postheadericon The Most Under-used Form of Micro-business Loan

Money remains the small business person’s number one problem at all times, regardless of how much they try to stick to their financial plan. While small companies have a rough idea of what their funding options are— a business line of credit, business credit card or the much-praised SBA 7(A) loan— most of them still suffer because they fail to consider all the available financial resources.

Microloans are the most ignored and under-appreciated financial tool, yet it can be of value to small businesses in many ways if used judiciously.

Though they come with lower lending caps than what you’d get from a traditional bank, microloans are advantageous than other borrowing options. Find out why you should go for microloans as a backup source of money for your growing business.

1-Finances arrive faster than SBA funding

SBA Loans are said to have favorable terms that work well with small companies, but it takes pretty long to get hands on the finances. Microloans can be ready in as quick as 14 days (depending on your lender) making them more efficient than any other loan types.

Though you’ll need a bit of preparation before the two-week application process, microloans remain the only low to no-interest remedy available.

2-It can help you build business credit

Good credit is every owner’s desire. But it takes time and struggles to establish a good score. Microloans, however, can help you do so much faster, especially if you are starting.

But whether you achieve this depends on how tight you meet payment schedules. Plus, you must report to all three business credit bureaus every time you finish making repayments, so they have it included in your next report.

3-Non-profit options

In general, microloans charge higher interest rates compared to traditional loans (although still lower than what credit cards charge). Plus, there are microloan products that charge zero interest. Funding firms like Kiva, a non-profit micro-business lender, have come up with interest-free microloans sponsored by donors in a crowdfunding model.

Interest-free loans come with extra benefits; you get to cover most of your cash needs, and a perfect chance to build business credit.

4-Flexible payment terms

Microloans are not only easier to find, but they are also more flexible than other loans—they have the most forgiving monthly payment terms. That allows you to pay back the amount you need without putting a strain on your budget or seeking other loans to fix it.

Wrapping Up

Whether you want to expand your bottom line, establish business credit, or fill a cash flow gap, always consider your microloan options.

Author Bio: As the FAM account executive, Michael Hollis has funded millions by using ACH business loans solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.

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