SBA Microloan Program
The Microloan program provides loans of up to $50,000 to small businesses and certain nonprofit childcare centers through SBA-approved intermediaries, which are nonprofit, quasi-governmental or tribal lenders that also provide business training and technical assistance. SBA lends to the intermediaries and funds technical assistance grants; the intermediaries make the credit decisions and set loan terms. The average microloan is about $13,000.
- Last reviewed
Key terms
- Maximum borrower interest rate
- Intermediary's rate on its SBA loan plus 7.75 percentage points for loans over $10,000, or plus 8.5 percentage points for loans of $10,000 or less
- ecfr.gov
- Packaging fee
- Up to 3% of the microloan for terms of one year or more, 2% for terms under one year, plus documented out-of-pocket closing costs
- legacy.sba.gov
- SBA loan to intermediary
- Up to $750,000 in the first year and $3,000,000 in any later year, with total obligations to SBA of no more than $7 million
- ecfr.gov
- Intermediary interest rate
- 5-year Treasury rate, rounded to the nearest 1/8%, less 1.25%; less 2% for Specialized Intermediaries averaging $10,000 or less per loan
- ecfr.gov
- Intermediary loan term
- Repaid within 10 years; no payments in the first year, with interest accruing from disbursement; SBA charges intermediaries no fees
- ecfr.gov
- Technical assistance grant
- Base grant of up to 25% of the intermediary's outstanding SBA loan balance (up to 30% in fully funded years), with a 25% non-federal match
- ecfr.gov
Borrower eligibility
- Borrowers must be small businesses eligible for SBA financial assistance, or nonprofit childcare businesses.ecfr.gov
- The business must be an operating, for-profit business located in the United States, small under SBA size standards, and not an ineligible business type.sba.gov
- For loans beginning on or after April 1, 2026, the business must be 100% owned by U.S. Citizens or U.S. Nationals whose Principal Residence is in the United States, its territories or possessions, and all entity owners must be organized there. Lawful Permanent Residents and other Ineligible Persons may not be owners.legacy.sba.gov
- Proceeds may be used only for working capital and to acquire materials, supplies, furniture, fixtures and equipment.ecfr.gov
- Microloan proceeds cannot be used to pay existing debts or to purchase real estate.sba.gov
- A microloan over $20,000 requires the borrower to show it cannot obtain credit elsewhere at comparable interest rates and has good prospects for success.ecfr.gov
- Microloans may not go to businesses with an Associate who is currently incarcerated, or to childcare businesses with an Associate on probation or parole for an offense against children.ecfr.gov
- The borrower must be located in the intermediary's approved service area.legacy.sba.gov
Lender requirements
What a lender must be or do to make these loans.
- Intermediaries must be a private nonprofit community development corporation or similar entity, a consortium of them, a quasi-governmental economic development entity (not a state, county or municipal government or its agency), or an agency of or nonprofit established by a Native American Tribal Government.ecfr.gov
- An intermediary must have made and serviced short-term fixed rate loans of not more than $50,000 to new or growing small businesses for at least one year, and have at least one year of experience providing technical assistance to its borrowers.ecfr.gov
- An intermediary may operate in only one state unless SBA determines that operating across state lines is in the best interest of the small business community.ecfr.gov
- The intermediary must contribute non-federal funds equal to 15% of any loan it receives from SBA, and the contribution may not be borrowed.ecfr.gov
- SBA loan proceeds, the intermediary's contribution and microborrower repayments must be deposited in a Microloan Revolving Fund, from which the intermediary may withdraw only for the Loan Loss Reserve Fund, new microloans and payments to SBA.ecfr.gov
- The intermediary must keep a Loan Loss Reserve Fund equal to 15% of its outstanding microloan portfolio; after five years in the program SBA may reduce this to its actual average loss rate, but not below 10%.ecfr.gov
- The intermediary pledges SBA a first lien on the Microloan Revolving Fund, the Loan Loss Reserve Fund and all microloan notes receivable.ecfr.gov
- Intermediaries must close and fund at least ten microloans each federal fiscal year to stay eligible for new grant funding, unless SBA accepts a corrective action plan.ecfr.gov
- Intermediaries must provide technical assistance to their microborrowers and may use SBA grant funds for technical assistance only to individuals or businesses owned by U.S. Citizens or U.S. Nationals.legacy.sba.gov
- Intermediaries must document 100% of business owners' citizenship at application and record in each loan file that no owner is an Ineligible Person.legacy.sba.gov
- All microloans made during a fiscal year must be entered in the Microloan Program Electronic Reporting System (MPERS) within 7 days after the fiscal year ends; loans more than 120 days delinquent must be charged off in MPERS.legacy.sba.gov
Underwriting requirements
What the credit file has to show.
