Terms and Costs Involved in SBA Microloans
SBA Microloans are provided by the SBA to fund intermediary nonprofit lenders. They subsequently offer loans to small businesses and startups, usually run by women, veterans, or minorities. The SBA grants these loans at huge discounts, and the borrower also receives them at rates which are often more than reasonable. Below are some of the important terms and costs involved in SBA Microloans.
SBA Microloan Amounts
The maximum amount one can borrow through this loan program is $50,000. The average loan size as observed in 2017 was $13,884. There are intermediaries who hand out loans as small as $500. You are free to negotiate the loan amount with your intermediary. The amount handed out will ultimately depend on your creditworthiness and the intended purpose.
SBA Microloan Term Lengths
SBA loan requirements for a Microloan include one additional condition— the repayment period should not exceed 6 years. The other rules could be negotiated between the intermediary and the borrower.
SBA Microloan Interest Rates
The SBA has certain rules regarding the maximum rates chargeable by intermediaries. This would depend on the latter’s rates to borrow from the SBA. Considering all parameters, the SBA loan rates generally lie between 6.5 and 13 percent. This varies from lender to lender. The average interest rate for the year 2013 was 7.5%.