Who should consider obtaining a microloan?
Microloans generally have less restrictive loan requirements, making It much easier to obtain than traditional loans.
Since microloans are often seen by professionals as a type of "starter" loan to help a business build credit before moving on to a traditional loan, entrepreneurs generally find them easier to obtain than normal loans. While the process is faster and less rigid, experts suggest that there are still some things you can do to prepare for the loan application process. The following items are things you can do now to improve your chances of being approved for a microloan:
1. Establish a business plan.
Being able to show potential lenders your plans and prove how seriously you'll take the business will give some peace of mind to the lending organization. You need to summarize how your company will make money, what goods or services the business will deal in, and how you will attract new customers, among other things. 2. Think about a loan guarantee.
Microloans are provided to small businesses and entrepreneurs with little to no credit history. Without a reliable record to see how trustworthy a borrower is, most lenders will require some assurance in the form of guarantee. Offering some valuable piece of property as collateral can prove to the bank that you're committed to paying the balance back in full. If you default on the loan, your credit score will suffer.