Small Business Administration to expand microloan program with new funding
Email Bookmark Share
PrintThe U.S. Small Business Administration (SBA) plans to expand its microloan program and increase access to capital for small businesses across the country by utilizing new funding from the Recovery Act. The new funding would provide $50 million for loans and $24 million for technical assistance. With the additional resources, SBA plans to focus on adding new lenders and encouraging entrepreneurs to seek out SBA-backed microlenders to finance their businesses.
Microlenders
Microlenders 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.
SBA Microloan Program
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.
“SBA’s Microloan program provides a critical source of capital for entrepreneurs, including women, low-income individuals and minorities, who often have difficulty obtaining capital to start and grow their businesses,” said SBA Administrator Karen G. Mills. “With these resources, we can put more entrepreneurs and small business owners in a position to succeed and create jobs that will in turn help drive our nation’s economic recovery.”
Since the Recovery Act, SBA has approved eight new applications from lenders to join the Microloan program, and has 15 new loans to microlenders for $10.7 million in Recovery Act funds ready to be disbursed. Of the 15, eight are for new microlenders.
Approved new microlenders
The approved new microlenders are: Vermont Community Loan Fund, Inc. of Montpellier, Vt; Neighborhood Development Center of Saint Paul, Minn.; Cen-Tex Certified Development Corp. of Austin, Texas; The Emperor Organization of Tallahassee, Fla.; Staunton Creative Community Fund, Inc. of Staunton, Va.; Lane MicroBusiness (d.b.a. eDev) of Eugene, Oregon; FINANTA (American Street Financial Ser.) of Philadelphia, Pa; and Accion USA, Inc. of New York, N.Y.