Finding funding can be a daunting process for many entrepreneurs, whether they are just starting up or looking to grow. It can be tough to get a bank loan or convince an investor to get on board when a company is small or new. This is where microloans come in.
What Is A Microloan?
Microloans are typically offered to businesses with smaller start-up capital needs (usually less than $50,000). Unlike traditional bank business loans, funding is typically distributed by designated community-based non-profit intermediary lenders such as Business Ownership Initiative (BOI), a business unit of the Indy Chamber. In addition to providing small business financing, BOI and many of these designated lenders also provide technical assistance to their clients to help them along the way.
Qualifying For A Microloan
Generally speaking, it’s easier to qualify for a microloan than for a traditional business loan. BOI microloans are geared toward helping new and small businesses, so the requirements are more flexible. As with traditional loans, the specific eligibility requirements differ from lender to lender – the business you’re in, your track record, the amount of the loan you need, how old your business is, and other factors may all affect your eligibility with a given lender.
At BOI, our staff will work with you to learn about you and your goals and take that information into consideration when evaluating your loan application. That’s one of the biggest differences between microlending and traditional lending – it’s about your character as a business person, not just your credit score.
Applying For A BOI Microloan
Interested in applying for a BOI microloan? Our 4 step process makes it easy:
1. Set up an appointment with a business coach to talk through your financial situation and help you get loan ready.
2. Complete a full loan application.
3. Submit an application to the loan committee.
4. If approved, meet in person for your loan closing.
So, Is A Microloan Right For My Business?
A microloan could be right for any kind of business, but the answer depends on your needs and circumstances. Microloans are often a good fit for sole proprietorships, businesses with few employees, women-owned businesses, minority-owned businesses and other businesses that have trouble getting access to traditional lending. They’re great if your business is very new and you don’t have a long credit history, can't provide adequate collateral, or if you only need a small loan. Microloans are also helpful for building credit, helping prepare you for traditional lending down the road. If your business needs a small loan and you don’t have access to a traditional bank loan, a microloan might be the best choice for you.
If you’re considering seeking a microloan, ask yourself these questions:
Want to chat with a BOI business coach to evaluate your funding needs? Schedule a one-on-one meeting online at IndyChamber.com/Lending