The Microloan TA program requires that 25% of the technical assistance given to the entrepreneur by the lender be provided pre-loan and 75% post-loan. This formula is inflexible and does not always meet the needs of entrepreneurs seeking capital. We would like this requirement to go away.
We believe that lenders should have the flexibility to provide that assistance when needed, whether pre-or post loan. A common sense solution would lift this regulatory burden from the program. We advocate for removing the limit and allowing lenders, working day-to-day with entrepreneurs to decide what they need and when they need it. Intermediaries may need to use a larger percentage of the technical assistance grants they receive from SBA to help small business owners navigate the Microloan application process and get their credit in order so that they can obtain a loan.
The users of the Microloan program are small business owners with little or no credit history, women and minority business owners, and entrepreneurs who may not qualify for traditional bank loans or even for the larger loan guarantee programs that SBA administers. For example, Jose and Rosie Rodriguez own King City Tires in the southern Salinas Valley in California, a very economically challenged region. King City Tires found a niche servicing tractors in the fields, 24/7. It took two years of business counseling from El Pajaro Community Development Corporation for the Rodriguez’s to qualify for a $1.5 million Small Business Administration loan to expand their business. Now they employ 16 full-time workers. If intermediaries have flexibility on when the business assistance is administered, then small business owners will succeed and create jobs.