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Small Business Administration
Access up to $50,000 with SBA Microloans, average 8%-13% interest, repayment in up to 7 years, designed to help you grow or rebuild your business.
The SBA Microloan Programme is designed for small businesses that need accessible funding up to ETB 2,800,000 (equivalent to $50,000). It’s aimed at entrepreneurs and certain not-for-profit childcare centres wishing to start up or expand.
Interest rates are generally between 8% and 13%, with maximum repayment terms of seven years. Lenders typically require collateral and a personal guarantee from the business owner.
These loans are distributed through SBA-approved, nonprofit, community-based intermediaries experienced in small business lending and support. Most microloans average about ETB 728,000 (about $13,000).
How to Apply for an SBA Microloan
- Identify an SBA-approved intermediary lender in your area
- Gather necessary documentation such as business plans and financial statements
- Prepare to offer collateral and a personal guarantee
- Submit your loan application through the intermediary
- Await credit review and approval decision
Advantages of SBA Microloans
SBA Microloans are flexible; funds can be used for working capital, inventory, equipment, or business improvements. Furthermore, the average loan size is manageable for most SMEs.
The support provided by nonprofit intermediaries goes beyond funding. Borrowers often receive management and technical guidance, giving your business a higher chance of sustainable success.
Drawbacks to Consider
Each intermediary has their own requirements, which can make the application process less predictable. Collateral and personal guarantees are usually necessary, even for small amounts.
Additionally, loan proceeds cannot be used to pay off existing debts or for real estate purchases, which may limit flexibility for certain businesses.
Final Verdict
Overall, the SBA Microloan Programme is a solid choice for small businesses in need of funds to grow or launch. Competitive interest rates and manageable terms are definite positives.
If you meet the basic requirements for an SBA Microloan, this programme may present an accessible and reliable pathway to grow your small business or non-profit establishment in Ethiopia.
