Getting Micro Loans for Your Small Business

Photo (cc) by stevendepolo

(Editor’s note: In the story below, the person we interviewed, Carlos Cepeda, told us that the interest rate he was paying on his loan was 1-percent. We have since received a correction from his lender, Accion. Their words:”The article and story both mention that we give loans at 1% interest, although this would be wonderful, because of the high risk we take on financing those with lower credit history and scores our rates range from 8.99% to 15.99%. )

In last week’s jobs address to Congress, President Obama said this: “Everyone here knows that small businesses are where most new jobs begin. And you know that while corporate profits have come roaring back, smaller companies haven’t.”

One reason why small businesses aren’t roaring is that for many, today’s tough lending standards make it tough to get money. So while the president’s proposed tax breaks sound nice, access to capital might be even nicer.

The recession has made things much worse for the little guys. Traditional lenders often consider small businesses too risky, and some owners don’t have great credit. So how can they get the funds they need to keep going? Maybe they need to think small. In the video below, Money Talks News founder Stacy Johnson shows how micro loans saved one small business after all its equipment was stolen. Check it out, then read on to learn more about micro loans and who offers them.

As you heard, Carlos Cepeda got a $20,000 loan at 1-percent interest for his lawn care business from Accion, a national nonprofit microlender. It’s one of several out there willing to loan small business owners with good credit up to $50,000 at low rates. Here are some of the other top lenders:

These are just a few to give you an idea of what these nonprofits typically offer. Most are regional, and you can find a more complete index of microlenders by state at the Aspen Institute’s MicroTracker. Keep in mind, however, that this isn’t free money. While lending standards may be looser than those at big banks, you’ll still be required to prove you’re a good risk.

Here are a few other things to keep in mind:

  1. Many of these lenders offer additional services like free advertising, and workshops that help you learn to manage small business finances. Take advantage of everything – it’s all too common for startups to fail because they take the money, but not the advice.
  2. Some organizations help you build credit by reporting your payments. That can help get bigger loans with better terms down the road. But not all do, and other conditions vary widely by lender, so read everything carefully.
  3. Some microlenders don’t even use your credit score as a factor in their decision-making, so don’t write off an opportunity just because of a low one. If you do need to work on your credit, check out 3 Tips to Raise Your Credit Score Fast.
  4. Microlenders might not be the only avenue of funding. Check out credit unions, community banks, local chambers of commerce, and small business development centers in the area to find out what else is available.

Small business owners may also want to check out our stories on how to structure a business, ways to bring in customers, and fake business grants.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 Items Every First-Aid Kit Should Have
10 Items Every First-Aid Kit Should Have

Take control of your health and safety by customizing your own first-aid kit with these Amazon purchases.

26 Things Everyone Should Keep in Their Car
26 Things Everyone Should Keep in Their Car

These tools and conveniences help protect drivers from hassles and calamities on the road.

13 Small Gadgets Under $20 That Make Life Better
13 Small Gadgets Under $20 That Make Life Better

These inexpensive electronics will make your day-to-day life a little easier — and happier.

5 Ways to Save up $500,000 in 15 Years
5 Ways to Save up $500,000 in 15 Years

Even if you’re behind in preparing for retirement, there’s still a way to pull together a solid nest egg if you focus.

30 Purchases That Will Start Saving You Money Immediately
30 Purchases That Will Start Saving You Money Immediately

Sometimes, you’ve got to spend to save. These canny deals are a good bet for savings.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Whether you resell it for a big profit or add it to your own wardrobe, this type of clothing is a hidden steal.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

9 Things You Should Never Leave in a Car
9 Things You Should Never Leave in a Car

Thinking of leaving these possessions in a car? Prepare for unexpected consequences.

Prepare to Pay More for These 31 Drugs in 2021
Prepare to Pay More for These 31 Drugs in 2021

More than 700 prescription medications have seen price hikes so far this year. Here’s a look at the worst.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

5 States Lowering Taxes This Year and 2 Raising Them
5 States Lowering Taxes This Year and 2 Raising Them

State personal income tax rates, brackets and deductions just changed in these places.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

7 Tricks to Cleaning Your Bathroom Faster
7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

20 Amazon Purchases We Loved in 2020
20 Amazon Purchases We Loved in 2020

These practical products made everyday life a little easier last year — and will do so in the new year, too.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.