Everything You Need To Know About SBA Microloans

SBA Microloans are a great financing option for small businesses. These loans, backed by the U.S. Small Business Administration (SBA), give entrepreneurs and business owners access to capital they wouldn’t otherwise be able to obtain due to their size or limited resources.

What is a Microloan?

A microloan from the SBA is typically between $500 – $50,000 and can be used for a variety of expenses and investments such as inventory, equipment, supplies, furniture, fixtures, machinery and more. Interest rates vary depending on the type of loan being taken out – ranging from 6%-13% – and repayment terms may extend up to six years based on the usage of funds borrowed.

Process For Obtaining SBA Microloan

The process for obtaining an SBA Microloan is fairly straightforward, but there are a few requirements that must be met in order to apply. To qualify, applicants must have a credit score of 640 or higher and at least two years of business experience. They must also provide the lender with detailed financial information such as income statements, balance sheets, tax returns and other applicable documents.

Size Standards

Additionally, the small business applying for an SBA microloan must meet certain size standards set by the Small Business Administration. The company should not exceed $50 million in annual revenue, 500 employees or tangible net worth of more than $10 million after taxes. Furthermore, businesses with more than one owner are required to have all owners sign the loan agreement.

Conclusion

Applying for an SBA Microloan is a great way to finance small businesses of any size. With its competitive interest rates and flexible terms, entrepreneurs can get the capital they need to grow their business. If you meet the requirements set by the Small Business Administration, then consider applying for an SBA microloan to help your business succeed.