How can you use an SBA Microloan?

SBA microloans are expedited loans for smaller amounts of money. $50,000 max. The SBA reports the average microloan amount is around $13,000.

SBA Microloan Program

What is an SBA microloan?

Mainstream lenders prefer to work with established, successful businesses and applicants with strong credit scores. If you’re just starting your small business and/or you’ve had some financial issues in the past, you might have a harder time qualifying for a traditional bank loan. To help business owners in this situation, the Small Business Administration created their microloan program. Here’s how it works and whether it could make sense for your small business.

What are SBA microloans?

How can you use an SBA microloan?

How do you qualify for an SBA microloan?

Popular Uses for SBA Microloans

Restocking Inventory

Buying New Equipment

Buying Furniture

Covering Working Capital

Covering Employee Salaries

Covering Office Rent

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Frequently Asked Questions

What are the loan terms and interest rates?

The maximum loan term on an SBA microloan is six years. It’s a relatively short loan term since you’re only borrowing a small amount: at most $50,000 according to the SBA microloans definition. The interest rate will depend on which community lender you work with. It’s typically between 8 and 13 percent.

The lender may also charge upfront closing costs to cover their expenses, such as pulling your credit report or submitting a UCC filing to the government showing they are using one of your assets as collateral.

To keep SBA microloan financing affordable, the intermediary lender may not charge any ongoing general fees besides the interest rate. Late fees are permitted, though, if you miss a payment. Late fees are usually no more than 5% of the amount you were supposed to pay.

How do you apply for an SBA microloan?

Is an SBA microloan right for you?