A microloan is exactly what it sounds like: a small business loan, typically up to $50,000, designed for businesses that need modest capital and may not qualify for a larger bank loan.
How microloans work
Microloans usually come from nonprofit and community funders, including SBA microloan intermediaries, rather than big banks. Amounts are small, terms run a few years, and the application often weighs your plan and character alongside the numbers.
Because the dollar amounts are low, they are a practical fit for early-stage needs like inventory, equipment, supplies, or working capital.
Who microloans fit best
They tend to suit owners who are harder to fund elsewhere:
- Startups and very new businesses
- Owners with limited or building credit
- Businesses needing under $50,000
- Underserved and community-focused entrepreneurs
The trade-offs
Microloans often come with helpful support, like mentoring or business coaching, and reasonable terms. The downsides are the small ceiling and, sometimes, a slower, more paperwork-heavy process than online funding.
If you need a larger amount or money quickly, a microloan may be too small or too slow, and a revenue-based option could fit better.
How to decide between options
A microloan is one tool among many. Depending on your revenue, speed needs, and amount, a line of credit, equipment financing, or revenue-based funding might serve you better.
The Broker Shop helps you weigh a microloan against faster alternatives and lets the right the right funders for your file. Checking your options is free and won't affect your credit score.
See what you qualify for
One 2-minute application is matched to the funders whose guidelines you meet. It's free, and checking your options won't affect your credit score.
See What I Qualify For →The bottom line: A microloan is small, startup-friendly funding usually under $50,000, ideal for modest early needs, weigh it against faster options to find the best fit.