Counseling first, money later The application process starts with a counseling meeting. At that meeting, the agency will review any business plan a potential business owner might have already written. But mostly, they just talk to the applicants to get an understanding of what they want to do and how realistic their aspirations are. Can be used for The loans can be used for working capital or to buy inventory, supplies, fixtures and business equipment. The money may not be used to pay existing debts or buy real estate.
Interest rates vary, depending upon the intermediary lender.
Rates are generally competitive, currently running from about 8 percent to 12 percent. Collateral Each nonprofit lending organization has its own loan requirements, but must take as collateral any assets bought with the microloan. In most cases, the personal guaranties of the business owners are also required. Most microloans are partially collateralized with liens on equipment, contracts, inventory or other property. But it's not easy money.