Up to $50,000
8.00% to 13.00%*
Up to 84 months
The U.S. Small Business Administration (SBA) guarantees microloans up to $50,000 made through SBA-approved lenders. The SBA microloan program focuses on helping early-stage businesses in underserved markets, as well as nonprofit child care facilities. While eligibility requirements tend to be less strict than other providers, with some lenders not evaluating your credit score, you may need to provide collateral and a personal guarantee.
You can also explore other SBA loan options, such as the popular SBA 7(a) loan for general expenses or the SBA CDC/504 loan for larger purchases like real estate. These other loans can go as high as $5,500,000, but are typically reserved for more established businesses with credit scores of or higher.
To apply with an SBA lender, contact your local SBA district office or an SBA microlender in your area.
In order to qualify, you’ll need to meet the SBA’s criteria of:
Up to $50,000
USDA microloans are reserved for small or beginner farmers or business owners in niche sectors — such as farms selling directly to consumers or those using hydroponic or organic methods. The U.S. Department of Agriculture’s Farm Service Agency (FSA) offers operating and ownership loans up to $50,000.
To qualify, you must meet the guidelines set by the FSA. You can access the USDA microloan application online.
In order to qualify, you’ll need to meet the Farm Service Agency’s criteria of:
Up to $15,000
0.00%
Up to 36 months
Kiva is a nonprofit company offering peer-to-peer microlending, with a specialty in providing crowdfunded business loans in developing countries. U.S.-based business owners can apply for a 0.00%-interest microloan for up to $15,000 by proving their creditworthiness with contributions from family and friends.
While there are many benefits to working with Kiva, the funding process is typically more involved than other types of business financing. The online application can take between 30 and 60 minutes to complete; then you have to wait 10 to 15 days to receive a decision. From there, you have 15 days to collect contributions from your own private networks, followed by 30 days of public fundraising through Kiva’s network of lenders.
In order to qualify, you’ll need to meet the Kiva’s criteria of:
$1,000 to $50,000
7.80%
36 to 60 months
An Upstart microloan can be used for various purposes, including credit card debt, moving expenses and medical costs. However, be aware that using a personal loan for business purposes won’t help you establish business credit and you’ll be personally liable for the debt you take on. In addition, you won’t be able to claim accrued interest as a qualified business deduction like you can with a dedicated business loan.
That said, Upstart eligibility requirements are quite flexible, accepting credit scores as low as 300 with an annual income of only $12,000. If you struggle to qualify for traditional business financing, a personal loan from Upstart might be a good solution for your business.
Read our Upstart review.
In order to qualify, you’ll need to meet the Upstart’s criteria of:
– OR –
$5,000 to $250,000
8.49%
12 to 60 months
The Accion Opportunity Fund (AOF) is a nonprofit lender offering up to $250,000 for a range of diverse business owners, including minority entrepreneurs, veterans and women-owned businesses. Funding is also available to ITIN-only borrowers, making it an excellent funding option for non-U.S. citizens. In addition, AOF provides extra resources, business coaching and customer service support in English and Spanish.
While AOF doesn’t have a set minimum credit score requirement, it suggests having a personal score of at least 600 to improve your chances of approval. That said, this lender may look beyond a bad credit score if your business has been operating for several years with a solid cash flow.
In order to qualify, you’ll need to meet the Accion Opportunity Fund’s criteria of:
$500 to $2,500 for first-time loan
15.00% to 18.00%
6 months
The nonprofit organization Grameen America provides microloans to help women escape poverty through entrepreneurship. First-time borrowers can receive up to $2,500, with good-standing members eligible for larger amounts. The program includes a free savings account with a commercial bank, weekly meetings covering financial basics and support to build your business credit profile.
To get started, you must form a group of four women entrepreneurs in your community and work together to improve your individual women-owned businesses. Additionally, all participants in your group need to to live within 15 miles of a Grameen bank branch to qualify.
In order to qualify, you’ll need to meet the Grameen America’s criteria of:
$500 to $500,000
9.90%
5 to 120 months
LiftFund is a nonprofit organization offering business loans up to $500,000, which exceeds the typical microloan limit. With a focus on providing microloans for startup businesses and minority entrepreneurs, LiftFund states it works with all types of borrowers, including those with limited credit, collateral or experience. It also provides a range of services and networking opportunities to help you strengthen your business model.
