Small business microloans have been helpful for companies that may be small or simply starting up and, as a result, and could be aided by a small injection of capital, but might also be in a position where a larger, more traditional small business loan is either unnecessary or unavailable. However, certain microloan programs can also go a step further by offering business training for entrepreneurs as not only can these businesses benefit from advice on how to better use funding from their loan, but these microloans can be lower in cost, simply due to the fact that they are typically smaller in amount.
As an example, the SBA implements a microloan program that can be beneficial for new companies, as not only are these funds available in an amount up to $50,000, but according to the SBA website, average around $13,000 and can also be used for various startup or small business costs, like buying supplies and inventory or equipment. Yet, business owners who also use this particular type of microloan opportunity are required to be provided business training or technical assistance from the SBA lenders who are charged with implementing these loans.
Obviously, there are some financial institutions that can offer similar aid to small businesses, due to the fact that any financial institution or loan program that offers funds to a small business or newly formed company will be in a more advantageous position to recoup this loan if a business succeeds. While, small business owners need to understand that technical assistance is not a guarantee from all financial institutions, when a microloan from the SBA’s program or similar initiatives can offer this form of aid, many feel that these borrowing options are worth exploring since it can not only give these companies the financing they need to either get off the ground or keep their small institution running, but may help them better use funds and prosper in the future.
Yet, microloans may not be the only financing option that small businesses have that can bring training or outside assistance to entrepreneurs, as many venture capitalists or angel investors who simply offer funding to a company in exchange for a share in their profits and success may also take on a role in running the organization or sitting on a small company’s board or management team. In some cases, these outside investors can be greatly beneficial in that they not only provide financing but business owners do not have to repay a debt as a result of acquiring these funds. Also, many investors are usually either successful businessmen and women themselves or have experience in a particular industry that the business they are giving funding to happens to be in.
While business owners with a small organization will obviously want to be wary of angel investors or venture capitalists, in terms of what they will require from a company in the future, as any business owner wants to avoid signing away rights to their company or giving up certain incentives reserved for the business’s creator, but sharing in profits while seeing growth as a result of guidance from a successful investor may be worth consideration by a new business or small company that is simply looking to expand their horizons.