According to a recent study, “Business Microloans for U.S. Subprime Borrowers”, microloans issued to small business owners through Accion (the nation’s largest microloan lender) between 2006 and 2011, contributed to an increase in their business revenue and the ability to hire new employees. Specifically, the study found that:
- More than 30% of the small business owners who received a microloan from Accion Texas between 2006 and 2011, were still operating their business as of May 2012.
- The average small business owner who received a microloan from Accion Texas between 2006-2011 experienced a 41% growth in sales by May 2012.
- The average small business owner who received a microloan from Accion , Texas between 2006-2011 were able to hire more employees and almost double their workforce by May 2012.
- The average small business owner received a microloan in the amount of $15,552 from Accion Texas between 2006 and 2012.
- The average small business owner who received a microloan from Accion Texas between 2006 – 2011 were minorities with low credit scores (i.e. subprime borrowers).
Based on those facts, if you are a minority with less than perfect credit, obtaining a microloan may be your best shot at funding the business of your dreams (although this type of financing is not limited to just minorities). You could experience immediate and consistent sales growth as well the ability to hire and retain new employees if you obtain a microloan. That alone should encourage to give microloans a try.
Where Do I Go to Apply for a Microloan?
It’s important to know that microloan lenders are in just about every local community in the United States. The SBA (Small Business Administration), provides a list of microloan lenders by state on their website. Contacting the microloan lenders directly in your area will give you the opportunity to learn about the lenders specific requirements for your area and how to get started. You can also reach out to independent consultants that have experience with helping small business owners obtain microloans.
For example, QT Business Solutions is a SBA microloan expert that has developed relationships with microloan lenders in the Metro Detroit area and beyond. They work with small business owners to develop a business plan along w/ 3 years of financial projections and submit it to microloan lenders along with their loan application. They also coach you on what to say when you meet with the lender. In my expert opinion, it’s helpful to consult with an organization like QT Business Solutions, because they can better prepare you to get approved for a microloan before you actually apply.