Another Loan Program

Even as loans being made through the American Recovery and Reinvestment Act’s no-interest ARC loan program are trickling through – only $36.8 million of the $225 million allocated has been disbursed – the U.S. Small Business Administration is expanding its microloan program in the hopes of increasing access to capital for small businesses across the country.

The microloan program has exhausted its regular 2009 fiscal year appropriations of $20 in loans and $20 million in technical assistance and is now shifting to the additional $50 million loan funding and $24 million for technical assistance provided under the Recovery Act.

With the additional resources, SBA is seeking new microloan lenders and encouraging entrepreneurs to seek out SBA-backed microlenders to finance their businesses.

There is a need to free up capital for business owners. But my point about increasing capital access as the main strategy for jumpstarting small businesses in this economy continues to be this:

Small business owners have a hard enough time qualifying for capital even in good times when their bottom lines are stronger. To think those bottom lines will be in good enough shape to qualify for loans after a year or two of weathering a rough economy is a head scratcher. How many businesses really qualify for these programs? While lending should continue to be part of the focus, other measures should be considered as well. (By the way, I’d love to hear your suggestions – email them to me).

For those of you who may qualify for the microloan program, here’s how it works: The SBA’s microloan program supports microlenders by providing them with up to $3.5 million in low-cost loans from SBA to finance their lending to small businesses.  SBA’s interest rate to microlenders is based on the five-year Treasury rate, with adjustments tied to a microlender’s average loan size.  

The microlenders turn around and use the SBA funding to provide loans of up to $35,000 to entrepreneurs, which can be used for working capital and acquisition of materials, supplies, furniture, fixtures and equipment.

SBA also provides grant funding to microlenders to finance technical assistance and counseling programs for their borrowers, including staff, classroom training and occupancy costs.  SBA’s reimbursement is capped at 25 percent of the microlender’s outstanding SBA loan portfolio.
If you are an organization interested in becoming SBA microlender, you must meet specific criteria in terms of organizational status, microlending experience and matching requirements from non-federal sources. If you are an entrepreneur who wants to learn about the microloan program, click here.



About Smart Companies Thinking Bigger®

Kelly Scanlon is the owner and publisher of Thinking Bigger Business Media. She recently finished a term on the national board of directors of the National Association of Women Business Owners, and was the national chair from 2010-2011. An advocate for small business owners, Kelly sits on numerous boards and committees to advocate on behalf of small business owners. She has won several awards for her advocacy. Among them are the 2011 United Nations NGO Positive Peace Award on behalf of Kansas City area small business owners, the U.S. Small Business Administration's Region VII Women's Business Champion of the Year in 2009, and the Women in Business Advocate of the Year from the State of Kansas in 2006. In 2002, she won the SBA's Region VII Small Business Journalist of the Year Award (Missouri, Iowa, Nebraska, Kansas). Whatever your business stage—aspiring, startup, established, mature—Thinking Bigger Business Media has the resources you need to grow to the next level. We are a resource organization dedicated to providing the strategic, "how-to" information small business owners need to become more productive and more profitable. We also provide information that helps owners connect with resources within the business community that can help them grow. We deliver that information through a variety of media products and other channels easily accessible to business owners.
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