percent.

Loan applicants should be ready to fill out the forms once they have chosen the nearest micro lender in their neighborhood.  Each lender may have different requirements but normally collateral such as a vehicle, a business equipment and proof of value for the items to be used as collateral, are needed.  Another requirement that may be asked for the small business loan is a co-signer with a good credit history.

Borrowers who aim to get a loan for their small business should also remember to improve on their personal credit first.  Being up to date on all bills payments that may have been overlooked is a good start because micro lenders will surely look into these records.  A business plan is one good tool to have as well when applying for a loan for a small business.  This gives the micro lender a good indication of the business’s financial state, both current and future.  After all these, it should take about 30 days to get word on the approval of the loan.

Read Part 1, Raising Money - Using Investors to Kick Start Your Business