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Microloans Are An Option For SMBs

Written by Ken Gaebler
Published: 4/27/2009

Startup businesses that need to raise money are finding that applying for microloans can be a great way to access business capital.

Recently it has been harder than ever for small business owners to get funding to grow their business but the good news for entrepreneurs is that microloans may be an option.

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Dave Erickson, director of Angelo State University's Small Business Development Center, says that microloans may be a good choice for companies looking for relatively small amounts of cash.

In a column for the San Angelo Standard-Times, Erickson writes that the microloan program can be helpful to a number of businesses in different financial situations.

"Microloans can be a good source of funds in small amounts for those businesses unable to qualify for traditional bank loans," he writes. "They might cost more in terms of higher interest rates but they might be the only available source of funds for a business. Also, having a successful payment history on a microloan could make a business eligible for future bank loans."

Small businesses may be able to get microloans from the U.S. Small Business Administration. As part of the American Recovery and Reinvestment Act of 2009, the SBA received $25 million to help its microloan program which has traditionally helped low-income businesses.

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