SBA MICROLOANS

Category: Federal

What is a Microloan?

Smaller-size loans of up to $50,000 provided through SBA funding intermediaries.

The microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000.

The SBA provides funds to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries administer the Microloan program for eligible borrowers.

Am I eligible?

Each intermediary lender has its own lending and credit requirements. Generally, intermediaries require some type of collateral as well as the personal guarantee of the business owner.

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 ?under $50,000 to ?rebuild, re-open, repair, enhance, or improve your small business.

Examples include: 

• Working capital 
• Inventory 
• Supplies 
• Furniture 
• Fixtures 
• Machinery 
• Equipment 

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. To find an authorized microlender near you, contact your local SBA District Office.

In the Houston SBA District Office, SBA supports and promotes microlenders LiftFund and PeopleFund.

How do I pay back my microloan?

Repayment Terms, Interest Rates, and Fees 

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

Existing borrowers

Existing borrowers can create an account in the SBA Capital Access Financial System (or CAFS) to monitor their loan status. Get account enrollment instructions.