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A microloan is a small loan that is offered to a business without extensive or positive credit history. They typically require little to no collateral. The Small Business Administration (SBA) has a Microloan Program designed to help spur growth within the small business community. Many microloans are offered through nonprofit organizations that are able to provide small businesses with up to $50,000 in capital. While $50,000 is the upper limit on most loans, the average microloan is under $15,000.

Should My Business Get a Microloan?

Whether or not your business should be looking to access a microloan is dependent on a number of things. If you have poor credit history and need a small cash injection, a microloan may be one of your best options. There are many businesses that have received microloans and gone on to create substantial profits using the capital. But if you have a larger business and require increased funding, a microloan can be quite a limiting form of capital. Another disadvantage of a microloan is that the interest rates can be higher than traditional loans — this is due to the associated risks of lending to individuals with poor credit histories. In addition, if you live in an area without an eligible nonprofit it may be difficult to find a source for a microloan.

What Are My Other Options?

There are many alternatives to microloans available to borrowers. One of the most popular is a line of credit which can give borrowers access to revolving credit whenever they need to cover certain expenses. We are able to offer our clients up to $150,000 through a line of credit. Unlike traditional lenders, we don’t ask for extensive documentation when trying to assess your eligibility for a loan. Instead, we use basic revenue data that ensures the application is quick and painless. Apply for a line of credit today through our easy-to-use online portal!


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