Microloan Program | Benefits.gov (2024)

FAQs

Who is eligible for a microloan? ›

Availability to businesses that may have difficulty qualifying for larger, more traditional loans such as those with bad credit. Open to startups or early-stage businesses. Special focus on underserved communities. Tend to offer relatively competitive rates, terms and fees.

Loan Limitations

There is no minimum loan amount. The maximum loan amount for either Microloan is $50,000. The $50,000 limit includes any possible outstanding FSA Direct Operating or Farm Ownership unpaid principal loan balances.

Another advantage of using a micro loan is that they can be easier to qualify for than traditional bank loans. This is because micro lenders typically have different underwriting standards than banks. Additionally, micro loans usually have shorter terms and lower interest rates than bank loans.

The most common reasons SBA loans are denied are poor credit, too much existing debt, or insufficient collateral. Other reasons include: Prior bankruptcy. Negative taxable income.

The SBA's turnaround time is 2 to 10 business days, but approval from your chosen lender can take 30 to 60 days. Microloans are loans for smaller amounts of $50,000 or less.

The minimum credit score required for an SBA loan depends on the type of loan. For SBA Microloans, the minimum credit score is typically between 620-640. For SBA 7(a) loans, the minimum credit score is typically 640, but borrowers may find greater success if they can boost their credit score into the 680+ range.

How Much Can You Really Borrow? Even though the USDA Guaranteed Loan has no limit on the amount you can borrow, it's highly unlikely any borrower could get a USDA Loan for more than $300,000-$400,000. Since the USDA loan is geared towards low-to-moderate income families, they have strict income limits.

The RBI defines a microfinance loan as a collateral-free loan given to a household having annual household income up to ₹3 lakh.

Loan Limits

USDA guaranteed mortgages do not have a maximum defined loan limit. As of March 2024, most of the rural areas USDA guaranteed loans cover have a standard limit of $398,600. Higher cost counties have higher limits between $431,400 and $919,800.

Pros and cons of microloans

Loan options targeted to business owners in underserved communities, such as women, minority groups, veterans and those located in low-income areas. Competitive interest rates. Lenders typically offer business training and educational resources.

What is the easiest SBA loan to get approved for? ›

SBA Express loans, part of the SBA's 7(a) loan program, offer the easiest application process and the fastest approval times among all SBA loans. These loans, with payoff periods as long as 25 years, are designed for purposes such as refinancing debt, buying equipment, or improving real estate.

Depending on your business's finances and credit score, it may be easier to get a microloan from a lender than a term loan from a major bank. Traditional term loans can be hard to qualify for without a stellar credit score, whereas the requirements for a microloan are more flexible.

SBA continues to offer other funding options for small businesses, including traditional SBA loans. In February 2024, SBA expanded the eligibility for our Hardship Accommodation Plan (HAP) for borrowers who are struggling with loan payments.

The SBA 7(a) Loan program

SBA 7(a) loans are the most popular type of SBA loan. These loans are federally guaranteed term loans with a maximum loan amount of $5 million. Business owners often use SBA 7(a) loans to finance working capital needs, buy an existing business, refinance debt, or purchase new equipment.

Eligibility Criteria

Applicants must meet the following requirements to be eligible* for the loan: Annual Household Income upto to ₹ 3 Lakh, where household shall mean an individual family unit, i.e., husband, wife, and their unmarried children.

Microloans are available through certain nonprofit, community-based organizations that are experienced in lending and business management assistance. Individual requirements will vary. To apply for a microloan, work with an SBA-approved intermediary in your area.

Depending on your business's finances and credit score, it may be easier to get a microloan from a lender than a term loan from a major bank. Traditional term loans can be hard to qualify for without a stellar credit score, whereas the requirements for a microloan are more flexible.

These loans have an advantage over other types of SBA loans because they often have less strict eligibility requirements. As a result, you may get approved for an SBA microloan even with minimal or no credit history. But a downside is that approval times generally range from one to three months.