What is a Microloan and Where Can You Get One for Your Small Business?

Microloans are small loans which are issued to businesses by individuals opposed to credit unions or banks. The concept of microcredit originated in the developing world, as a means of helping people in smaller economics have the ability to launch their own business. Microlending subsequently took off around the world, and today, small business microloans are an effective way to lend entrepreneurs and small businesses in the U.S. with the funds they need to start and develop their business.

General Terms of Microloans

The maximum amount a microloan will typically lend is up to $35,000. However, in some instances, lenders will lend up to $50,000. The average amount microloans lend is around $10,000.  Businesses can use microloans to borrow as little as $500, making these types of loans a good option for small businesses needing to get their hands on smaller funds.

One of the key attractions of a microloan is that they are generally easier to qualify for than a traditional small business loan. Specific eligibility criteria vary from lender to lender, and can be influenced by the type of industry the business operates in.

Rather than being solely about credit scores, microloans work more closely with the small business owner applying for the loan, to find out about the business and its goals and objectives. The lender uses such information to determine whether they will lend the applicant the funds.

The maximum repayment terms for small business microloans is generally six years, giving small businesses sufficient time to pay back the loan whilst they get their business up and running and make it profitable.

Why Small Businesses Might Need a Microloan

This type of loan is usually borrowed by a startup to help them fund the items required to get the venture up and running, such as equipment, the lease of an office, or employees’ salaries.

Microloans are also sometimes used to provide small businesses with working capital to enable them to manage cash flow more proficiently, such as to cover outgoings as they wait for invoices to be paid, to develop a comprehensive marketing program, or to stock up on inventory when it is at a reduced price or in time for a busy holiday season.

How Your Small Business Can Get a Microloan

Before applying for a microloan, you should carry out some research and shop around to see the different criteria of the different microlenders to help determine which lender might be most suitable for your specific requirements and objectives. Check that your small business is likely to be eligible for the microloan. Look for certified and reputable lenders that come with praiseworthy testimonials from other small business owners.

It would help if you draw up a comprehensive business plan , which defines how you plan to use the loan. Once you believe you meet the criteria of the loan, you should make the application, which can typically be done online. Answer the questions as accurately and honestly as possible. The lender will then decide whether to proceed and lend you the funds you are looking for.

To give you a helping hand in your quest to find a reputable microloan lender to provide the finance you need for your small business, here are three credible microloan lenders in the U.S.


Microloan.org is dedicated to enriching communities by providing small businesses with the funds they need to create a high-quality business development, which creates sustaining jobs for the community. If you are looking for a strategic partner to help you find the best borrowing option to help your business grow, Microloan.org would be a good place to start.


Kiva is an international non-profit based in San Francisco. Kiva offers microloans which are crowdfunded, where backers can donate as little as $25 to borrowers. Kiva’s microloans are typically used to start or grow a small business. You would repay the lenders the money back through Kiva.

Accion USA

Accion USA is a non-profit organization that provides microloans of up to $50,000 to low and moderate-income entrepreneurs. Accion looks at a business owner’s individual circumstances and strengths to determine whether to provide them with a microloan.

Photo via Shutterstock

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