Microloan Program For Small Businesses: Facts Finder
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Microloan Program In A Nutshell
- The Microloan Program of the Small Business Administration (SBA) is a lending program designed to provide small business owners with access to working capital, inventory, and supplies.
- The loans offered through this program range from $500 to $50,000 and are provided by intermediary lenders, who receive funding from the SBA. These intermediaries are typically nonprofit organizations with experience in lending and working with small businesses.
- The SBA's Microloan Program is intended to help small businesses that may not qualify for traditional bank loans due to lack of collateral or credit history.
- The repayment terms for these loans can range from 6 to 48 months.
How do I use a microloan?
Microloans can be used for a variety of purposes that help small businesses expand. Use them when you need less than $50,000 to rebuild, re-open, repair, enhance, or improve your small business.
- Working capital
Proceeds from an SBA microloan cannot be used to pay existing debts or to purchase real estate.
What do I need to apply?
Microloans are available through certain nonprofit, community-based organizations that are experienced in lending and business management assistance. Individual requirements will vary.
To apply for a microloan, work with an SBA-approved intermediary in your area. SBA-approved lenders make all credit decisions and set all terms for your microloan.
How do I pay back my microloan?
Loan repayment terms vary according to several factors:
- Repayment terms: Amount, planned use, lender requirements, needs of the small business owner; maximum repayment term allowed for an SBA microloan is six years
- Interest rates: Interest rates vary depending on the intermediary lender; generally, between 8 and 13 percent