Loans to Small Businesses

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					Microfinance loans for Micro and
        Small Businesses

      John Owens, MABS Chief of Party
         Client Eligibility Criteria
Number of years in business 1-2 years
Licenses: Municipal permits or licenses
Residency – 1 year or more usually
Age 18-65 years
Business permit
For new borrowers: 1-2 co-makers
Must demonstrate a good credit history
 and have sufficient present current
 income level to cover loan payments.
            Available Financing
           for Micro-Borrowers
   Loan size: range from $50-10,000
   Interest rates & service fees – flat or
    declining basis
   Terms: Usually short-term for new
    borrowers but can be longer for repeat
   Payment terms are monthly, bi-weekly, or
    weekly, depending on your cash flow.
   Loans are usually processed in one week for
    new borrowers and less than 24 hours for
    repeat clients.
      Tips when Applying
           for a Loan
Shop around at your
local rural bank,
credit cooperative, or
thrift bank.

Fill out a loan
application or check if
the bank has an
orientation session for
new clients and plan
to attend.
    Tips when Applying for a Loan
Be prepared!
Have a picture ID &
 any form of business
Show your credit
Have available copies
 of utility bills (light,
 water, phone).
   Tips when Applying for a Loan

Remember that the bank is checking
 your character in terms of handling
 debt & your capacity to repay loans, so
 be honest and open.
The bank will ask about your
 business, assets, credit history,
 savings, income and expenses, and
   Tips when Applying for a Loan

Most banks will ask for a co-maker or
co-borrower so it is good to have at
least one relative or other person who
is willing to sign the loan with you.
If you’re new in the business and
don’t have a track record, see if you
can get a family member to take a
salary loan to help you out instead.
Tips when Applying for a Loan

                Fornew
                open a savings
                account and
                develop a track
                record with
                your bank.
    Tips when Applying for a Loan
If you have property
 or fixed assets, these
 may be used for
 collateral if required,
 especially for small
 business loans over
 $1,000 so be
 prepared to have a
 title or ownership
 certificate ready.
A Final Word of Advice!
            After getting a loan,
             remember to make
             all your payments
            Maintaining an
             excellent credit
             history will
             guarantee quicker
             access to larger
             loans at lower

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