Reno microlending program targets unbankable businesses

Monday, February 14th, 2011 By

Microfinance

The USDA and Nevada Rural Development Corp. are partnering to offer small loans to "underbanked" businesses. Image: Flickr / MoneyBlogNewz / CC-BY

The Rural Nevada Development Corp. is kicking off a new “microlending” program. The U.S. Department of Agriculture-funded program targets businesses that couldn’t otherwise qualify for loans. One-fifth of the money has already been handed out.

Reno, Nevada, rural development loans

A $500,000 grant from the U.S. Department of Agriculture is funding a new “microlending” program. The program funds bad credit loans for Reno and Reno-area businesses through the USDA Rural Microentrepreneur Assistance program. These loans provide up to $50,000 for businesses that have been denied traditional banking loans. The fixed-rate loans charge between 10 and 12 percent interest and must be paid back in five years.

Qualifying for Reno bad credit business loans

In order to qualify for the Rural Nevada Development Corp. loans, a business has to meet several criteria. A business has to have less than $1 million in gross revenue per year and fewer than 10 employees. The business also must have applied for traditional loan financing and been denied. The money is available for businesses around Reno, Carson City, Las Vegas and Indian Reservation areas. There is $500,000 allocated for these loans in Nevada, and $100,000 was handed out within the first five days of the program. Loan administrators expect that all $500,000 will be given out within the month.

More on microfinance

“Microfinance” and “microlending” are becoming popular terms. Though the USDA is calling this Reno loan program “microlending,” it lends much larger amounts than most microfinance programs. Microfinancing is usually targeted towards very low income individuals, often in developing nations. Microlending usually comes in amounts around $1,000 — making the RNDC “microlending” program comparatively gigantic. Most microlending from developed countries to developing countries is through private individuals, but there is a “hole” in the credit market for businesses without good credit history and without money to develop their own businesses.

Source

RGJ.com

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This post has one comment

  1. NVreviewer says:

    Here are a few clarifications on the above storyfrom the Lending Administrator at RNDC (Rural Nevada Development Corporation).

    1. This is not a Reno loan program. We don't even cover Reno.
    2. This is not a grant we got from USDA. It is a loan that we pay back to the government.
    3. These are not "bad credit loans". Period.
    4. Qualifying business CANNOT be in Reno, Sparks, Carson City, Las Vegas or Henderson. This is a program for Rural Nevada. Our service area is from Jackpot to Laughlin and West Wendover to South Shore.
    5. Loans are not "handed out" they are loaned based on criteria put before a committee that will make the approval decision.
    6. We do not expect to LOAN out the entire $500,000 by the end of the month.
    7. We have other programs available through our non-traditional lending program that may benefit businesses that don't qualify for the micro-loan program.

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