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The mission of the Microloan Program is to integrate micro-level financing with training and technical assistance for start-up, newly established, existing, and growing small businesses.
The Microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000.
The U.S. Small Business Administration provides funds to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries administer the Microloan program for eligible borrowers.
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.
Microloans can be used for:
- Working capital
- Inventory or supplies
- Furniture or fixtures
- Machinery or equipment
Proceeds from an SBA microloan cannot be used to pay existing debts or to purchase real estate.
Repayment Terms, Interest Rates and Fees
Loan repayment terms vary according to several factors:
- Loan amount
- Planned use of funds
- Requirements determined by the intermediary lender
- Needs of the small business borrower
The maximum repayment term allowed for an SBA microloan is six years.
Interest rates vary, depending on the intermediary lender and costs to the intermediary from the U.S. Treasury.
Microloans are available through certain nonprofit, community-based organizations that are experienced in lending and business management assistance. If you apply for SBA microloan financing, you may be required to fulfill training or planning requirements before your loan application is considered. This business training is designed to help you launch or expand your business.