Published November 2000

MicroLoan a financing alternative

By Kimberly Hilden
Herald Business Journal Assistant Editor

The Small Business Administration’s MicroLoan Program offers small businesses a source of financing when traditional loans are hard to come by, said Roland Chaiton, community development specialist for DownHome Washington.

“When commercial financing is declined, or not possible in the case of many start-ups, we are often given a referral by a bank to see if we can help,” Chaiton said about DownHome Washington, which receives funds from the SBA to lend through the MicroLoan Program. “If we believe a deal can go through a bank, the applicant will be asked to explore that possibility first. If declined, we will see if we can help. Some start-ups will automatically begin with us, as it is obvious they would have little possibility for regular commercial bank financing.”

Under the MicroLoan Program, DownHome Washington can lend as much as $25,000 for a maximum six-year term, Chaiton said. Uses for the loan include inventory, working capital, supplies, equipment and materials.

To apply for a MicroLoan, prospective borrowers must submit a business plan, a loan application and a credit report, Chaiton said. These are reviewed by DownHome Washington staff to see if the application package is viable and if changes should be made to better the borrower’s chances of success with DownHome Washington’s Loan Fund Committee.

Once the necessary changes are accomplished, the borrower meets with the Loan Fund Committee to discuss the application and the borrower’s business plan, Chaiton said. The committee decides whether the loan application package is approved, disapproved or needs to be modified.

Terry Sanford, President of the Stanwood-Camano Hearing Center, is an alumnus of the MicroLoan process. She initially went to DownHome Washington to take a business planning class, thinking she’d eventually go to a bank for small-business financing. Instead, she ended up going through the DownHome Washington MicroLoan process, securing about $20,000 in financing to start up her hearing center.

Now, more than three years later, Sanford credits DownHome Washington’s loan process with keeping her on track, saying, “It gave me some reinforcement that I did have a good concept. ... It is a wonderful program.”

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