By Jeannie Hurley
The Indy Chamber
The Indy Chamber is a local partner in Accelerate Latinx powered by Interise.
Me: “So what areas of your business do you need help with?”
Business Owner: “I’m looking for a microloan to help grow my business.”
This where the real conversation begins.
I serve as the Operations Coordinator for Business Ownership Initiative (BOI), a nonprofit within the Indy Chamber. We provide free business coaching, low-cost workshops, and small business loans to aspiring entrepreneurs and established business owners in Central Indiana. I serve as the first point of contact for our clients by connecting them to our business coaches and local resources. Every day, I speak with clients who are seeking funds for their businesses.
The SBA works with lenders, similar to BOI, throughout the country to provide loans to small businesses. The SBA sets guidelines for their lending partners, reduces their risk, and makes it easier for them to access capital. In turn, lenders are able to take larger risks on small businesses than traditional banks. In 2018, these partners approved over 66,000 SBA loans, totaling to over $33 billion dollars that went to small businesses. The SBA connects business owners to local lenders through an online tool called Lender Match.
To qualify for an SBA loan, a company must be a for-profit business operating in the U.S. that cannot get funds from another financial lender. The owner must also have invested time or money into the business. SBA-backed loans currently offer rates between 7 and 9 percent. Also, many of the lenders provide technical assistance and business coaching to support entrepreneurs throughout the loan period.
Many of the clients that I work with have attempted other ways to fund their business prior to contacting BOI.
Some funding methods can be strategic or creative like boot-strapping, baby stepping sales, or crowdfunding. Other methods flirt with financial disaster like depleting a retirement plan or taking a high interest cash advance loan. When we meet with a client, we help them with cash flow projections and help them to determine if they’re ready to take out a loan.
For startups that still need to test their model, we connect them with other resources such seed funds, community development building grants, pitch competitions, and Individual Development Account (IDA) programs offered through local neighborhood centers.
One of the greatest rewards of my job is seeing firsthand what microloans can do for small businesses. A microloan gives a grocery store owner enough capital to buy a new freezer so he can continue offering African and Caribbean foods to a Midwest community. A microloan gives a Latino mechanic the funding to buy more equipment to increase revenue and hire more employees. A microloan helps a mom and her daughter achieve their dream of opening a florist shop in the center of a bustling city.
Now that leads me to ask you, “What can a microloan do for your business?”