- SBA does not review microloans for creditworthiness; the intermediary makes all credit decisions and sets the terms.ecfr.gov
- Underwriting, including any collateral or borrower equity requirement, is set by the intermediary using prudent lending practices; SBA urges intermediaries to temper collateral requirements with strong technical assistance.legacy.sba.gov
- For loans over $20,000 the intermediary must document in the file the factors showing credit is not available elsewhere at comparable rates, such as a longer maturity need, collateral that does not meet non-federal lenders' requirements, or lenders not serving new businesses or the industry.legacy.sba.gov
- Microloans may not be revolving lines of credit, and neither the intermediary nor its Associates may hold an equity interest in a business it finances.legacy.sba.gov
Required documents
Governing documents
The rules a file is held to, with the version in force.
- Rule13 CFR Part 120, Subpart G, Microloan Programecfr.gov
- SOPSOP 52 00 B, Microloan ProgramVersion BEffective Jul 1, 2018legacy.sba.gov
- Procedural noticeProcedural Notice 5000-877356, Updated SOP 52 00 B Microloan Program Citizenship RequirementsEffective Apr 1, 2026legacy.sba.gov
- Policy noticePolicy Notice 5000-877232, Update to SOP 52 00 B Microloan Program Citizenship RequirementsEffective Apr 1, 2026legacy.sba.gov
What changed
Published changes to this program, newest first.
- Procedural notice
SOP 52 00 B amended for citizenship requirements (Procedural Notice 5000-877356)
SBA incorporated its new citizenship policy into SOP 52 00 B. For loans beginning on or after April 1, 2026, intermediaries may make microloans only to businesses 100% owned by U.S. Citizens or U.S. Nationals with their Principal Residence in the United States, its territories or possessions, and Lawful Permanent Residents, visa holders, DACA recipients and other listed Ineligible Persons may not be owners. SBA-funded technical assistance is limited to individuals and businesses owned by U.S. Citizens or U.S. Nationals and must go only to current or eligible prospective microborrowers.
What to do: Collect and document citizenship and principal residence for 100% of owners at application, record in each loan file that no owner is an Ineligible Person, and restrict grant-funded technical assistance to eligible clients.
Effective Apr 1, 2026Read the source - Policy notice
Microloan citizenship policy (Policy Notice 5000-877232)
SBA announced that, effective April 1, 2026, 100% of all direct and indirect owners of a microloan applicant must be U.S. Citizens or U.S. Nationals.
What to do: Stop approving microloans to businesses with any owner who is not a U.S. Citizen or U.S. National from April 1, 2026, and update intake forms and procedures.
Effective Apr 1, 2026Read the source
How to participate
An organization that wants to become an intermediary contacts its SBA District Office and applies through the Microloan Intermediary Application System in SBA's Capital Access Login System, or on paper. The application includes a narrative on past and planned lending and technical assistance, proof of nonprofit status, governing documents, organizational charts, loan policies, and SBA Forms 1081 and 1711 for key people. SBA evaluates eligibility and qualifications and gives priority to organizations that make very small loans. Borrowers apply directly to an intermediary listed on SBA's microlender list.
Last reviewed Nov 13, 2026. A summary of official sources, linked beside each fact, kept current by Kita each week. Program rules change: confirm against the current source before you rely on a figure. Not legal advice. Spotted something out of date? Email hello@kita.ai.
Run SBA Microloan on Kita.
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Tax returns, bank statements and financials, as PDFs, scans or photos.
Period over period, with debt service coverage computed from the spread.
Tests the file against SBA Microloan requirements and flags what is missing before it reaches review.
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