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Small loans still too big: Microlending fills gap in SBA-backed loan program
By Austin Light CHARLOTTE — When Congress passed the American Recovery and Reinvestment Act in February, about $375 million was allocated to the U.S. Small Business Administration to alleviate the credit crunch. But some business owners, finding that SBA-backed loans are still too big, are turning to microlenders that offer small-scale financing. Under different circumstances, Summer Plum of Charlotte could be the kind of borrower Congress had in mind when it raised the cap on SBA’s lending guarantees. While the SBA doesn’t make loans, its microloan program — for loans up to $35,000 — guarantees commercial lenders 90 percent of the loans, which average $13,000. Plum runs Felicitea, a massage clinic and custom tea shop in Elizabeth at 360 N. Caswell St., and she could use a loan. Felicitea is a one-person business with low overhead, so Plum is looking for no more than $5,000. Most SBA-backed lenders, however, don’t offer loans lower than $10,000.