# How does the SBA Microloan program work?

**Short answer:** SBA lends to nonprofit community intermediaries, and they lend up to $50,000 to small businesses. The intermediary makes the credit decision and sets the terms. SBA does not review microloans for creditworthiness (13 CFR § 120.707(a)).

Canonical page: https://www.sbaexpress.loans/answers/sba-microloan-how-it-works/
Last checked: 2026-11-08

SBA does not make microloans to you directly. It lends to organizations called Intermediaries, and they make the loans (13 CFR § 120.700).

## Who the intermediaries are

An Intermediary can be one of four things (13 CFR § 120.701):

- A private nonprofit community development corporation or similar entity.
- A consortium of those nonprofits.
- A quasi-governmental economic development entity.
- An agency or nonprofit of a Native American tribal government.

It must make and service microloans and give borrowers marketing, management and technical assistance.

## Loan features

- Amount: up to $50,000. SBA says the average is about $13,000 (sba.gov/loans/microloans, read November 8, 2026).
- Term: up to 7 years.
- Rate: fixed and capped by rule (13 CFR §§ 120.701, 120.707).
- Uses: working capital and the purchase of materials, supplies, furniture, fixtures and equipment.

## Who decides

SBA-approved lenders make all credit decisions and set all terms, SBA says. SBA does not review microloans for creditworthiness (13 CFR § 120.707(a)).

## How intermediaries are funded

SBA lends money to the Intermediary, which adds 15% from non-federal sources (13 CFR § 120.708). Those funds and borrower repayments go into a Microloan Revolving Fund (13 CFR § 120.709). SBA grants can pay for technical assistance (13 CFR § 120.712).

## How this differs from 7(a)

In a 7(a) loan, a lender makes the loan and SBA guarantees part of it. In a microloan, the Intermediary is your lender. SBA's relationship is with the Intermediary, not with you.

## Sources

- [13 CFR § 120.700](https://www.ecfr.gov/current/title-13/section-120.700)
- [13 CFR § 120.701](https://www.ecfr.gov/current/title-13/section-120.701)
- [13 CFR § 120.707](https://www.ecfr.gov/current/title-13/section-120.707)
- [13 CFR § 120.708](https://www.ecfr.gov/current/title-13/section-120.708)
- [13 CFR § 120.709](https://www.ecfr.gov/current/title-13/section-120.709)
- [13 CFR § 120.712](https://www.ecfr.gov/current/title-13/section-120.712)
- [sba.gov/loans/microloans (read November 8, 2026)](https://www.sba.gov/loans/microloans/)