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Terms & Conditions for Microloans to Borrowers

An intermediary may make micro-loans to any small business eligible to receive financial assistance, including a borrower establishing a nonprofit childcare business. Proceeds from micro-loans may be used only for working capital and acquisition of materials, supplies, furniture, fixtures, and equipment. Loans cannot be made to acquire land or property.

SBA does not review micro-loans for creditworthiness. Generally, intermediaries should not make a micro-loan of more than $10,000 to any borrower. An intermediary may not make a micro-loan of more than $20,000 unless the borrower demonstrates that it is unable to obtain credit elsewhere at comparable interest rates and that it has good prospects for success. An intermediary may not make a micro-loan of more than $50,000, and no borrower may owe an intermediary more than $50,000 at any one time. Each micro-loan must be repaid within six years.


The maximum interest rate that can be charged a micro-loan borrower is determined by the following formula:

  • On loans of more than $10,000, the interest rate charged on the SBA loan to the intermediary, plus 7.75 percentage points;

  • On loans of $10,000 or less, the interest rate charged on the SBA loan to the intermediary, plus 8.5 percentage points.