Best Business Microloans

If your business needs a micro-infusion of capital and you don’t qualify for bank financing, you may find success with microlending.

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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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By Jill A. Chafin | Edited by Dawn Daniels | May 29, 2024

How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LenderBest for…Max. loan amountMin. interest rateTime in businessMin. credit score
SBA loans$50,0008.00%*Not specifiedGenerally 620Get business loan offers
Farm loans$50,0005.25%Varies based on loan type Not requiredGet business loan offers
Interest-free loans$15,0000.00%Not requiredNot requiredGet business loan offers
Upstart logoPersonal loans for business$50,0007.80%Must meet personal employment requirements300Get business loan offers
Minority entrepreneurs$250,0008.49%12 monthsNot disclosedGet business loan offers
Women-owned businesses$2,50015.00%Not requiredNot requiredGet business loan offers
Startups$500,0009.90%Not disclosedNot disclosedGet business loan offers
Bad credit$50,0007.50%12 months575Get business loan offers

* Interest rates vary depending on the intermediary lender, with maximum rates set by the SBA.

Learn more about how we chose our picks

Microlenders at a glance

SBA Microloan: Best for SBA loan

Up to $50,000

8.00% to 13.00%*

Up to 72 months

* Interest rates vary depending on the intermediary lender, with maximum rates set by the SBA.
Pros
  • Typically less strict eligibility requirements than other SBA loans
  • Available in all states
  • Capped interest rates
Cons
  • Collateral and/or a personal guarantee may be required
  • Can’t use funds to pay existing debt or purchase real estate
  • Slow approval process

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the SBA’s criteria of:

  • Min. credit score: Generally 620
  • Min. time in business: Not specified
  • Min. annual revenue: Not specified

Farm Service Agency: Best for farm loans

Up to $50,000

  • Operating loan: 5.25%
  • Ownership loan: 5.25%

  • Operating loan: 84 months
  • Ownership loan: 300 months

Pros
  • No appraisal needed for ownership loans
  • No minimum loan amount
  • Low interest rates
Cons
  • Previous farm management experience within the last ten years required for a farm ownership loan
  • Can’t be delinquent on any type of federal debt (other than IRS tax debt)

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the Farm Service Agency’s criteria of:

  • Min. credit score: Not required
  • Min. time in business:
    • Operating loan: Not specified
    • Ownership loan: 12 to 36 months farm management experience
  • Min. annual revenue: Not required

Kiva: Best for interest-free loan

Up to $15,000

0.00%

Up to 36 months

Pros
  • 0% interest during the entire loan term
  • Funds can cover a wide range of business expenses
  • Focuses on helping underserved business owners succeed
Cons
  • Long approval and funding timeline
  • Doesn’t fund all types of businesses
  • Must demonstrate a strong social following to qualify
  • Smaller loan maximum compared to other microlenders

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the Kiva’s criteria of:

  • Min. credit score: Not required
  • Min. time in business: Not required
  • Min. annual revenue: Not required

Upstart: Best for personal loans for business

$1,000 to $50,000

7.80%

36 to 60 months

Pros
  • 24-hour funding available
  • Low credit borrowers may qualify
  • No prepayment fees
Cons
  • Doesn’t offer specific business loans
  • Charges an origination fee
  • Limited loan term options
  • Minimum loan amounts vary by state

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the Upstart’s criteria of:

  • Min. credit score: 300
  • Employment requirements:
      • Have a full-time job or an offer to start in six months

    – OR –

    • Have a part-time job or a different source of regular income
  • Min. annual income: $12,000

Accion Opportunity Fund: Best for minority entrepreneurs

$5,000 to $250,000

8.49%

12 to 60 months

Pros
  • Lends primarily to women, people of color and low-income entrepreneurs
  • Offers business coaching and mentorship
  • Flexible repayment terms
  • High borrowing amounts compared to other microlenders
Cons
  • Not available in Mont., N.D., S.D., Tenn., or Vt.
  • Only two types of loan products
  • Doesn’t list minimum credit score requirements

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the Accion Opportunity Fund’s criteria of:

  • Min. credit score: Not disclosed
  • Min. time in business: 12 months
  • Min. annual revenue: $50,000

Grameen America: Best for women-owned businesses

$500 to $2,500 for first-time loan

15.00% to 18.00%

6 months

Pros
  • Microloans for women
  • Doesn’t require a minimum credit score, collateral or business income
  • Provides business training, coaching and resources to help your business succeed
Cons
  • Must live within 15 miles of a Grameen America branch
  • Small loan amounts compared to other microlenders
  • Must form a group of four female entrepreneurs in your area and attend weekly meetings to qualify

