Last Updated January 26, 2010
Providing loans to buy inventory, equipment, machinery, and fixtures; provide working capital; or receive technical assistance
The Microloan Program of the Small Business Administration was developed to make more very small loans available to prospective small business borrowers. Under this program, the SBA makes funds available to nonprofit intermediaries, who in turn make loans to eligible borrowers. The intermediaries also provide technical assistance to borrowers.
Client confidentiality does not permit the SBA or nonprofit lenders to release information to the public on specific projects.
Application and Financial Information
Loans are made by selected nonprofit lenders in amounts up to a maximum of $35,000. The average loan size is $12,300. Each nonprofit lending organization has its own loan requirements. Generally, lenders will take collateral against a loan. In most cases, the personal guaranties of the business owners are also required.
Depending on the earnings of the business, the loan maturity may be as long as 6 years. Rates for microloans are determined by the intermediary's cost of funds and the size of the microloan.
Eligibility, Uses, and Restrictions
Virtually all types of for-profit businesses that meet SBA basic requirements are eligible. Lending decisions under this program are made solely by the intermediary lender. They are based on credit experience, character, and/or relationships built during the pre-loan technical assistance and training.
Loans may be used for furniture, fixtures, supplies, inventory, machinery, equipment and working capital. Loans may not be used as a down payment or for the purchase of real estate.
SBA Home page: www.sba.gov
SBA Microloan Program: www.sba.gov/services/financialassistance/sbaloantopics/microloans/index.html
Check the telephone directory under "U.S. Government" for the nearest SBA office or call the Small Business Answer Desk (800) U-ASKSBA. For the hearing impaired, the TDD number is (704) 344-6640.