Micro Loans: New Ways to Get a Small Business Loan

Micro Loans: New Ways to Get a Small Business Loan

I have operated my business for a number of years under the assumption that, like the companies I worked with, it was a “small business.” I was baffled as to why my clients rarely utilized all of the “help” that was available to them. from loans to grants and tax credits from the government.

To find out that we did not meet the requirements, it was either impossible to qualify, required elaborate financial statements, or required piles of forms, applications, and other forms. Although I have received some bank and SBA loans, I have also received numerous rejections.

I’m sorry that your client doesn’t meet the requirements of the bank, but why did the manager of the bank encourage my client to apply? More time was wasted. Do I bill my customer for this time? After all, I’m running a business. What about the time my customer spent collecting the data?

Was all of this pointless? I finally came to understand how the system worked after years of frustration. By providing small business loans and soliciting applications, bankers are attempting to assist owners of small businesses. It is not their responsibility to determine beforehand whether a client is creditworthy.

That is the underwriter’s responsibility. Even though they had this information at the beginning of the process, I learned that it didn’t matter. What I observed was a pattern of rejections based on “inadequate cash flow,” “low asset base,” “low equity,” etc. Therefore, it was preferable to face the facts rather than wasting my clients’ time and money.

The banks would only lend money to businesses that met certain requirements, in fact. Why then were they promoting loans for small businesses? They do provide loans to small businesses. Micro businesses are not eligible for small business loans! The point is that. It was a matter of determining beforehand what kind of entity you are. My customers were Micro Businesses, not small businesses.

What distinguishes a microbusiness from a small business? Structure, revenue, and size. The majority of the time, the Small Business Administration considers a company to be small if it employs fewer than 500 people.

In this instance, misidentification or identification is the problem. It is much simpler to find solutions now that we have correctly identified the kind of businesses we are. We don’t have to waste time and effort on options that really don’t apply to us.

The term “micro-enterprise” is, in point of fact, relatively new and gaining popularity. There is a nationwide network of lenders who work with microbusinesses, and organizations like The Association for Enterprise Opportunity are beginning to emerge as a voice in Washington.