SBA's Micro Credit Loan Program

Don't take our word for it - directly from the SBA:

What is a Micro Loan?
The Micro Loan 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 micro loan is about $13,000.

How Micro Loan Funds May Be Used
Micro loans 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 micro loan 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 micro loan 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 micro loan 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.

Collateral
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.

Learn More About Micro Credit Loans and Other SBA Programs.

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