What is a Microloan? Microlenders in 2022

Microloans are small loans for businesses. The available amount for this loan type usually goes up to $50,000, though some lenders may also consider somewhat higher amounts as "micro." These small loans usually have short repayment terms and may have relatively low or high rates, depending on the situation.

Microloans can be a helpful option for startups, businesses facing challenges with access to credit or those that don’t need a larger loan. This loan product can be used to pay for anything a business needs, from new equipment to operating expenses.

How does microlending work?

Microlending works in the same way as traditional term lending. A microloan provides a lump sum that the borrower pays back with interest via regular payments over a set period of time; the main difference is that the loan amount is usually smaller. Microloans are often paid back over three to six years, though the term can vary depending on the lender.

You can find microloans from a range of institutions, including the Small Business Administration (SBA), the U.S. Department of Agriculture (USDA), mission driven organizations, online and alternative lenders and peer-to-peer funders.

SBA microloans are funded through a network of nonprofit, community-based organizations. They are meant to provide funding to women, low-income, veteran and minority entrepreneurs, as well as business owners who aren’t able to readily access capital in other ways. USDA microloans — also called FSA microloans, after the Farm Service Agency that developed them — are meant to serve the unique needs of agricultural operators, particularly young farmers, beginning farms or nontraditional agriculturalists. Microloans from other sources have a variety of purposes, from helping underserved communities to making a profit for the lender.

Microloans for small businesses: Terms and features

Microloans are typically characterized by their small loan amounts and short terms. But while some lenders like the SBA and USDA will offer relatively low rates, other microlenders will set higher rates than traditional loans. The table below presents some general features of microloans, though specific terms and rates may vary depending on the borrower and lender.

Average terms
AmountUp to $50,000
Interest ratesVaries, typically ranging from 2.25% to 18%
Term lengthUsually at or under 10 years (term varies by lender; some USDA microloans extend up to 25 years).

Microloan programs

A wide range of institutions may offer microloans, including government agencies, peer-to-peer lenders and community-based organizations.

SBA microlenders

Amount: Up to $50,000

Interest rate: 8% to 13% (as of Feb. 10, 2022)

Terms: Up to 6 years

Availability: Nationwide (SBA-authorized lender determined by borrower’s location)

The SBA microloan program provides short-term loans of up to $50,000 to small businesses that are not being well-served by traditional financial institutions or other lenders — particularly women, low income, veteran and minority entrepreneurs. It’s designed to reduce risk and make it easier for businesses to access capital that can help them grow. The program is administered by a network of community-based organizations across the nation — you can search for lenders near you on the SBA website.

USDA FSA Microloans

Amount: Up to $50,000

Interest rate: 2.250% to 2.875% (as of Feb. 1, 2022)

Terms: Up to 1, 7 or 25 years, depending on type

Availability: Nationwide

The USDA microloan program is meant to help farmers gain access to capital for improving farms and farming operations. Funds can be used for a variety of purposes, from making a down payment on a farm to marketing costs. To be eligible, applicants must be unable to obtain sufficient credit elsewhere.

Accion Opportunity Fund

Amount: $5,000 to $100,000

Interest rate: As low as 5.99%

Terms: Not listed

Availability: Not listed

Accion’s small business lending program, called Accion Opportunity Fund, provides funding up to $100,000 to diverse business owners — along with a starting rate of 5.99%. In addition, it supports borrowers with a range of educational resources, coaching and English and Spanish peer networks. This nonprofit lender also offers funding to ITIN-only borrowers, opening up financial opportunities to many who aren’t able to secure funding elsewhere.

Grameen America

Amount: Up to $2,000

Interest rate: 15% to 18%

Terms: 6 months

Availability: 24 branches in 10 U.S. states

Grameen America offers microloans, financial education and support networks targeted to U.S. women, particularly those who live below the federal poverty line. Women participate in training to learn about loans, saving and credit and receive a microloan to build a business. They will then attend weekly meetings to make repayments, continue their education and receive further support. The program also helps borrowers open free savings accounts at traditional banks and make weekly deposits.

Kiva U.S.

Amount: Up to $15,000

Interest rate: 0%

Terms: Up to 36 months

Availability: Nationwide

As a nonprofit dedicated to expanding access to capital, Kiva uses a crowdfunding model to offer small loans with unheard-of 0% interest. Potential borrowers must prove their creditworthiness by getting friends or family to lend to them, after which they can appeal to the public with a crowdfunding campaign. The purposes for Kiva loans have run the gamut, from paying for a stall at an artisan fair to building a walk-in refrigerator to use on an organic farm.


Amount: Not listed

Interest rate: Not listed

Terms: Not listed

Availability: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Missouri, Mississippi, New York, New Mexico, Oklahoma, South Carolina, Tennessee and Texas

LiftFund is a private, independent nonprofit Community Development Financial Intuition (CDFI) and Community Development Corporation (CDC) (the latter of which is defined as an organization whose purpose is to uplift and revitalize its community). The microloan program works "to level the financial playing field for the underestimated entrepreneur." LiftFund is an administrator of SBA microloans, as well as other types of loans.

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