What Are Small Business Microloans?
Microloans are small business loans under $50,000 provided through nonprofit intermediaries, Community Development Financial Institutions (CDFIs), and SBA-approved lenders. They serve businesses that don’t qualify for conventional bank financing — including startups, minority-owned businesses, women-owned businesses, and businesses in underserved communities.
SBA Microloan Program
The SBA Microloan program provides up to $50,000 through a network of nonprofit intermediary lenders. Average loan: $13,000. Terms: up to 6 years. Rates: 8–13% APR. The SBA does not lend directly — intermediaries set their own rates and requirements within SBA guidelines. Many intermediaries also provide free business training and technical assistance.
CDFI Microloans
Community Development Financial Institutions (CDFIs) serve underserved markets. They often accept lower credit scores (500–600+), shorter time in business (even startups), and have more flexible collateral requirements than traditional lenders. Examples: Accion Opportunity Fund, LiftFund, Pacific Community Ventures, Kiva (crowdfunded, 0% interest).
Who Microloans Are Best For
- Startups in their first 1–2 years of operation
- Businesses in low-income or underserved communities
- Women-owned, minority-owned, and veteran-owned businesses
- Credit scores below 620 that don’t qualify for conventional loans
- Small capital needs ($5,000–$50,000) where larger loan minimum doesn’t make sense
How to Apply for an SBA Microloan
Contact your local SBA District Office or visit the SBA website to find approved intermediary lenders in your area. Each intermediary has its own application process. Expect to provide: personal and business tax returns, bank statements, business plan with financial projections, and details on how the funds will be used.