Business Loan Microlender Expands to Los Angeles
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UPDATED: Apr 12, 2013
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Small business owners in the Greater Los Angeles can add a new company to their list of lenders.
Opportunity Fund, a nonprofit microlender, has just announced it has expanded to the Los Angeles metropolitan area.
According to Opportunity Fund’s press release, 550 entrepreneurs in the area have already received funds. Opportunity Fund expects to lend to as many as 1,200 businesses this year. The microlender intends to offer $4 million in the coming year.
Thus far, Opportunity Fund has lent micro business loans to companies as diverse as an ice cream parlor all the way to a fashion company.
However, this raises the question: What makes microlending so different from conventional business loan lenders? After all, these businesses could have gone to a more traditional lender.
Caitlin McShane, Marketing Director for Opportunity Fund, told loans.org that the main difference between microlending and conventional business loan lending is simply the size of the business loans lent.
Microlending, as the name implies, offers loans of smaller amounts; perfect for small-sized businesses. However, the underwriting criteria for microlending is far easier to qualify for.
Like conventional lending though, Opportunity Fund’s financing comes with terms.
“Opportunity Fund lends up to $100,000. A $100,000 loan would have an interest rate of 8 percent,” said McShane. “Our rates range from 8-12 percent, depending on the size of the loan.”
McShane explained that Opportunity Fund was expanding to the cover the whole of the “Southland” area beyond Los Angeles County. She said the expansion would include Orange County, Riverside County, and San Bernardino County.
Far from being a last resort for the poorest of entrepreneurs, McShane explained how microlending works for a variety of business owners.
“Microlending is for any business owner unable to access capital through banks,” she said. “Typically, the businesses that have the most challenges accessing capital are also businesses owned by low-income entrepreneurs, women-owned businesses, immigrant-owned businesses, and minority-owned businesses.”
(Interview with Ms. McShane conducted by Isaac Juarez)