The SBA Microloan Program

Last week the Trump Administration released a guideline for its 2018 budget for the federal government, and it seems clear that many agencies will have make do with less next year.  While we can debate the merits of fiscal austerity in government, there is no doubt that some important government programs will be affected.  As Forbes reports in this article from last week, the microloan lending program from the Small Business Administration (SBA) may be included.

Lending Programs

One of the primary aspects of our mission here at Small Business Funding is to make sure that small business owners are aware of the many funding options and programs available, so here’s our take on it.  The SBA offers several lending programs: the 7(a)-general business loan, 504 loans (often real estate-related), and the SBA Microloan.

The 7(a) and 504 loans are typically for larger amounts of $500K+, and usually are backed by a specific asset.  The SBA Microloan was conceived as a quicker and easier alternative to traditional SBA loan products which involve sometimes months of paperwork and back and forth.  By contrast, the Microloan offers small business owners approvals for smaller amounts of up to $350K, but cuts the processing time down to 2-3 weeks, while maintaining the low rates and long terms (up to 10 years) of the larger SBA loan products.

It is important to note that while an SBA loan is perhaps one of the best type of loans available to small business owners today, they are extremely hard to qualify for.  Your business must be able to show multiple years’ operating as a profitable business, low debt to income ratios, and the company principals should carry above average FICO scores for the best chances at approval.

Microloan Program

While there has always been a finite amount of funds available for the Microloan (a projected $35 Million in 2017), the proposed budget will potentially cut this amount by 20%, which equates to about $28 Million available in 2018.  Small Business Funding has access to the SBA Microloan program, and we are happy answer any questions you might have.  There are numerous other loan products outside of the SBA that might be worth hearing about as well, so feel free to apply for a free lending analysis, or give us a call!