What is Micro Money? How Can it Help?
The SBA has a great loan program called The Microloan Program. Although the name is Micro, the benefits to you can be huge. So, consider micro money for your business.
The Microloan Program provides small, short-term loans to small businesses. Micro loans can provide you working capital and fulfill other purposes when you need money the most.
How Do You Use Micro Money (Also Known as Microloans) in a Small Business?
Some of the common uses for Micro loans include:
- Working capital
- Buying inventory or supplies
- Also, the purchase of furniture or fixtures
- Buying machinery or equipment.
But it’s highly likely that they would not be enough for you to meet payroll needs, or to buy equipment.
Terms, Interest Rates, and Fees and loan terms vary. So this is based on the size of the loan, and what you’re planning on doing with the funds. And it is also from the requirements of the intermediary lender, and the needs of the small business borrower.
Micro Money and Fundability
Whether you just need micro money or a lot more, your business has got to be fundable.
So, what does it mean when we talk about fundability? What does it mean when we state a business is fundable? Basically, fundability is a business’s current ability to get financing. There are over 120 factors that affect fundability. That’s a lot, and it can be difficult and overwhelming to ensure it’s all in order.
A business credit expert can help. Not only can they help make sure your business is set up to be fundable, but they can help you find things you may not even realize are affecting the fundability of your business. Something as simple as your business name being slightly different in a couple of different places can cause major issues.
Does Your Business Have to Be Fundable to Get Microloans?
Yes! Some of the bigger concerns that lenders of any type have are that your business can’t or won’t pay its debts, and that your business is committing fraud somehow. Among other considerations, keeping consistent records can help you with the latter. When a lender can’t find info about your business, they will mark your application as fraudulent and you’ll get a denial.
Therefore, are you keeping track of where all your business information is? If not, you should seriously consider starting. Because if your business moves, or the name changes, or your business entity changes (e.g. you incorporate), you will need to make sure that info is correct, consistent, and up to date. Everywhere.
All this consistency will help you with the latter issue. But what about the former?
To show that you and your business can and will pay any loan back, you will need to be able to prove that you can. This can mean everything from your bank account statements to your balance sheets. This is also yet another reason why building business credit is such a good idea—good business credit scores, in part, prove that you pay your bills on time.
Fundability for Microloans Also Works for the Big Money
Good business credit is a part of fundability, and it is helpful no matter how much you are asking for. But so are fundable foundational elements such as your business address, and who prepares your financial statements.
Fundability Helps Your Business Evade Tax Problems
One of the tenets of fundability is keeping a separate business bank account. This thoroughly separate business bank account must be 100% dedicated to your business’s finances. But it does not just help you get loans of any size. Because the Internal Revenue Service does not want you to be commingling funds, a separate business bank account is an easy way to assure that.
Fundability Helps Your Business Stay Out of Legal Trouble
Good luck to you if your business needs licenses, and you don’t have all of them—or any. In some parts of the country, you would have to pay a fine. But in other parts of the United States, you can end up with a misdemeanor charge. Or both.
Just like feeding a parking meter is less expensive than paying a parking ticket, even if the meter reader never comes around, the same is true about business licensing. Having all your licenses makes your business more fundable.
Fundability Helps Your Business Attract and Retain Customers and Prospects
How many times have you done business with a company where their email address came from Gmail, Yahoo, or some other free email service? It doesn’t just feel cheap. It can also feel like that business simply won’t bother with some of the most fundamental aspects of owning and running a business. And it can look sketchy, too.
Not having a website, or having an old and clunky one (<– click for an example from someone who you would think would have enough money to have a proper website created!) will mean that your prospects and customers will simply get their information about your business from somewhere else. And that’s not necessarily going to be flattering to your business.
It also represents missed opportunities. In the linked website above, so much of it isn’t clickable, especially elements where you would expect to be able to go to a page to buy something.
Make your online presence a good experience for your customers and prospects, and you’ll also be more likely to get micro money.
Micro Money Can Pay Off in Big Benefits
In the end, it’s important to remember that just because micro loans are small, doesn’t mean they can’t do big things. Do you want to find out if a business credit expert can help you qualify? Go here now for a free consultation.