Unlocking the Benefits of an SBA Microloan—a Guide for Small Business Owners & Entreprenuers.

Starting and growing a small business is challenging, especially when it comes to startup capital and funding growth. That is where the Small Business Administration (SBA) microloan program comes in. Backed by the SBA, microloans are designed to help you start and grow your business. Whether you're just starting out or looking to take your business to the next level, we want to help you make informed decesions like knowing the benefits of a microloan.
What is an SBA Microloan?
Microloans are small business loans backed by the SBA designed to help small businesses and entrepreneurs access capital to start and grow their businesses. The SBA does not provide the loans—instead, Community Development Financial Institutions (CDFIs) like Pathway Lending work as intermediaries to provide the funds to small businesses.
How Much Money Can You Borrow?
The microloan program provides loans up to $50,000. Although this may not seem like a lot, it can be enough to help you purchase equipment, inventory, or make other investments that will help your business grow. The average microloan is about $13,000. The terms of these loans are typically more favorable than other types of loans, with longer repayment periods and access to expert advisors (technical assistance).
How Do You Qualify for a Microloan?
Community Development Financial Institutions exist to help small business owners who may have difficulty accessing traditional financing. Our mission-driven approach means not everything in the qualification process is black and white. Simply, our lending team wants to see a demonstrated ability to repay the loan and wants to work with business owners who can make a positive impact in their communities. This means we look at obvious factors like a credit score, business financials, and your personal financial situation. We also look and require you to have a business plan where we can see researched information about your opportunity.
How Can Microloans be Used?

Great question! There are many ways a microloan can be used, and a couple ways they cannot be used.

You cannot use a microloan to pay off existing debts or to purchase real estate.

Microloans are commonly used to purchase equipment, inventory, supplies, professional services, marketing, and more. Another great use for a microloan is working capital. This includes things like paying bills and covering other expenses that are necessary to keep your business running. This type of working capital loan can help you bridge any cashflow gaps between when you need to pay for something and when you will receive payment.

How To Apply For a Microloan

Applying for a microloan really is not a difficult process. It does require paperwork and at minimum you'll need to provide:

  • Business Plan
  • Financial Statements
  • Tax Returns

The most common mistake we see are business owners applying without a business plan. Our team offers coaching to help you create a business plan our lenders will love, that outlines clear business goals, and gives you confidence going forward!

You're Ready to Apply? What are the Next Steps?

If you have reviewed all of this and say, "ya, I have that, I can do that, that sounds like me, I think I am ready...", there are a few next steps to take:

  1. Connect with a coach who can guide you through the application process
  2. Have a clear plan on how you are going to use the money
  3. Begin taking advantage of the technical assistance our team provides as part of the microloan program

Connect with a Pathway coach to learn more about microloans and how they can help your business?

What have you learned from this information? What documents do you need help producing? What research do you need help with? What next steps do you need to take before talking with a lender?

Pathway coaches are experts in their field—former executives, CPA's, and more with expertise ranging from accounting to sales & marketing. We're ready to help you and your business start and grow!

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