With an injection of $50m for loans and $24m for technical assistance from the American Recovery and Reinvestment Act, the U.S. Small Business Administration (SBA) is expanding its Microloan program and increasing access to capital for small businesses across the country.
SBA’s Microloan Program provides a source of capital for entrepreneurs, including women, low-income individuals and minorities, who usually have difficulties to obtain capital in order to start and grow their businesses.
According to 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”.
The 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.
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.
Since the Recovery Act, SBA has approved 8 new applications from the following lenders to join the Microloan program:
– 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;
– Accion USA, Inc. of New York, N.Y.
15 new loans to microlenders for $10.7m are ready to be disbursed.