The U.S. Small Business Administration is helping lenders provide microloans to assist with financing in the business incorporation process.
Entrepreneurs with minimal credit histories or low incomes are encouraged to apply for the SBA microloans that provide up to $50,000 in startup funds for new business ventures, according to the Los Angeles Times. However, the SBA microloan program is technically open to all entrepreneurs who may be having difficulty obtaining financing through traditional banks.
With interest rates at 10 percent or lower and average loan sizes of $13,000, the microcredit program is proving to be a valuable resource for entrepreneurs – the SBA is helping to fund $3.1 million in microloans per month.
Boc Capital is one of the lenders utilizing the SBA microloan program and has observed an increase in demand since the recession hit.
“We’ve been seeing some borrowers that in the past would’ve gotten financing through traditional banks,” said Boc Capital’s executive director, Nancy Carin.
The loan application process can still be stressful for business owners, however. Having a professionally-prepared financial statement and a comprehensive business plan can help speed up loan approval, according to Small Business Finance Tips.