Microloan Program

What is a Microloan?

The Microloan Program provides small, short-term loans to small business concerns and certain types of not-for-profit child-care centers. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries make loans to eligible borrowers. The maximum loan amount is $50,000, but the average microloan is about $13,000.

How Microloan Funds May Be Used

Microloans may be used for the following purposes:

  • Working capital

  • The purchase of inventory or supplies

  • The purchase of furniture or fixtures

  • The purchase of machinery or equipment.

Proceeds from a microloan cannot be used to pay existing debts or to purchase real estate.

Technical Assistance

Each intermediary (lender) is required to provide business training and technical assistance to its micro-borrowers. If you apply for microloan financing, you may be required to fulfill training and/or planning requirements before your loan application is considered. This business training can be helpful to you as you launch or expand your small business.

Terms, Interest Rates, and Fees

Loan terms vary according to:

  • The size of the loan

  • The planned use of funds

  • The requirements of the intermediary lender

  • The needs of the small business borrower

The maximum term allowed for a microloan is six years. Interest rates vary, depending on the intermediary lender and costs to the intermediary from the U.S. Treasury. Generally, these rates will be between 8 and 13 percent.


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.

Contact Your Local Microloan Intermediary

Small businesses interested in applying for a microloan should contact an intermediary in their area, since all credit decisions are made on the local level. The Microloan Program is available in selected locations in most states. For more information contact your local SBA District Office or review the attached file for a list of participating intermediaries by state.


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