In 1992, the United States Small Business Administration (SBA) launched a micro loan program to help small business secure the financing they couldn't get from traditional lenders like banks.
Under the micro loan program, the SBA doesn't actually lend money directly to small businesses. Instead, it works with 170 non-profit lenders around the country called intermediaries. The intermediaries receive money from the SBA, which they use to make small loans at relatively low interest rates.
A new business can secure a micro loan for as little as $100 and as high as $35,000. The SBA says the average loan size is $13,000. Interest rates vary between 8 percent and 13 percent depending on the size and duration of the loan. The maximum length of an SBA micro loan is six years [source: U.S. Small Business Administration].
To apply for a micro loan, you'll need to be within the local lending area of one of the 170 non-profit intermediaries. Most microlenders also require borrowers to complete business training and business planning seminars before receiving the loan.
Some microlenders specialize in lending to businesses owned by women, minorities, the disabled or other economically marginalized groups [source: Consumer Reports].