Small Business Microloans: What They Are & Where To Get Them

Businesses that need $50,000 or less might want to consider a microloan. Here's what you need to know about finding small business microloans and how to get one.

WRITTEN & RESEARCHED BY
Erica Seppala
Editor & Senior Staff Writer

Last updated onUpdated December 18, 2025

REVIEWED BY

Expert Contributor

Our content reflects the editorial opinions of our experts. While our site makes money through , we only partner with companies that meet our standards for quality, as outlined in our independent .

Key Takeaways

Microloans are small loans up to $50,000 and are a viable funding option for businesses that may not qualify for traditional loans.
Small businesses, startups, and those with lower capital needs or credit challenges can benefit from microloans.
Microloans can be obtained from SBA programs, nonprofit lenders, and alternative lenders.

If you need a smaller amount of funding for business expenses, a microloan may be a good fit. Microloans are small business loans, typically up to $50,000, designed for startups and businesses that don’t qualify for traditional financing.

Below, we’ll cover how microloans work, where to find them, and how to qualify.

Table of Contents

What Are Microloans?
Microloan Interest Rates
Microloan Borrower Qualifications
The 3 Types Of Microlenders
How To Apply For A Microloan
Alternatives To Small Business Microloans
The Bottom Line On Microloans For Small Business

What Are Microloans?

A microloan is a small business loan, typically $50,000 or less, designed for businesses that may not qualify for traditional bank financing.

Because loan amounts are smaller, microloans are often easier to qualify for, especially for newer businesses or those with limited revenue.

How Small Businesses Can Use Microloans

Microloans can be used for many common business expenses, including:

Inventory and supplies
Equipment purchases
Office or workspace costs
Hiring employees
Working capital
Startup expenses and projects

Keep in mind that specific microlenders may restrict how funds can be used, so it’s important to review lender guidelines before accepting a loan

Who Microloans Are Best For

Microloans are best suited for small businesses with modest funding needs. Businesses seeking large amounts of capital (such as for commercial real estate) will usually need a different type of financing.

Microloans are commonly used by:

Businesses that don’t qualify for traditional bank loans
Startups and early-stage businesses
Women- and minority-owned businesses
Businesses in underserved or low-income areas
Owners with limited or challenged credit

In addition to providing access to capital, repaying a microloan on time may help strengthen your credit profile, making it easier to qualify for larger financing in the future.

Microloan Interest Rates

Microloan interest rates, terms, and fees vary by lender and borrower profile. Factors that typically affect your rate include your credit history, time in business, available collateral, and the type of loan.

Most borrowers can expect interest rates in the 8% – 18% range, though rates may be lower for strong applicants. In some cases — especially with higher risk profiles — rates can be higher.

Microloan Borrower Qualifications

Microloans generally have more flexible qualification requirements than traditional small business loans, though standards vary by lender.

Most microlenders consider:

Business size: Limits on revenue, net worth, or number of employees often apply, especially for SBA microloans.
Credit score: Many lenders look for a personal credit score of around 620, though lower scores may qualify at higher rates.
Loan amount: Microloans are capped at $50,000, and many borrowers receive less depending on lender funding limits.
Use of funds: Loan proceeds must be used for approved business purposes.
Collateral or guarantees: While specific collateral isn’t always required, personal guarantees or blanket liens are common.

The 3 Types Of Microlenders

If a microloan is the right choice for your business, the next step is to find a microlender. There are three types of microlenders to consider.

The Small Business Administration (SBA)

The Small Business Administration’s loan programs, including SBA Microloans, have low rates and favorable terms.

Loans through Small Business Administration programs have gained a solid reputation among business owners because of their low rates and favorable terms. The SBA’s Microloan program is no exception.

	SBA 504 Loans
Borrowing Amount	$500 – $50,000
Term Lengths	Up to 6 years
Interest Rates	6.5% – 13%
Borrowing Fees	Possible fees from the loan issuer
Personal Guarantee	Guarantee required from anybody who owns at least 20% of the business
Collateral	Collateral normally required, but depends on the lender
Down Payment	No down payment for most businesses Possible 20% down payment for startups Possible 10% down payment for business acquisition loan

Under this program, loans up to $50,000 are distributed through nonprofit intermediaries. The average SBA Microloan is $13,000. Loans are available to for-profit businesses and nonprofit childcare centers.

SBA Microloans can be used for:

Supplies
Inventory
Fixtures
Machinery & equipment
Working capital

Loans can not be used for the purchase of real estate or to refinance existing debt.

Nonprofit Lenders

Nonprofit lenders are a great source for microloans.

One popular microlender is Kiva U.S., which provides up to $15,000 at a 0% interest rate with terms up to 36 months. Borrowers prove “social capital” by asking friends and family to loan to them. After this step, borrowers can put their business on the Kiva platform to reach over 1.6 million lenders. There are no credit score, collateral, time in business, or revenue requirements to qualify.

Other nonprofit lenders serve specific U.S. regions. Accion New Mexico serves borrowers in New Mexico and surrounding states, while Opportunity Fund provides loans to businesses in California. A quick online search will help you find nonprofit lenders in your area, or you can ask for microlender referrals through colleagues, friends, family, or your financial institution.

Alternative Lenders

Alternative lenders are a popular choice for microloans due to their simplified loan processes. While most alternative lenders do not classify themselves as microlenders, they often have smaller loans available for small businesses.

You can start your search with reputable lenders like Credibly, LoanBuilder, and OnDeck.

These loans are great choices due to their relaxed requirements and fast funding. However, interest rates and repayment terms may not be as favorable as other funding products. Make sure to fully assess the total cost of borrowing to ensure you make the right financial decision.

How To Apply For A Microloan

Applying for a microloan is typically straightforward, though requirements vary by lender.

You’ll usually complete an application and submit basic personal and business information, along with documents like bank statements and financials. Some lenders may also request a business plan or resume.

Collateral or a personal guarantee is common, and nonprofit or SBA microlenders may require training or counseling. Approval can take anywhere from a few days to several weeks, depending on the lender.

Alternatives To Small Business Microloans

If a microloan isn’t the right fit, several other financing options may work better depending on your timeline and needs.

Business Credit Cards

Business credit cards can be a faster alternative if you don’t qualify for a microloan or don’t want to wait for funding. Approval often takes just a few days, and some cards are available to borrowers with lower credit scores, although APRs may be higher.

Credit cards can be used for startup costs, purchases, or working capital. Interest applies only to the balance you carry, so costs depend on how you use the card..

Personal Loans For Business

If you’re a startup without an established business history, a personal loan may be an option, especially if you have strong personal credit. These loans are based on your personal income and credit profile rather than business performance.

Borrowers with good credit may qualify for lower rates and longer terms, while those with weaker credit can still qualify at higher rates.

Invoice Financing

Invoice financing helps businesses cover cash flow gaps caused by unpaid invoices. Instead of waiting for customers to pay, you use outstanding invoices to access funds.

There are two main types:

Invoice factoring: The lender advances a portion of the invoice and collects payment directly from your customer.
Invoice discounting: You receive an advance and repay the lender after your customer pays.

The Bottom Line On Microloans For Small Business

Microloans can be a helpful funding option for small businesses that don’t qualify for traditional financing. They’re best suited for modest funding needs and early-stage expenses.

As with any loan, it’s important to understand the costs and compare your options to make sure the financing makes sense for your business.

Bio
LinkedIn
Latest Posts

Erica Seppala

Editor & Senior Staff Writer at Merchant Maverick

Erica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.

View Erica Seppala's professional experience on LinkedIn.