Microfinance loans for Micro and Small Businesses

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Microfinance loans for Micro and Small Businesses
John Owens, MABS Chief of Party
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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
• ID
• 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.

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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 borrowers.
• 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.

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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.

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Tips when Applying for a Loan

• Be prepared!
• Have a picture ID any form of business
  registration.
• Show your credit history/savings history.
• Have available copies of utility bills (light,
  water, phone).

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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
  references.

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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 youre new in the business and dont have a
  track record, see if you can get a family member
  to take a salary loan to help you out instead.

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Tips when Applying for a Loan

• For new businessmen, open a savings account and
  develop a track record with your bank.

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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.

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A Final Word of Advice!

• After getting a loan, remember to make all your
  payments on-time.
• Maintaining an excellent credit history will
  guarantee quicker access to larger loans at lower
  interest rates.