Question 1

What is an SBA Microloan?

Accepted Answer

The SBA Microloan program provides small loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up or expand. The loans are administered through SBA-approved nonprofit community-based lenders (CDFIs) who also provide business training and technical assistance. The average microloan is about $13,000.

Question 2

What can I use an SBA Microloan for?

Accepted Answer

SBA Microloans can be used for working capital, inventory, furniture, fixtures, supplies, materials, equipment, and machinery. They cannot be used to pay existing debts or purchase real estate. The program is designed for startups and small businesses that may not qualify for traditional bank financing.

Question 3

What are the interest rates and terms for SBA Microloans?

Accepted Answer

SBA Microloan interest rates range from 8% to 13% depending on the intermediary lender and the borrower's credit profile. Terms vary based on the loan purpose, up to 6 years for working capital and up to 7 years for equipment. There are no prepayment penalties for loans with terms under 6 years.

Question 4

Who qualifies for an SBA Microloan?

Accepted Answer

SBA Microloans are designed for small businesses, startups, and businesses in underserved communities. Eligibility requirements vary by lender but typically include a viable business plan, reasonable credit history, and the ability to repay. Collateral may be required for some loans, but many microloans are unsecured.

Question 5

How long does it take to get an SBA Microloan?

Accepted Answer

SBA Microloans typically take 2 to 4 weeks to process, depending on the lender and the completeness of the application. Because the loans are administered by local nonprofit lenders, the process is often more personalized and faster than traditional SBA 7(a) loans.

Question 6

What is a CDFI and how does it relate to SBA Microloans?

Accepted Answer

A CDFI (Community Development Financial Institution) is a specialized financial institution that provides credit and financial services to underserved markets and populations. SBA Microloans are administered through SBA-approved CDFIs and other nonprofit community lenders. These lenders often provide business training and technical assistance alongside the loan.

SBA Microloans / CDFI Programs

Program Parameters

Who Qualifies & Common Uses

Startups & Early-Stage

Minority & Women-Owned

Veteran-Owned Businesses

Equipment & Inventory

Working Capital

Business Expansion

Frequently Asked Questions

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