The microloan program provides very small loans to newly established, start-up, growing small business concerns and some not-for-profit childcare centers to launch or expand the business.
SBA provides funding to microlender intermediary, which are community-based nonprofit organizations with experience in lending as well as technical assistance and management.
Each intermediary lender has its own credit and lending requirements. In general, intermediaries need some type of collateral as well as the business owner's personal guarantee.
Microloans are used for things like rebuild, repairing, or improving projects as well as for working capital or things like buying furniture, fixtures, supplies, and equipment.
The microloan program offers loans up to $50,000 to support the startup and growth of small businesses. The average microloan is about $13,000.
Terms vary according to size of loan, planned use and lender requirements. The maximum payback period for microloans is 6 years & interest rates normally range from 8% to 13%.