What is the Microloan Program?

The Microloan Program makes very small loans to new, newly established, or growing businesses and some nonprofit childcare centers. Under this program, the US Small Business Administration (SBA) delivers funds to non-profit community lenders (Micro Loan Brokers), who, in turn, deliver the money in loans from up to $50,000 to eligible borrowers. The average amount of this type of loan is about $13,000. Applications are submitted to local brokers and all decisions are made locally.

Who is eligible for the Microloan Program?

Each intermediary lender has its own loan and credit requirements. However, business owners contemplating applying for a microloan should be aware that intermediaries will generally require some form of collateral and the personal guarantee of the business owner.

What are the terms of the Microloan Program loan for?

The maximum term allowed for a Micro loan is six years. However, loan terms vary based on the size of the loan, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. Interest rates vary, depending on the intermediary lender and the US Treasury Department’s intermediary fees.

How do I apply for the Microloan Program?

Small businesses interested in the Microloan Program should contact brokers in their area. The lender is a nonprofit organization that receives a loan from the SBA. In turn, it lends small sums to very small businesses in the community. It also provides technical assistance to small businesses and makes all credit decisions. The application process may vary depending on the intermediary lender.

How do government small business loans work?

The Federal Small Business Administration SBA Microloan offers government loans to small business owners through banks and credit unions  in the United States. When a credit is authorized, the federal agency guarantees these lenders that, in the event that the borrower defaults, they will cover the debt. For entrepreneurs, these loans represent a huge benefit, since they can get the money they need without paying much in interest . To access one of the loans from the Small Business Administration (the name in English of this agency) you must have a good credit score and demonstrate that your company produces enough money flow to pay your debts, with the other requirements.

Advantages and disadvantages of SBA loans

Here are the advantages and disadvantages of government loans granted by the SBA.


  • For loans up to $150,000, the SBA guarantees up to 85%. For loans over $150,000, the SBA 504 Loans guarantees up to 75%.
  • Because they are backed by the federal government, brokers can authorize loans with higher levels of risk.
  • Many company profiles are eligible to receive credits.
  • Rates are preferential. This means that they are loans with lower costs.
  • They have many uses: to start a company or to purchase assets, as working capital or to invest in the growth of your business.


  • It is only granted to companies that demonstrate the need for capital.
  • You cannot receive it if you are delinquent on any debt obligation to the federal government.
  • The paperwork can be cumbersome because you must meet the requirements of both the SBA and the intermediary entity.
  • Some information is only in English.


These are the main requirements that people must meet to access a government loan:

  • To qualify for one of these government loans, your business must be based and operate in the United States .
  • All businesses applying for these loans must meet the definition of a small business under the agency’s guidelines. These parameters take into account the number of employees, annual income and net worth of the company.
  • To qualify for Small Business Administration loans, applicants need a minimum credit score of 680 . Personal and business histories are also taken into account.
  • Many of these loans require a  guarantee . If a loan cannot be backed by business assets, real estate and personal assets can serve as collateral.
  • Your business must have been in business for more than two years and be profitable .

What do you need to prepare your loan application?

In general, applying for an SBA loan takes a long time due to the paperwork and paperwork involved. These are the documents you will need to gather to apply for government small business loans:

  • Personal information. Previous addresses, full name, criminal record, educational level, and the status of your finances.
  • Business background. You must submit your resume to the Small Business Administration and demonstrate your experience in your industry.
  • Business plan. Companies should prepare a well-structured business plan and describe in it the financial projections and medium-term goals of the business.
  • Personal and business tax returns. You will need to submit your personal and business tax returns for the last three years.
  • Financial statements. The state of your finances is one of the most important requirements of your application. For lenders it is essential to know your profits and losses, as well as the status of your bank accounts.
  • Warranty. Also called endorsement or collateral. It’s not always required, but if you show that you have valuable business or personal assets to serve as credit collateral, your application will earn points.
  • Other documents. To prove that your business operates legally, you need to provide documents such as certificates of incorporation, certificates of organization, or copies of your business license.

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