Microloan Program

To assist entrepreneurs, business owners, and other individuals possessing the capability to operate successful business concerns and to assist small business concerns in those areas suffering from a lack of credit due to economic downturns. Under the Program, the Small Business Administration (SBA) makes loans or provide guaranties to private, non-profit, and quasi-governmental organizations (intermediary lenders) that utilizes the loan funds to make short-term, fixed interest rate microloans in amounts up to $50,000 to start-up, newly established, and growing small business concerns.

The Microloan Program is to be used exclusively for working capital, inventory, supplies, furniture, fixtures, machinery, and/or equipment. In addition, the SBA will make grants to participating intermediary lenders to provide marketing, management, and technical assistance to prospective borrowers and borrowers receiving microloans. Under the Program, SBA will also provide training for intermediary lenders participating in the Microloan Program.

An entity may apply to SBA to become an Intermediary lender. A small business may apply to an intermediary for a microloan. Small business seeking funding must: (1) Meet SBA size standard requirements as defined in Chapter 13 of the U.S. Code of Federal Regulations; (2) meet type of business requirements as published by SBA; and (3) meet lending requirements of local intermediary lenders. This program is covered under 2 CFR 200, Subpart E - Cost Principles.

Intermediaries must match 15% of the amount of all loans from SBA under the Microloan Program. Intermediaries must also match 25% of the amount of all grants under the Microloan Program.