Borrowers Look to Microloans to Bail Them Out of Credit Crunch

With the credit crunch in full swing, small-business owners and startups looking to borrow money have been turning to microloans to meet their financing needs.

Elizabeth Makee is director of operations for Accion San Diego, a local bank and grant-funded

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During the past three months, Accion San Diego has loaned $500,000 to applicants, or nearly $200,000 a month, whereas the typical monthly lending total is between $100,000 and $150,000.

The nonprofit provides loans ranging from $300 to $35,000, with fixed rates ranging from 12 percent to 18 percent. Payback times are typically two to three years. Before the downturn, Makee says loans averaged $8,000. Lately, though, they've been averaging $10,000.

"We're seeing high credit scoring," says Makee of microloan applicants. "The same people a year ago may have qualified for a bank loan."