For what purposes can LEDC loans be used?
LEDC loans are term loans that can be used for working capital, equipment, inventory, advertising and marketing, etc.
What documents are needed to apply for a loan?
Depending on the size of the loan and the applicant’s credit score, documents are required such as:
Two years of personal and/or business tax returns.
Four months of bank statements, personal and business. Personal bank statements required, business required if the business currently has its own account;
- Copy of applicable business licenses and permits;
- Financial statements including cash flow and profit and loss statements, and balance sheets if available;
- Lease agreement (if applicable);
- Proof of identification
Is there a minimum credit score necessary to apply for a micro-loan?
No. LEDC has been able to work with business owners with credit scores as low as 550.
Are there any fees?
Yes. There is one fee that is 3% of the loan amount for closed loans. For example, a $6,000 loan would have a fee of $180, which would be paid at the time of closing. There is also a $20 fee for pulling a credit report, which an LEDC Loan Officer or Originator does during a client’s first visit to our office. There is NO application fee!
What are the terms and interest rate of LEDC’s loans?
LEDC offers installment loans and has the flexibility to set the term on all loans between 1 and 5 years based on the applicant’s needs. Interest rates typically range from 9 to 14 percent.
How long will the application process take?
Loans up to $10,000 are typically approved or denied approximately one week after all the application documents are received. Loans up to $50,000 typically take three weeks after all the application documents are received.
What factors does LEDC consider to determine whether or not a loan is approved?
As a non-profit loan fund, LEDC takes a holistic approach to evaluating potential loan clients. LEDC weighs many factors, such as strength of business, character references, availability of collateral, owner equity contribution, credit score, etc.
Are there any types of businesses that cannot apply for a loan?
Yes. Any business engaged in illegal activities or the sale of sexual-oriented goods or services, liquor stores, real estate and speculative investments are ineligible for LEDC loans. Contact an LEDC loan officer for more information.
Are there any negative credit factors that make an applicant ineligible?
Yes. If an applicant owes back taxes to a State or the IRS or has not paid any court judgments or outstanding child support, he or she will not qualify for a loan. Contact an LEDC loan officer for more information.
Can a start-up business apply for a loan?
Absolutely. That's what we're here for.
How can I start the process of applying for a loan?
If you are interested in a loan, please contact Paula Sternberg, Regional Microloan Originator at (202) 540-7430 for more information. To download a loan application and intake form, please click here.