Micro loans provide your business with small capital injections that can really make a huge difference to your company. Typically micro loans are $35,000 and under. They also work for both newly established and start-up companies. No matter what stage in developing your business is in, you should consider this financing option.
These micro loans are most often provided by the SBA (Small Business Administration) as they provide the money to non-profit community lenders who are responsible for making the loan decisions locally. The SBA also guarantees other types of loans as well. They will guarantee up to 70% of some SBA loans as well. The government is a great resource to turn to for this kind of assistance.
There are restrictions to micro loans as they can only be 72 months or 6 years maximum. All micro loans will require some collateral and a personal guarantee of the business owner. This means you will have to make up the payments if your business cannot. This can put you in a rough spot, so be careful.
There is another requirement with this sort of loan and that is you normally will be required to take training on businesses and also fulfill special business planning requirements. It is important that your business has a business plan in place as it will not only help you get financing, but it also helps you run your business more efficiently.