Are you wondering what the best options are when small businesses need microloans?
If so, you are in the right place!
With so many options for borrowing microloans, we are here to help you decide which is the best one for your business.
Top 6 best microloans options for small business
Kiva is a website that helps people who need to borrow money while investors can connect with those people and fund their loans. Each borrower gives their reasoning for why they need to borrow money and investors can choose if they want to lend them money or not.
Kiva’s loans start with a minimum of $1,000 but allow multiple people to invest into one fund so that no one is investing the full amount on their own unless they choose to. This helps out borrowers to help them get the money needed quicker.
Many businesses need to borrow money for many reasons. The idea of Kiva is that people need help and they help to connect those who need the money with those who have enough capital.
The one drawback to Kiva is that their loans only go as low as $1,000, making it impossible to borrow less than that while using them.
Small Business Administration microloans are small loans that never exceed $50,000.
The SBA is a government agency that is in place to help small businesses stay afloat and function when struggling. They allow these businesses to secure smaller loans when they need them as a way to support Americans in their dreams to run their businesses.
While they do help small businesses, the SBA only lends to small businesses that fall under their definition of a small business. They must operate at a profit, be rightfully defined as a small business per their terms, do business in the United States or its possessions, use alternative financial resources before seeking help, show why you need the loan, and not have any negative marks in regards to any debt from other U.S. loan programs.
This is great for small businesses that qualify and need help. The only downside is that it can be difficult to secure the loan quickly since they require that you have already tried to find another financing.
Accion USA is a unique lender from the typical ones you would think of.
They are a nonprofit organization that allows investors to donate money and they pair up with businesses and institutions that they believe have a worthy cause. They also offer advice and other resources for small businesses to help them operate more effectively.
Even though they are a lender, they focus more on helping small businesses operate and stay afloat in the long run similar to the way SBA loans do. Their focus is on helping businesses by getting money from investors to help the ones that they partner with.
Accion also has a similar approval process to the SBA by making sure the business is in decent standing while checking that the person applying for the loan has a credit score over 575, no recent bankruptcies or foreclosures, and no unpaid taxes exceeding $3,000.
Lendingtree is a larger lender that also offers microlending.
Lendingtree specializes in offering small loans that range from $1,000 to $50,000. They consider microloans to be personal loans since their other categories typically require a different kind of loan that offers larger amounts to borrow.
With LendingTree, you apply for the loan you need based on your personal information. Once this is done, multiple lenders start giving you instant offers so you can shop around and choose the best one for you. This allows the borrower to choose who they want to borrow from, while the investor can decide if they trust them.
One thing to note with Lendingtree is that the lowest amount they will finance on personal loans is $1,000. With microlending, some people need to borrow less than that. That would make Lendingtree not a viable option for them.
Grameen America is another unique type of lender where that wants to help people break out of the cycle and come up with business ideas. They mostly offer small loans under $2,000 to help people fund their new ideas.
They are a lender that likes to partner with women below the poverty line that want to start their own business. This creates a great opportunity for those women who need help to get started.
The downside is that they will only partner with specific women and they are not as flexible as other lenders.
Lendee is unique in that it can help people get loans for almost any amount, such as a small loan of $500. With Lendee, you can borrow microloans for amounts that could not normally be borrowed from anywhere else. With Lendee, it would be possible to receive a small loan for a small business that is starting up or that needs help.
Lendee also helps out the borrower because their dashboard will have multiple investors that are ready to invest, and those investors will have criteria on their profile to see if you are the intended borrower you are looking for. Similar to other lenders, you will explain what you need the money for, which will help the investor to decide if they should give you money or not.
A great thing about using Lendee is that they use a different qualifying system than other lenders. They have the “lendee score” which combines the borrower’s FICO score, their recent income and expense ratio, and other qualifying factors that help boost their score.
Lendee offers the ability for people to secure low-risk investments and for borrowers to receive the small loans they might need.
How they compare
All of these loans have their pros and cons that can either benefit your business or hinder it.
Kiva is a popular lender that will allow multiple investors to fund small business loans. While they will offer loans to many businesses, they will not loan under $1,000.
SBA microloans are loans that are funded by the government to help businesses that are stimulating the economy. They are very helpful but can be difficult to secure at times.
Accion USA is a very unique company because they are a nonprofit organization that wants to help small businesses with advice and financing. Accion USA has a similar approval process as the SBA loans, making it just as difficult to secure them at times.
Lendingtree is a larger lender that offers personal microloans that are available to help out small businesses. Similar to Kiva, Lendingtree will not lend under $1,000, making it not possible for very small microloans to be lent through them.
Grameen America is a lender that offers help and services to small businesses that are getting off the ground or ones that need a little help. They only finance under $2,000, making it great if your business only needs a small loan. They would not work for your business if they do not want to partner with you or if you need more than $2,000.
Lendee is a peer-to-peer lender that specializes in microloans under $1,000 directly from investors. They benefit small businesses that need a little bit of extra capital to stay in business or to start. Lendee’s negative is that they will not loan large amounts.
Looking for the perfect microloan for your business? Lendee might be the place for you.