This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Microloans Buoy Cash-Strapped Entrepreneurs

NEW YORK ( TheStreet) - The Small Business Administration needs to work harder to assess risk among its lenders, says a new report from the Government Accountability Office. This doesn't bode well for borrowers whose credit is anything less than perfect. Luckily for entrepreneurs, nonprofit microlenders are eager to help.

Only a fraction of cash-strapped entrepreneurs who could benefit from a microloan apply for one. Less than 1% of small-business owners in the U.S. have received microloans to date, according to an April article in the Journal of Corporation Law. It's not that microloans haven't received any publicity. In fact, the United Nations named 2005 the Year of Microcredit, with celebrities like Michael Douglas and Aishwarya Rai filming public service announcements to encourage donations to entrepreneurs in third-world countries.

But in the United States, "the people who should know that microfinance is an option for them don't know," says Laura Kozien, communications director at Accion USA, a nonprofit microlender in New York. "Most business owners who are familiar with microfinance think I'm not poor, I'm not an immigrant, so microfinancing isn't for me."

Groups like Accion might become a key source of funding as the SBA curtails lending. The number of 7(a) and CDC/504 loans issued by the Small Business Administration fell 35% from 78,317 in fiscal 2008 to 50,829 in 2009. The total dollar value of the SBA's loans dropped 28% to $13.1 billion.

Microloans are a smart, viable option for any cash-strapped business of five employees or fewer, Kozien says. On that note, here are five things you need to know if you're thinking about applying for a microloan:

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs