Generally, businesses applying for this type of loan will fall well within these standards. Use of Loan Funds Microloan funds may be used for working capital or to purchase inventory, supplies, furniture, fixtures, machinery and equipment. Funds may not be used to purchase real estate or to provide a down payment on real estate. The maximum term allowed for a loan is six years. Terms may vary according to the size of the loan, the planned use of funds, the requirements of the intermediary lender, and the needs of the borrower.
Interest rates vary, depending upon the intermediary lender.
Credit Requirements A Microloan applicant must meet the credit requirements of the local intermediary lender. In addition, the applicant should have some management expertise or be willing to participate in training designed to strengthen management skills. As with credit standards, collateral requirements for the Microloan Program are set by each local intermediary lender. In most cases, loans are at least partially collateralized by equipment, contracts, inventory or other property. Lenders may also require personal guaranties.