As small business owners, we are constantly bombarded with lending options through advertising, articles, emails and people we meet at just about every event we attend. It can be a daunting, time-consuming process to assess what products might be advantageous to our business.
At different stages of our business growth, we may be attractive to a banker—and, at some stages, not so attractive. There are reliable lending options available to us even if our banker is not able to do a deal. In our community, one of the best options for entrepreneurs in this situation is the Kansas City Regional Microloan Program.
What Is a Microloan?
A microloan is a small loan offered to a small business that is unable to access capital from a traditional lender such as a bank. The average microloan in the KC market is $8,000, but can be as large as $50,000.
Who Qualifies for a Loan?
• Anyone over the age of 18
• Startup, existing and home-based businesses
• Denied by a bank (if applicable)
What Are the Terms of a Microloan?
Size: $500-50,000 (average is $8,000)
Repayment: Up to 72 months
Interest Rate: 7.75-12 percent
How Can I Use the Loan?
You can use the loan for working capital, inventory, equipment and furniture or fixtures. The microloan cannot be used for owner’s salary/draw or real estate purchase.
What Documents Are Required?
• Photo ID
• Proof of residence (utility bill or other official document)
• Proof of income (W-2s, Social Security, disability, bank statements)
• Use of loan proceeds
• Business plan or business plan questionnaire (provided at request)
• Two personal references
• Three months of recent bank statements (if available)
• Two years of tax returns, preferred (most recent)
• Recent business financial statements (if applicable) or projections
• Proof of insurance (if applicable)
What About Collateral?
Each loan is looked at individually. Loan officers may consider available collateral as well as other options, like a co-signer.
How Long Does It Take to Get the Loan?
Once all requirements are met and all documentation is received, your loan closes within five to 10 days.
Do I Need a Bank Account?
Yes. ACH (automatic debit) is used to repay your loan. If you do not have a bank account, a referral to a local financial institution can be provided.
How Do I Find out More?
“Financing Your Small Business” informational sessions are held each month.
- April 23, 2014 // 4-5:15 p.m. at the KCMO CDE Office; send email to firstname.lastname@example.org to register.
- May 28, 2014 // 4-5:15 p.m. at the Women’s Business Center; send email to email@example.com to register.
Who Underwrites the Loan?
Kansas City’s microlending organization, which has nearly 17 years of experience, is Justine PETERSEN. The local contact is Lisa Zimmerman, small business counselor. Contact her at (816) 210-7672 or firstname.lastname@example.org. Justine PETERSEN’s email is www.justinepetersen.org.