The eligibility criteria for small businesses to qualify for the SBA Microloan Program may vary slightly among intermediary lenders.
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However, here are the general requirements that businesses must meet to be eligible for the program :
1. Size of the Business :
The SBA defines a small business based on industry-specific size standards. These standards consider factors such as the number of employees or average annual receipts. The size standards can vary depending on the industry, so it's important to check the SBA's size standards for your specific industry.
2. Use of Loan Funds :
The SBA Microloan Program is designed to support a variety of business purposes, such as working capital, inventory or equipment purchases, leasehold improvements, and other legitimate business expenses. The funds cannot be used to repay existing debts or to purchase real estate.
3. Creditworthiness :
Microloan applicants are typically required to have a reasonable credit history and demonstrate the ability to repay the loan. The intermediary lender will evaluate the business owner's personal and business credit history, as well as the overall financial condition of the business.
4. Collateral and Personal Guarantee :
While the SBA Microloan Program does not require collateral for loans up to $50,000, the intermediary lender may still require collateral based on their lending policies. Additionally, personal guarantees from business owners with a significant ownership stake in the business may be necessary.
5. Business Plan and Financial Statements :
Intermediary lenders may require a comprehensive business plan that outlines the business's objectives, strategies, market analysis, and financial projections. Financial statements, including balance sheets, profit and loss statements, and cash flow statements, may also be necessary to assess the financial stability and viability of the business.
6. Technical Assistance :
Borrowers participating in the SBA Microloan Program are required to receive technical assistance and training from the intermediary lender. This assistance is aimed at helping small business owners develop their business management skills and improve their chances of success.
It's important to note that while these are the general eligibility criteria, each intermediary lender may have additional requirements and guidelines specific to their organization. Therefore, it is recommended to contact the intermediary lenders participating in the SBA Microloan Program in your area to understand their specific eligibility criteria and application process.
The SBA's website (www.sba.gov) and local SBA district offices can provide further information and guidance on the SBA Microloan Program and help connect you with participating intermediary lenders.
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