Note that LiftFund doesn’t list any details about eligibility requirements, such as minimum credit score, business history or annual revenue. In addition, LiftFund’s small business loans aren’t available in every state.
In order to qualify, you’ll need to meet the LiftFund’s criteria of:
$500 to $50,000
7.50%
Not disclosed
Ascendus is a nonprofit lender providing bad credit business loans up to $50,000 for startups and business owners with a limited or spotty credit history. You only need a credit score of 575 to qualify since Ascendus looks beyond credit scores, taking into account your company’s full potential for growth. Low-credit borrowers could possibly qualify for better rates by adding a creditworthy cosigner.
In addition to microloans, Ascendus offers training and educational support for business owners, as well as childcare business loans, loans for entrepreneurs of color, a business line of credit and state-specific loan programs.
In order to qualify, you’ll need to meet the Ascendus’s criteria of:
Microloans could offer many benefits to borrowers, but they might not always be the best choice for your financing needs. Consider these points before seeking a small business microloan.
| Pros | Cons |
|---|---|
| Lenient eligibility requirements Often prioritize minority and women-owned businesses Access to small loan amounts, which can be used for a wide variety of purposes Extra business resources, such as financial coaching and classes | Short repayment terms and potentially higher interest rates Collateral and/or a personal guarantee is usually required Can’t be used for existing debt or real estate Lack of availability in some areas or eligibility based on specific demographics Might not be enough funds to help your business grow |
If you’ve decided that a microloan is the right move for your business, here are the general steps to get a microloan for your small business:
Each microlender sets its own business loan requirements to determine borrower eligibility. Plus, some microlenders only work with businesses in specific geographic areas, industries or demographics.
Although microlenders tend not to rely exclusively on your credit score when reviewing your application, it’s still worth boosting your personal credit score before applying. Having a higher score could help unlock more favorable rates and terms — potentially saving you more money in the long run.
You can monitor your score for free with LendingTree Spring. Try to pay down your debts and dispute any errors on your credit report before submitting a loan application. If the lender does consider your credit score, it’s usually in the overall context of the loan application. However, serious financial issues — such as active bankruptcy proceedings — may disqualify your business from receiving a microloan.
Organizing your financial records can help speed along the application process. If you miss anything on the loan application or forget to include pertinent information, your loan application may get denied.
Here are some common documents your lender may need to see or access when applying for a micro business loan:
A microlender may require borrowers to offer business assets as collateral to secure a microloan. Common assets can include cash, equipment or real estate. In addition, a personal guarantee may be required, meaning you’d be responsible for repaying the microloan if your business defaults.
Review each lender’s terms and conditions to pick the best option for your business. You may benefit from reading small business lender reviews in advance to ensure they align with your business’s criteria and needs.
You can also use our business loan calculator to see your borrowing potential, compare rates and get an overview of what you’ll pay in interest.
And before signing the dotted line, make sure to thoroughly read your business loan agreement. If anything seems confusing, it’s best to bring it to the lender’s attention before moving forward.
Microlenders typically like supporting new businesses that have great business ideas but can’t qualify for a traditional bank loan. Startups or business owners with little to no credit history are often eligible for microloans. Additionally, some lenders cater specifically to underrepresented entrepreneurs, such as women, minorities and veteran business owners.
Peer-to-peer lending (P2P) is a specific type of microloan available for small businesses. With a P2P microloan, you’ll receive funds issued by an individual or multiple funders instead of a bank. Typically, P2P financing is managed by a platform.
P2P investors select the companies and projects they’d like to fund. Therefore, you may generate more popularity among lenders if you have a solid business plan or an inspiring mission. Some peer-to-peer funding options include Kiva, Peerform and Prosper.
If your business takes off and you want to give back to the community, you could consider investing in microloans. Overall, this can be a great way to diversify your income while helping budding entrepreneurs materialize their dreams. If you have limited funds, Prosper allows you to invest with just $25.
In general, microlending investing can produce decent rates of return. According to Prosper, the average historical return for microlending investing is 5.5%.
However, microlending carries certain risks, such as losing your initial funds if the borrower defaults on their loan. In addition, microlending platforms may charge investors extra fees, such as an annual loan servicing fee.
