In the current financial crisis, it might seem impossible to start or expand a business with a less-than-perfect credit score.

Credit is crunched so bank loans are tougher to get, and banks generally do not lend to start-up companies.

There’s hope, however, for small businesses beyond maxing out the credit cards or further tapping friends and family.

Microlenders, such as ACCION USA and Partners for Self Employment, provide small loans to companies that have trouble getting traditional bank loans.

While most microlenders do about only 25 to 30 loans a year, ACCION USA gives out about 20 to 25 loans every month, said William Mateo, South Florida program director. Loans range from $500 to $50,000 for those qualified at rates of 8 percent to 12 percent.

ACCION USA’s research has found that after a loan is given out, the business’s income increases and it creates about 1.7 new jobs, Mateo said.

“The bottom line is, it’s all about job creation,” Mateo said.

Many banks won’t help companies that have been in business less than two years, but Mateo calls ACCION USA an “oasis for small business.”

For a bank loan, someone who had been in business for three years would need a minimum 640 FICO score, Mateo said. With ACCION USA, businesses need a 575 FICO score.

If businesses have been operating for more than six months, they should be turning a profit.

There’s less paperwork, too. ACCION USA requires the last three business and personal bank statements for loans of less than $25,000. For loans more than that, it requires the most recent business and personal tax returns.

Conditions for loans depend on what the loan is being used for, Mateo said. If the loan is for equipment, it can be issued for up to five years. For inventory, loans may be issued for up to 24 months.

Most of ACCION USA’s clients are minorities or women, but there’s no demographic requirement. Recently, because of the credit crisis, more professionals such as dentists and lawyers have sought loans from ACCION USA, Mateo said.

ACCION USA’s final goal is to help small business owners be bankable, Mateo said. ACCION USA reports to the three major credit bureaus to help clients develop credit.

“We don’t want to keep clients forever. We want them to graduate so that they can get into the mainstream.”

Partners for Self Employment focuses not only on providing loans to South Florida companies, but also on educating them about how to use their money better.

“We do a lot of hand holding,” said Maria Coto, executive director.

Partners for Self Employment is one of the organizations that the Small Business Administration funds to provide micro-loans, so loans are guaranteed by the SBA up to 90 percent.

The organization typically deals with established businesses that have been in business for at least two years but often don’t have a business plan.

The condition for getting a loan from Partners for Self Employment is that loan applicants go through business training.

“That training is going to make the difference between success and failure for most people,” Coto said.

Partners for Self Employment offers one-on-one technical assistance for all businesses, but charges only a one-time, $100 fee that covers underwriting cost for the loan and costs of printed materials, Coto said.

For start-ups, Partners for Self Employment offers a Peer Lending Program, providing training in a group environment. A one-time fee of $30 to purchase the manuals covers the training sessions. Loans start at $1,000 without credit or collateral and increase to a maximum of $7,500 based on the amount of business training an individual has completed within the program.

For established businesses, the maximum loan is $35,000 for a maximum term of 60 months and a 12 percent interest rate.

The organization also offers a matched savings fund to businesses that go through training, Coto said. For every dollar participating businesses save, Partners for Self Employment backs it with a grant of two dollars that the business doesn’t have to pay back  a dollar of local government money and a dollar of federal money. That money can only be used to purchase a business asset, not for operating expenses, Coto said.

© 2009, The Miami Herald. Source: McClatchy-Tribune Information Services.