February 15, 2019 | By Mason Roberts

micro loan small business startup projectFinding the appropriate funding for your small startup business can be difficult. It can be a bit challenging to find the funding you need with no business history to back you up. A small startup is said to cost at least $30,000 more or less, to get off the ground, depending the details of your business. With this in mind, you may already realize you have to find alternative ways to get the capital you so desperately need.

What Is A Microloan?

Microloans tend to be geared towards the needs of a small startup business. They tend to favor these types of businesses the most because they offer a small amount of capital, usually under $50,000, which gives businesses the little push they may need to get to their grand opening and beyond. This loan is considered an alternative loan, or non-traditional loan, much different from a traditional bank loan. The funding provided by a microloan is typically given from a non-profit micro-finance institution, handing out smaller amounts of money.

Can You Apply for A Microloan?

The good news is everyone can apply for a microloan. Though it's an application that is accessible to all consumers, this type of loan tends to favor to those who would not even be eligible to apply for a traditional bank loan.


Many times, small business owners applying for a microloan may have a low revenue rate, bad credit, or may even just be living in a less developed neighborhood. There are also many micro-financing institutions which offer loans to specific groups of people, such as a women and veterans who own their own businesses. It's a fairly accessible loan option for those small business owners who's credit or lack of funding might be holding them back, especially those who need a little help in growing their new startup.

Where Can You Get A Microloan?

When looking to receive a microloan, it is important to research your alternatives to find the most suitable option for your small business. There are many different lenders all over the country that can help your business lock down a microloan. It is important to do your research when it comes to the process, fees, and interest rates for each option to get the most bang for your buck. Microloan lenders work hard to come up with qualifications for small startup business owners, and offer loans with flexible terms and lower interest rates than traditional lenders typically offer.

Best Ways To Use A Microloan For Your Business

The possibilities of how to use your microloan are seemingly endless. If you're a startup business, you can use the money to grow your business in whatever way necessary. As a small business owner, especially if you're one who owns a new startup, you should have no trouble in finding a way to recoup the capital you have borrowed with the money you make through investing in yourself early. It's why this financial tool is such a viable option when you're just starting out.


Microloans are also used for things such as: purchasing inventory, upgrading furniture, buying machinery or neccessary electronics, etc.


Say you had just opened your dream restaurant. You could use a microloan to purchase kitchen equipment, or even use it to complete your aesthetic in the dining room, maybe even both. Or, say you are an existing small business owner; maybe you can use the money to further your success by improving the quality of your product or service, or hiring more staff to complete your orders. You could use this money to get the inventory you need to meet popular demand or make any other number of changes for the better.


Whatever stage your small business is in, startup or existing, getting a microloan could help immensely. It can even assist in making the one little change your business needed to never struggle financially again.


This type of loan has made many businesses establish a sturdy ground. Only you know what your business needs most to succeed, and only microloans provide the flexibility you need to get it all done.

Your Small Business May Need A Microloan

micro loan small business bank hand getting money

Many things come into play when a traditional bank loan is being considered. Even if your small business is booming and you have no apparent problems, you can still get denied for a traditional bank loan. And once denied, small business owners may not know where to turn. There are a couple of reasons a bank might not think your business is a good candidate for a traditional bank loan. Here are the top reasons a small business might get denied by the banks, and why you should be considering a microloan instead.

  • Poor credit score: If you are a small business owner with little to no credit, the chances of you receiving the loan you need from a bank are slim. This is an important qualification for traditional lenders, and it is a huge determining factor in whether or not small business owners like you are denied or approved. If you are a startup business with pretty much no credit history, it's very unlikely that you will receive a traditional loan. In either case, it would be a smart idea to turn to a microloan instead, because this is not a problem when it comes to qualifying for such a loan.
  • Small amount of collateral: In receiving a traditional bank loan, collateral is important. Many times, business owners offer up their most valuable items in exchange for their capital. If you do not have something of extreme value to offer to lenders, you can be denied. If this is the case for you, a microloan is a good alternative. With this loan, you are not entitled to offer a crazy valuable piece of collateral, like a traditional bank
  • In need a small amount of money: If you are a small business owner, you probably don’t need a large amount of money to grow your success. Unfortunately, traditional bank loans do not favor to this type of need. Your chances of being denied or waitlisted are fairly high when applying for this type of loan if you don't want to borrow too much. Often times, the minimum amount of money lenders will offer is in the hundred-thousand range, which may be a higher amount than you were initially thinking. A microloan will solve this problem. You can receive a fairly small portion of capital upon request, a traditional bank loan being a very different case.

A Microloan May Be Your Best Option

Microloans have grown to be a successful financial solution for many small business owners. They can help your business grow in revenue and success. There is a vast array of business types taking advantage of and benefiting from these microloan options. Why not see if yours could be one of them? Small startup business owners should consider this type of loan for the support they need with less risk in receiving their money.