Microloans for Small Businesses
Small Business Micro Loans
Microloans for small businesses are credit facilities offered to individuals with difficulty of accessing traditional loans either for business start-up or for expanding their business ventures. Each year, 250,000- 300,000 small business owners benefit from these micro lenders
Micro loan Requirements
Solid business plan: having a successful business plan means understanding the potential business inside out. You accomplish this by doing in-depth research of the specific business and industry. Remember, the business plan is what wins you potential investors, so, make it as enticing as possible.
Identification documents: government issued ID such as a valid passport of the owner, and also business registration documents where applicable.
Collateral: where necessary, list the items you wish to set up as security for the loan plus their relevant documentation.
References: either personal or professional references can boost your chances of getting a microloan.
Financial data and cash flow if the business is already running.
Business inventory: this is applicable for an already running business.
Advantages of Using Microloans for Business
Business advice: some microfinance partners offer borrowers training and consultation. This empowerment comes a long way to ensure the success of your business.
Flexible payment plan: micro lenders focus on uplifting the poor communities. Hence they give each borrower a simple payment plan depending on their situations.
Fast access to cash: the process of processing microloans is less tedious compared to the bank loans.
Disadvantages of Using Microloans for Business:
The interest rates can be sometimes high especially if you have a bad credit rating.
The loan amount is usually on the lower side hence not applicable for someone in need of large sums of cash.
Failure to repay the loan, your credit rating is affected.