Microloan Program Facts
The Microloan Program was created by the U.S. Small Business Administration (SBA) in 1992 to increase the amount of debt capital available to new and expanding businesses, and in particular to reach those that have traditionally had difficulty in accessing such financing: minorities, women, low-income individuals, veterans, those without credit histories, and the operators of very small businesses. While these are the priorities for the program, most small businesses are eligible. Impact Seven has been an intermediary for the program since 1995. It borrows money from SBA and makes direct loans to small businesses. Even if you've been turned down from a traditional lender because of past credit problems or because your loan request is too small, you may qualify for a Microloan.
Eligible Borrowers:
If you are a small business owner in Wisconsin operating
a for-profit, legal business, you are most likely eligible.
If you reside in Fond du Lac, Kenosha, Milwaukee, Oasukee,
Racine, Walworth, Waukesha, Washington, and Winnebago
counties, or the inner city of Milwaukee, you should first
contact your local Microloan intermediary (Advocap or
WWBIC). If they are unable to serve you, or do not meet your
needs, we can consider your request.
Finance Instrument:
Direct loans between Impact Seven and you.
Uses of Funds:
Working capital, equipment, inventory, supplies,
furniture and fixtures. Real estate purchase is not allowed.
Terms:
Up to 6 years, no penalty for early repayment.
Rates:
Fixed rate determined on a case-by-case basis based on
the strength of your application. General range is Prime to
Prime+2.
Criteria:
The major criteria for this program are quality of
business plan/economic viability of business, experience,
personal character, credit history, and collateral.
Collateral:
Business assets, personal assets, and personal
guarantees. Because of the risky nature of microlending,
collateral is a key factor. Real estate, equipment, and
vehicles are the most common assets pledged.
Range of Microloan Financing:
Loans can be made from $100 to $25,000, while the average
loan is roughly $7,500. While the maximum Microloan is
$25,000, a Microloan from Impact Seven can be a portion of
overall financing package of up to $75,000 with another
lender or program (including the Greater Wisconsin Fund).
Social Impact:
Reaching members of minority groups, women, low-income
individuals, and veterans is a priority of the Microloan
Program, but most small businesses are eligible borrowers.
Technical Assistance:
Within certain limits, Impact Seven offers free
one-on-one business counseling and training seminars. For
example, Impact Seven holds marketing and business planning
seminars on a regular basis for current and prospective
borrowers. We will help you get the appropriate training and
advice from outside sources as well, should the situation
warrant it.
Examples of Client Businesses:
Small manufacturer, hair salon, dairy goat farm,
café, imported gift shop, chiropractor, automobile
mechanic, machine shop, Latin variety store, candle maker,
pet groomer, etc.
Application Process:
For Start-Up Businesses:
The first step is to discuss your situation with an
Impact Seven business developer - preferably with a personal
meeting - to assess your readiness to start the business. If
it is determined that you are not yet at the point to seek
financing, a plan for you to obtain the necessary training,
experience, etc., will be developed. If you are ready to
finance your operation, you will be asked to complete a
Microloan Application. When this has been completed, it is
returned to the business developer, along with the
additional required information, and a $50 deposit against
cost, which will be used to pay for a credit report and
other processing costs. The Impact Seven business developer
will review your application and present an analysis to the
Microloan Committee. Approved loans will be sent to the
Impact Seven Board of Directors for final approval and you
will receive a commitment letter outlining the terms of
financing. After we receive your signed commitment letter,
loan closing will be scheduled at either our Almena or
Madison office, depending on where you are located.. If your
loan request is denied, you will receive a letter to this
effect, with the reason for denial. The decision process,
from the time we receive your completed application,
generally takes from 2 to 4 weeks, sometimes much shorter,
sometimes longer.
For Existing Businesses:
After an initial discussion of your situation, if it is
determined that the Microloan Program is appropriate for
you, we will ask you to complete the Microloan Application.
When this has been completed, it is returned to the business
developer, along with the additional required information,
and a $50 deposit against cost, used to pay for a credit
report and other processing costs. The Impact Seven business
developer will then schedule a site visit to see your place
of business and tie up any loose ends with your application.
The Impact Seven business developer will then review your
application and present an analysis to the Microloan
Committee. Approved loans will be sent to the Impact Seven
Board of Directors for final approval and you will receive a
commitment letter outlining the terms of financing. After we
receive your signed commitment letter, loan closing will be
scheduled at either our Almena or Madison office, depending
on where you are located. If your loan request is denied,
you will receive a letter to this effect, with the reason
for denial. The decision process, from the time we receive
your completed application, generally takes from 2 to 4
weeks, sometimes much shorter, sometimes longer.
Questions?
Call Paul Van Auken at our Madison office at (608)
251-8450 or a business developer at our Almena office at
(715) 357-3334.
Application:
If this program sounds like something for you, you can: