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Think Big- Learn How to Apply for an SBA Microloan

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Think Big- Learn How to Apply for an SBA Microloan

By Davidh, SBA Official
Published: November 12, 2013 Updated: November 12, 2013

Think Big! The popular admonition is a forceful reminder of the power of positive thinking, encouraging us to push toward growth and higher achievements.

In the entrepreneurial world, “thinking big” usually calls for hefty investments. If you’re a big corporation that may not be a major hurdle, but how can you “think big” if you’re a small business?  Think U.S. Small Business Administration.  The SBA can help, not only financially , but with technical assistance and training, which all are essential in order to achieve success.

One of the best SBA lending programs for very small businesses, particularly those in the start-up stage, is the Microloan Program, which provides small business loans of up to $50,000. Microloans have helped thousands of small businesses start, grow and succeed.  SBA doesn’t actually make the microloans.  SBA loans money to community based non-profit, non-traditional lenders which make microloans to small businesses. 

SBA microloans:

  • Can provide up to $50,000 –the average microloan is about $13,000- to small for profit businesses and non-profit child care centers.
  • Can be used for most business expenses but not for paying existing debt or purchasing real estate (SBA offers other programs for these purposes.)
  • May have a loan term of not more than six years.  Interest rates will vary from lender to lender.

How to apply for a microloan

Getting ready to apply for a business loan, whether for a low dollar amount or millions of dollars, requires serious preparation and attention to detail.

We recently posted a blog on how to get a business loan, which will serve you as a guide to applying for a microloan as well. While it encompasses several steps, all of them important, it boils down to one overarching theme: be thoroughly prepared to show the lender that:

  1. Your business idea is sound and potentially profitable
  2. You and your partners, if any, are qualified to run the business, and
  3. You can repay your loan

Advantages of Working with SBA Microlenders

One of the big advantages of working with SBA Microlenders is that they are mission-oriented institutions committed to the economic development of the areas they serve; they understand the community and the issues and therefore are very well equipped to work with local small businesses.

In addition to the financial help they represent, one of the best features of the SBA Microloan Program is that Microlenders are required to provide business based training and technical assistance component to help the small business borrower become successful.

Nationwide, there are about 150 microlenders that work with SBA. To find a Microlender in your area, contact your local SBA District Office.

About the Author:

David J. Hall

SBA Official

Hi, my name is David and I'm serving as a Moderator for the SBA Community. Our goal is to continually improve this site to meet your needs, so we appreciate your feedback and participation.

Comments:

While many small business owners wouldn't think of $50,000 as "micro", this is a great resource for those in need of funding for start-ups. Great post.
Microloan sounds really interesting & innovative, to not only provide financial help but as well as technical help to the small business holder.

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