The SBA Microloan program provides business financing up to $50,000 (with the average funding amount being about $13,000) to help small businesses and not-for-profit childcare and daycare centers get the funding they need to both start-up and expand their small businesses.
The SBA (Small Business Administration) provides capital funding to nonprofit community-based organizations who have experience in both small business lending as well as providing technical assistance to small businesses.
These SBA Microloan community based business lenders then provide actual SBA loans through the microloan program.
Microloan Requirements
Since this small business lending program is administered by Small Business Administration intermediaries, it is the SBA that determines the terms and conditions of Microloan borrowers based on their own lending and credit requirements. Most of these types of lenders require collateral as well as a personal guarantee of the busienss owner.
What Can I Use a Microloan For?
- Inventory or supplies
- Furniture or fixtures
- Machinery and equipment
What Can I NOT Use a Microloan For?
Microloan proceeds can’t be used to pay for existing business debt or purchase of commercial property.
Other Microloan Information
- The maximum repayment term allowed for an SBA microloan is six years.
- Generally, these rates will be between 8 and 13 percent.
- The average microloan is about $13,000.
