Banking: The Microloan Alternative
Darlene Sealls started planning her company, ProDar Video, a Skokie, Ill., video-editing company, in 1994, while she was working full-time at a local public television station. She calculated that she needed $50,000 in start-up capital to purchase a high-tech computer system to "cut and paste" videos for corporate customers, teachers, and consumers.
But local bankers refused to provide a credit line. "I had a great credit history, but it wasn't a corporate history," she notes ruefully. She couldn't use her credit cards to finance the purchase: the video equipment was just too costly. "I applied to three different computer-leasing companies, but they rejected me too, because I was a start-up."
Fortunately, there was an alternative: Sealls applied for a microloan, with the help of the Chicago Women's Business Development Center. (See "The Lowdown on Microloans," [Article link] .) "I'd gone through the credit-application process so many different times that the paperwork was easy to handle," she notes. "Best of all, the WBDC was able to help me refine my business plan and then channel my microloan request to an organization whose financing priorities fit my needs." The application process took about three months.
The good news: ProDar's microloan was approved by a lender -- Evanston Business Investment Corp., a nonprofit economic-development group in Evanston, Ill. -- that was willing to support a start-up and to take into account Sealls's personal credit history. The bad news: Sealls was able to borrow only $10,000 -- just a portion of the start-up funds she needed. The rest has come from personal savings. But she's hardly complaining: "Now that I'm able to purchase my equipment, I'm on my way. I project revenues of $76,000 in 1996, and with the help of a microloan, I can start building a corporate banking history."
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