Why a Microloan Is Your Next Best Bet For a Loan
Funding can mean almost everything to you if you’re trying to get your business off the ground. When you’re new, opportunities are rare, so you must search in the right place.
Microlending, for instance, is a perfect way to source extra commercial finances for many reasons including;
- This approach isn’t profit and interest-centric as other forms of funding.
- Interests are way too low. And settlement terms are as long as six years.
- Most microlenders focus on supporting vulnerable groups that can’t get funding from banks.
That’s not all; these financers offer training and unswerving consultation to help you make the most of your loan.
How is Microlending Different?
Microlending is a form of financing where a startup receives microloans courtesy of an individual investor, instead of a banking or credit firm.
You get a lump sum of money to get your enterprise on its feet or grow your existing micro business. The SBA considers any loan below 50, 000 USD a microloan, but some lenders offer as low as $50.
And while it may resemble your standard business loan, this approach is very different when analyzed based on the lender’s intention.
Your everyday business loan providers focus more on raking in profits by charging hefty interest and fees. Microlenders like FAM, however, are more determined to invest in growing your business idea.
Microlending is also the right choice for you because most of them want to help vulnerable groups and communities that are left out by standard bank loans.
They are the last resort for a small business person who isn’t eligible for standard bank loans for any reason.
What Happens During Application?
First, it’s essential to understand that underwriting procedures and borrowing terms vary. Nevertheless, most micro financers will;
– Scrutinize your business plan
– Do a credit pull
– Analyze your revenue
– Check how long you’ve been in business, to see whether you qualify.
How can You Spend Your Loan?
As hinted earlier, you can use microlending to fund your business in different ways, such as;
- Procuring inventory.
- Clearing payroll.
- Sorting out seasonal business expenses.
- Exploring a new marketing idea
You can also use it to cover the cost of training your staff.
What Now?
Microloans have more impressive interest rates than their traditional counterparts. Besides, it is easier to qualify for microloans. Even better, you get an extended settlement period, which may stretch up to six years.