How to Qualify For a Microloan for Your Business

Micro loans are small, short-term loans that are granted to people who run Small businesses. The loans accrue low interest and can be given to individuals who are starting up businesses. In addition,  the loans as the name suggests are loans which are given to a business that has few employees. The loans are not usually no big as much because they are up to $50000.

These microloans have encouraged entrepreneurship which in return has seen the growth of the economy. As a micro business, you don’t need to seek a loan from a bank because they will turn you down. Bank loans are usually very big loans which a small business cannot seek for. This is why a bank will not give you a loan of $500. Therefore small businesses are well suited for microloans. To qualify for a microloan, you need to do the following.

Create a complete business plan

Before you decide to seek for a microloan, you should ensure you have a well-written business plan. This is loanessential because microlenders will look at the business plan to establish of you are serious about the business you want toast or doing already. A business plan entails a lot of details which will give the exact picture of what your business will look like. For instance, the business plan will have a list of the business goals, the stakeholders, how the business will, how you will reach customers and also suppliers. To some, a business plan sounds complex, but it is such a good way you will be able to give out what is in your mind.

Ensure you have a good credit history

loanAs much as microloans may be small, it could be beneficial if you clean up your credit history. It may not be among the factors required by microloan lenders, but a good credit history will help in a manner. Most microloans are small in amount, and so the lenders are never in worries even with customers who have a bad credit history. However to get the best chance to get your loan approved and get the best interest rates you can ensure your credit history is well maintained.

Consider offering personal guarantee

Since microloans are given to business owners who may have poor or no credit history, you may end up being asked for collateral before you qualify to get a microloan. For instance, you may give personal property as a guarantee for the loan you will receive. This may include your home or car. This will be used to get back the men that you may default in repaying the loan.