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Microloans

SBA finance intermediaries give loans of up to $50,000 to small businesses.

Content

What is a microloan?
Eligiblity criteria?
How do I use a microloan?
What do I need to apply?
How do I pay back my microloan?
Existing borrowers

What is a microloan?

A microloan is a program that offers loans to help small enterprises and non-profit childcare centers to establish and grow. The loan amount can go up to $50,000 maximum whereas, on average, a typical microloan is around $13,000.

Small Business Administration (SBA) gives the funding to the intermediary lenders who will manage the whole microloan program for borrowers who meet the criteria. These nonprofit organizations have expertise in lending, management, and technical support.

Eligibility criteria

The eligibility varies with the intermediary lenders according to their lending and borrowing criteria. However, lenders always need the owner’s guarantee or some sort of security.

How do I use a microloan?

Microloans should be availed when you need an amount of less than $50,000 to support or expand your small business. This amount can be used to enhance, renovate, reconstruct, repair, or improve anything. 

Here are several examples where you can avail this amount:

  • Working capital 
  • Supplies in Inventory
  • Fixtures for furniture
  • Equipment for Machines


The money you get from an SBA microloan can’t be used to pay off debts or buy a house.

What do I need to apply?

Microloans can be availed from specific non-profit organizations or community groups that are well versed in lending and business management, however, the individual needs may vary.

To apply for a microloan, you need to get in touch with any SBA-verified intermediary to guide you through the process. All the decisions related to credit and terms for your microloan are made by those intermediaries.

How do I pay back my microloan?

Terms are prone to vary due to different parameters.

Repayment terms 

Repayment depends on:

  • The amount borrowed

  • The planned use of the amount

  • Lender requirements

  • The needs of the business owner

Note: The maximum repayment term allowed for an SBA microloan is six years.

Interest rates 

  • This depends on your intermediary lender and is generally between 8% to 13%.

Existing borrowers

Those who have borrowed Microloan already can check the status of their loan by creating their accounts on SBA’s Capital Access Financial System (or CAFS). Get information on how to set up an account.

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