Angel Investors

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Government & Community Assistance to Obtain Money

Micro-Loan Program

Financial Resources For Northwest & West Central Ohio Entrepreneurs


Purpose of Program

Small businesses and not-for-profit child-care centers needing small-scale financing and technical assistance for start-up or expansion.

Eligible Businesses

Small business concerns as well as not-for-profit child-care centers

Eligible Use of Funds

Working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and/or equipment. Proceeds cannot be used to pay existing debts or to purchase real estate.

Loan Limits

The maximum loan amount is $35,000; the average loan is about $13,000. Generally, intermediaries should not make a micro-loan of more than $10,000 to any borrower. An intermediary may not make a micro-loan of more than $20,000 unless the borrower demonstrates that it is unable to obtain credit elsewhere at comparable interest rates and that it has good prospects for success. An intermediary may not make a micro-loan of more than $35,000, and no borrower may owe an intermediary more than $35,000 at any one time.

Repayment Term

Loan terms vary according to the size of the loan, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. The maximum term allowed for a microloan is six years.

Interest Rates

Interest rates vary, depending on the lender and costs to the lender from the U.S. Treasury. Generally, these rates will be between 8 and 13 percent. The maximum interest rate that can be charged a micro-loan borrower is determined by the following formula:

On loans of more than $10,000, the interest rate charged on the SBA loan to the intermediary, plus 7.75 percentage points;

On loans of $10,000 or less, the interest rate charged on the SBA loan to the intermediary, plus 8.5 percentage points.



Collateral, Security

Each lender has its own lending and credit requirements. Generally, they require some type of collateral and personal guarantees of significant owners. The type and amount of collateral is determined by lender and government regulations, and risk characteristics of the loan. Collateral must have documented value (which may require third party appraisal) sufficient to protect the interest of the lender and the SBA in the event of loan default.


Participation Requirements

Additional Considerations

Each lender is required to provide business training and technical assistance to its microloan borrowers. Those applying for microloan financing may be required to fulfill training and/or planning requirements before a loan application is considered.

How to Apply

SBA makes funds available to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance; these intermediaries make loans to eligible borrowers. SBA does not review micro-loans for creditworthiness. Small businesses interested in applying for a microloan should contact an intermediary in their area. All credit decisions are made on the local level. The Microloan Program is available in selected locations in most states.

Links to Loan Application and/or Specific Information

Small Business Administration
Columbus District Office
401 N. Front Street, Suite 200
Columbus, Ohio 43215

Useful Information

Interest Rate Links

Business Management Links

Glossary of Important Financial Terms You Should Understand

How To Prepare A Business Plan to Obtain Money

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