What is SBA Microloan?
SBA Microloan is a program that offers loans up to $50,000 for new or early stage businesses seeking funds to grow or startup costs. It's good for someone who hasn't been able to get a loan through a traditional bank but still has some strength in terms of credit and holds the capacity to repay the loan. The funds can be used for certain business purposes such as, startup costs, working capital, tenant improvements, equipment or machinery, and so on. It's not suitable for someone who wants to pay for existing business debt or to invest on real estate.
How Does SBA Microloan Work?
SBA Microloan is a government funded loan program that consists of multi-step process. You can obtain SBA Microloan from various sources but not from the SBA itself. Basically, SBA initially provides the funds at a discounted rate to intermediary provider and then they make it accessible to the small business owners or borrowers. It's a good option for those underserved entrepreneurs like women, veterans, and people with disabilities. However, one of the downsides of this loan is that it takes several weeks to process.