Types of Business Revolving and Micro Loan Funds

October 15th, 2020 by admin Leave a reply »

Revolving and micro Loan funds are emerging as the primary source for entrepreneurs to obtain funding for their business as banks have been tighter with lending. Micro loan programs are provided by various federal, state and not for profit agencies to assist with economic development.

The funding sources shown below are not lent directly by the funding agency, rather these funds are provided to intermediary groups such as economic development agencies, municipal bodies, etc to disperse in their region. These funds are provided at no to little cost for the purpose of increasing economic activity and creating/retaining jobs. Below is an overview of the most common revolving and micro loan funds for businesses.

SBA 7m – The Small Business Administration (SBA) 7(m) Micro loan program gives short term, lesser dollar amount loans to small business entities, and also to organizations such as non-profit childcare and daycare centers. The Small Business Administration makes funds readily accessible to designated lenders, who act in an intermediary capacity. These intermediaries will be locally based non-profit organizations that have expertise, not only in general lending, but in the area of technical assistance and management. The intermediaries then directly supply the loans to qualified borrowers. An average loan amount is from $10,000 to $15,000, with the maximum available loan amount being $35,000. The general outline of fund usage is leasehold or renovation improvement, or as working capital. Job creation or retention requirements will apply.

Loan Amount: up to $35,000

Interest Rate: Typically 5%

USDA IRP – The purpose of the Intermediary Relending Program (IRP) program is to alleviate poverty and increase economic activity and employment in rural communities. Under the IRP program, loans are provided to local organizations (intermediaries) for the establishment of revolving loan funds. These revolving loan funds are used to assist with financing business and economic development activity to create or retain jobs in disadvantaged and remote communities. Intermediaries are encouraged to work in concert with State and regional strategies, and in partnership with other public and private organizations that can provide complimentary resources. Job creation or retention requirements will apply.

Loan Amount: up to $150,000

Interest Rate: Typically 5%

USDA RMAP – The USDA’s Rural Microentrepreneur Assistance Program (RMAP) is designed to create jobs, and strengthen rural communities by providing specialized technical support and loans for small businesses.

RMAP provides loans and grants to Microenterprise Development Organizations (MDOs), which in turn provide technical services and distribute micro loans to rural microentrepreneurs. The MDOs are not required to be located in a rural area to be eligible to participate but microentrepreneurs must be. Microenterprises may be, but do not have to be, food or agriculture-related.

In addition to loan funds, training, operational support, business planning, market development assistance, and other services to rural microentrepreneurs is available to no charge. Job creation or retention requirements will apply.

Loan Amount: up to $50,000

Interest Rate: Typically 5%

EDA Revolving Loan Program – The Economic Development Administration (EDA) Revolving Loan Fund Program is the Economic Development Administration’s economic development financing program that helps America’s small businesses grow while benefiting communities through tax base expansion, business growth and job creation. Loans are available for most types of small, for-profit businesses to purchase and/or renovate capital assets including land, buildings and equipment or to finance working capital needs such as inventory and accounts receivable. Job creation or retention requirements will apply.

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