As banks keep a tight grip on lending, small businesses turned down by the financial institutions are seeking out microlenders for loans ranging from $500 to $35,000.
The Wall Street Journal reported yesterday that microlenders are experiencing a rapid rise in requests for loans. The Utah Microenterprise Loan Fund, a community-development organization, lent out $1.2 million to small businesses in 2008, double the previous year, the publication reported. Since the start of 2009, $300,000 has been dispersed with lending limits going from $10,000 to $25,000 in certain parts of the state.
The Greater Newark Business Development Consortium is getting calls from small companies that have been in business for 10 or 20 years, according to the Wall Street Journal. The owner of a window blind manufacturer said he received a $22,000 loan from the consortium after being turned down by two banks.
As more employees are laid off, some are starting their own businesses and are looking to microlenders for startup financing, Sara Ignas, a spokeswoman for the Association for Enterprise Opportunity, an advocacy group for microlenders, told the publication.
Meanwhile, Grameen America, a microlending entity recently submitted an application for a federal credit union charter in North Carolina. The financial institution has received support from various CUs, banks and regulators in the state.
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