SBA Microloan Fund FAQ’s

Who is eligible?

  1. With a single exception for childcare centers, all microloan borrowers must be a for profit business.  All non-profit childcare centers are eligible to borrow; however, no other type of non-profit business is eligible.
  2. The business concern must meet size eligibility standards (visit www.SBA.gov for a listing of these standards)
  3. The business must meet certain types of business requirements.  Any legal, for-profit, small business is eligible to make an application.  The form of the business, whether a proprietorship, partnership or corporation, is not a determining factor.

How much can I borrow?

The maximum amount a business is allowed to borrow is $35,000.  If the total cost of a project exceeds $35,000, SBA funds can be leveraged up to a 2:1 ratio.  In such a scenario, the maximum financing may not exceed $105,000.  That is, a maximum Microloan of $35,000 coupled with a maximum of private sector funds of up to $70,000.

What are the terms and Interest Rate?

  1. The maximum allowable term for a Microloan is six years (72 months)
  2. All loans must be short-term, fixed rate and may not be revolving lines of credit
  3. Borrower must certify that they are not more than 60 days delinquent in paying their child support
  4. The interest rate will be determined at the time of approval, however rates cannot be greater than:
    1. 8.5% over our cost of funds for loans $10,000 or less
    2. 7.75% over our cost of funds for loans over $10,000

What fees can I expect to be charged?

Borrowers should expect to pay any third party charges customarily and routinely associated with a loan closing, such as the cost of credit reports, closing attorneys, UCC filings, etc. Also SBA allows a once a year contribution from each micro-borrower of up to $100.  RCAP Solutions Financial Services, Inc. requires a $50 fee at the time of application.  If the loan is not approved, the fee will be returned to the customer.

What are eligible uses of funds?

Proceeds of micro-loans may be used for working capital, inventory, supplies, furniture, fixtures, machinery and/or equipment.  In no case shall the proceeds of a micro-loan be used as a down payment for the purchase of real estate or to purchase real estate.

For more information, please contact Brian Scales, 978-630-6649, Email: bscales@rcapsolutions.org