A new $250,000 microloan fund has been launched to help Northeast Ohio entrepreneurs in need of a small and quick cash infusion.
The Appleseed Micro-Loan program is designed to provide loans of up to $35,000 to businesses with fewer than 50 employees and is being overseen by the Braintree Business Development Center in Mansfield, Ohio.
“It’s just a small amount for something specific and it comes with a pretty quick turnaround,” said Bob Cohen, Braintree’s director.
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The program is open to companies from all industries, including healthcare, though Cohen acknowledged that the small dollar amounts could make the program a better fit with other sectors. However, if a healthcare company is in a situation where it needs to obtain a license of some type, or a new piece of equipment, there could be a fit.
“Any business could find itself needing a small injection of cash for a short period of time,” Cohen said.
The loans come with a fixed interest rate of the prime rate plus 4 percent, with a maximum length of five years.
Braintree is part of the JumpStart Entrepreneurial Network, a collection of incubators, funds and resources for Northeast Ohio entrepreneurs. JumpStart is a state-supported venture development group based in Cleveland. (Disclosure: JumpStart is an investor in MedCity News’s parent company, MedCity Media.)
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Cohen said Braintree receives lots of referrals from commercial banks, which are reluctant to do such small loans because their administrative costs are roughly the same on a $35,000 loan as a $1 million loan.
Braintree is hosting a kickoff event for the microloan program on Sept. 19 in Mansfield.
The concept of microloans, or microcredit, is traced back to the Grameen Bank in Bangladesh in the early 1970s. Grameen founder Muhammad Yunus won the Nobel Peace Prize in 2006 for his work on the microcredit program.
Cohen said he’s aware of about a dozen microfunds in Ohio.
