SBA Microloans
A small business loan of up to $50,000 from a nonprofit community lender that the SBA funds, for working capital, supplies and equipment. The average is about $13,000.
- Personal guarantee likely
How it works
The SBA does not lend the money itself. It funds nonprofit, community-based lenders (called microloan intermediaries), and they make the loans, decide who gets one and set the terms.
- Up to $50,000, and no business may owe one intermediary more than $50,000 at a time. The average microloan is about $13,000.
- Generally no more than $10,000. Above $20,000, the business must show it cannot get credit elsewhere at similar rates and has good prospects.
- Repaid within seven years at most.
- Interest is set by the lender, generally between 8% and 13%. The SBA caps it at the rate the intermediary pays the SBA plus 7.75 percentage points (8.5 points on loans of $10,000 or less).
- The money can pay for working capital, inventory, supplies, furniture, fixtures, machinery and equipment, but not existing debts or real estate.
To apply, contact an intermediary near you from the SBA's list of microlenders. Each one has its own application, credit checks and support for borrowers.
Upsides and downsides
Upsides
- Made for small amounts: the average microloan is about $13,000
- Lenders are community organizations with experience of advising small businesses
- Interest is capped by SBA rules
Downsides
- At most $50,000, and generally no more than $10,000
- Each lender sets its own terms, fees and security, so offers vary
- Cannot be used to pay off debts or buy property
Risks
- If the lender asks for a personal guarantee, you owe the loan yourself if the business cannot pay
What it costs
- How it is priced
- Interest set by each lender, generally 8% to 13% a year, within an SBA cap
- Costs that are easy to miss
- Each lender sets its own fees and conditions, so ask for the full cost in writing
Generally no more than $10,000. The average microloan is about $13,000.
Have a quote? True cost of a loan: work out the APR and total cost
Applying to an SBA program? Is my business small?: check whether your business counts as small
Does it fit?
Could fit when
- You need up to $50,000
- Banks have turned you down, or the business is new
Unlikely to fit when
- You need more than $50,000 (the most a business can owe one microloan lender)
- You want to repay existing debts or buy property
- The business is not operating yet
Who can use it
- Business types: Sole proprietorship, Partnership, LLC, S corporation, C corporation, Benefit corporation, Cooperative
- An operating business, run for profit, located in the US, that meets the SBA's size standards
- A loan can also be used to set up a nonprofit childcare business
- Loans above $20,000 only if the business cannot get credit elsewhere at similar rates
- Not for paying existing debts or buying real estate
Not available for: Nonprofits (apart from childcare businesses); Businesses mainly engaged in lending, such as banks, finance companies and factors; Passive businesses owned by developers and landlords; Businesses earning more than a third of their revenue from legal gambling; Any activity that is illegal under federal, state or local law; Businesses mainly engaged in political or lobbying activities; Speculative businesses.
Am I ready?
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- What the money is for
- Cash flow forecast
- Personal credit report checked
Regulation and protections
Regulators: U.S. Small Business Administration (SBA).
Who runs it: Federal program.
SBA rules set the most a lender can lend and charge, and the longest term. Within those rules, each lender makes its own credit decisions and sets the terms, so read the loan agreement before you sign.
Types of provider: Nonprofit, community-based lenders approved and funded by the SBA (intermediaries).
What has changed
- Cooperatives can borrow too: microloans go to small businesses eligible for SBA loans (13 CFR 120.707), and the SBA's definition of a business concern includes cooperatives (13 CFR 121.105).
Sources
- SBA: Microloans (amounts, uses, rates, term, intermediaries) · checked October 17, 2026
- 13 CFR 120.707: conditions on loans by intermediaries to microloan borrowers · checked October 17, 2026
- 13 CFR 120.110: businesses that are ineligible for SBA business loans · checked October 17, 2026
- 13 CFR 121.105: how the SBA defines a business concern (legal forms, including cooperatives) · checked October 19, 2026
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