Microfinancing coming from nontraditional sources
A microfinancing loan can be a big help to an entrepreneur looking to create a corporation. But the sources of those small business loans are becoming more varied as the nation’s economic recovery continues.
The U.S. Small Business Administration runs its own microloan program, in addition to services offered by banks and regional development centers across the country. But less traditional lenders – such as commercial real estate owners – are starting to make investments as well, the Fort-Worth Business Press reports.
Real estate owner Ron Sturgeon told the paper that his company was already offering new tenants attractive lease rates, and that the loan program just took the idea a step further. He says his company will initially give out loans worth up to $10,000, in the hopes that the businesses will eventually turn into successful tenants.
“We’re not trying to throw money at the problem by offering more and more for tenants to sign,” he told the paper. “We’re trying to find a long-term solution that works for us and if that means helping to grow some new businesses so we have new tenants, then well do it.”
BusinessWeek reports that while the total economic impact of microfinancing doesn’t compare to the small business lending picture as a whole – $68.6 million in 2008 – it makes a major difference for entrepreneurs unable to get traditional bank loans, and gives them the startup capital they need. Small companies with an established credit, have better chance of obtaining that traditional bank loans.