Join our Waitlist for Expert Advice!

A Simple Guide to Microloans Need a little cash to grow? The Small Business Administration has microloans to help.

What it is: The Small Business Administration established a Microloan Program in 1992 to increase the availability of very small loans to small-business borrowers. The program had doled out thousands of loans to businesses. Money has gone toward a wide range of uses: working capital, inventory, supplies, furniture, fixtures, machinery and equipment.

Loans can reach to up to $50,000, with an average microloan of about $13,000.

How to get it: Microloans are available through nonprofit community-based organizations that serve as intermediaries. There are about 200 across the United States.
A full list is available on the SBA's website.

Here are ways to prepare for applying for a microloan:

  • Have a business plan.
  • Make sure you will be able to make the monthly payments.
  • It's often best to stick with microlenders in your own area.
  • Show a readiness to invest some of your own money in the business.

Upside: Microloans are an especially good source of funds for businesses that have never borrowed from a bank. The program provides a source of smaller loans that many banks are reluctant to service, especially as a business loan.

The loans can be best for startup companies with lower capital requirements and limited operating history. Microloan borrowers may benefit from the intermediary's expertise in business.

Downside: Microloan interest rates tend to be higher than for standard small business loans.
SBA microloan funding can also be difficult to get if your community does not have a nonprofit serving as an intermediary for the program.

Lending and credit requirements vary among intermediary lenders. Often, some type of collateral or personal guarantee is required in order for a business owner to obtain a loan.

More tips:
Microloans can pay for working capital, inventory or supplies, furniture or fixtures, and machinery or equipment.

If your business doesn't qualify for an SBA-funded microloan, there might be other local microloan programs that can offer an alternative. When it comes to finding one, asking around might be the best strategy.

Related: Launch Your Startup With Microloans

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

At 16, She Started a Side Hustle While 'Stuck at Home.' Now It's on Track to Earn Over $3.1 Million This Year.

Evangelina Petrakis, 21, was in high school when she posted on social media for fun — then realized a business opportunity.

Health & Wellness

I'm a CEO, Founder and Father of 2 — Here Are 3 Practices That Help Me Maintain My Sanity.

This is a combination of active practices that I've put together over a decade of my intense entrepreneurial journey.

Business News

Remote Work Enthusiast Kevin O'Leary Does TV Appearance Wearing Suit Jacket, Tie and Pajama Bottoms

"Shark Tank" star Kevin O'Leary looks all business—until you see the wide view.

Business News

Are Apple Smart Glasses in the Works? Apple Is Eyeing Meta's Ran-Ban Success Story, According to a New Report.

Meta has sold more than 700,000 pairs of smart glasses, with demand even ahead of supply at one point.

Money & Finance

The 'Richest' U.S. City Probably Isn't Where You Think It Is

It's not located in New York or California.

Business News

Hybrid Workers Were Put to the Test Against Fully In-Office Employees — Here's Who Came Out On Top

Productivity barely changed whether employees were in the office or not. However, hybrid workers reported better job satisfaction than in-office workers.