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the Grameen America’s criteria of:

  • Min. credit score: Not required
  • Min. time in business: Not required
  • Min. annual revenue: Not required

LiftFund: Best for startups

$500 to $500,000

9.90%

5 to 120 months

Pros
  • Focuses on supporting startups and diverse business owners
  • Offers consultation services, networking events and entrepreneurship programs
  • Helps build business credit
Cons
  • Only available in 14 states: Ark., Fla., Ga., Ky., La., Miss., Mo., N.Y., N.M., Okla., S.C. and Tenn.
  • Lack of transparency on eligibility requirements
  • Collateral may be required

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the LiftFund’s criteria of:

  • Min. credit score: Not disclosed
  • Min. time in business: Not disclosed
  • Min. annual revenue: Not disclosed

Ascendus: Best for bad credit

$500 to $50,000

7.50%

Not disclosed

Pros
  • Low minimum score requirement
  • Considers other factors beyond credit score when determining eligibility
  • Allows cosigners
Cons
  • Loans not available in Vt. or Calif.
  • Doesn’t lend to all types of industries
  • Repayment terms not disclosed

Why we picked it

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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.

How to qualify

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In order to qualify, you’ll need to meet the Ascendus’s criteria of:

  • Min. credit score: 575
  • Min. time in business: 12 months
  • Min. annual revenue: Not disclosed

What is a microloan?

A microloan is a small loan, usually under $50,000, taken out by a business. They’re typically targeted toward startups, low-income borrowers or those with little or damaged credit. It’s also a popular option for entrepreneurs from underrepresented communities, as well as anyone unable to qualify for conventional business loans.

Common microloan providers include nonprofit organizations and government lenders. Some lenders may have restrictions on eligibility and limitations on how funds are spent.

That said, microloans often have flexible terms, lower interest ratess and fewer fees than traditional business loans.

How microlending works

A microloan provides a lump sum for business purposes — similar to a term loan. The specific rates and terms vary, but an SBA microloan has a maximum repayment term of six years. The USDA microloan, in comparison, has a 25-year term.

While microloans are available to any business that meets the lender’s eligibility requirements, certain entrepreneurs may be better suited for microlending as their primary form of business financing. For example, microlending tends to be a top choice for new businesses looking to secure startup financing.

Microloan programs may also offer additional services not traditionally offered at a bank or credit union, such as entrepreneurship mentoring or business classes. In fact, your lender may even require you to attend training sessions as part of your loan agreement.

Pros and cons of microloans

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.

ProsCons
 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

How to get a microloan

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:

1. Review eligibility criteria

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.

2. Gather essential financial documents

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:

3. Be prepared to provide collateral or a personal guarantee

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.

4. Compare options and rates

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.

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Alternatives to microlending

After weighing the pros and cons and the eligibility requirements of microfinancing, you might decide to explore different types of small business loans.

  • Business line of credit: You can access revolving funds to help pay for a variety of business purchases with a line of credit, typically only paying interest on the withdrawn amounts.
  • Working capital loan: A working capital loan for payroll, inventory, rent and other day-to-day expenses.
  • Equipment financing: This loan can help your business purchase or upgrade equipment, including computers, vehicles and restaurant appliances. Since the equipment typically acts as collateral to secure the debt, many lenders don’t require a lengthy business history or down payments.
  • Term loan: You receive a lump sum of cash and make scheduled payments with accruing interest. Funds can be used for a variety of business needs.
  • Commercial real estate loan: If you’re considering purchasing real estate to expand your business, a commercial real estate loan can help.
  • SBA 7(a) loan: Backed by the U.S. Small Business Administration, the SBA 7(a) loan offers up to $5,000,000 with affordable rates and terms up to 25 years. Funds can be used for general business expenses, like hiring staff, payroll, inventory and marketing.

How we chose the best microloans

We reviewed more than 20 lenders to determine the overall best eight microloans. To make our list, lenders must meet the following criteria:

  • Minimum time in business: Options for startups or those who have been in operation for 12 months or less.
  • Minimum credit score: We prioritize lenders willing to look beyond credit scores, such as taking a big-picture approach to determining a company’s creditworthiness. The options on this list accept credit scores of 620 or less.
  • Rates and terms: We focus on microlenders offering competitive fixed rates, no hidden fees and flexible repayment options.
  • Loan amounts: A range of funding amounts for all types of businesses, with maximums from $2,500 to $500,000.
  • Additional resources: Since microloans are mostly geared toward startups and low-income borrowers, we look for lenders offering business coaching, networking opportunities and free educational classes to help set new entrepreneurs up for success.

Frequently asked questions

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.