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    Mission: Business is the priority
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    Advantages and disadvantages of Micro-Loans

    Micro-loans are usually for $5,000 to $35,000. The loans are often available for start-up businesses.

    Advantages:

    • The loan process is fast.
    • Loan funds are available for start-up business use.
    • Minimal required documents: a short business plan and income tax returns (business and personal)
    • The loan is usually combined with business training and technical assistance.
    Disadvantages:
    • Average loan amount is $13,000, which usually is not enough to fund a business
    • If funds are used for operating deficits, it makes it harder to become profitable - because the business must pay for operating expenses plus the loan.

    Where to find micro-lenders

    Micro-lenders can be found through at least 5 sources:
    • SBA approved micro-lenders
    • Check the information in the Funding section of the Tools for local micro-loan programs
    • Local CDBG loan funds
      • Some communities have used part of their Community Development Block Grants for a business loan program. Contact your city economic development department for information.
    • Local banks and credit unions with small business focus
      • Contact your Small Business Development Center to request a list of local micro-lenders. The SBDC will probably ask that you meet with them first to prepare a business plan. Working with the SBDC will give you a more favorable standing with the micro-lender.
    • Accion Microloans
      • As a last resort (i.e. you have to exhaust all other sources first), Accion Microloans funds micro-loans.
    Ongoing Responsibilities

    • Micro-loans usually require some training or one-on-one consulting to strengthen your business skills.
    • Many micro-loans require you to send quarterly financial reports to the lender.


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