Applying for a microloan for your startup


Written by:

If you’re just starting up your company, you may need a little extra financial help to get your business up and running. You might not need a big loan, like $100,000 or more. Maybe you just need $10,000 to buy a piece of equipment. Even so, you may find that traditional banks won’t lend such a small amount to a startup that doesn’t have an established credit history.

This is where microloans for startups can be helpful. Unlike sole proprietor loans, which are typically for higher amounts (as high as $5 million), microloans are for smaller amounts, even as low as $500. Startups that don’t have an established credit history may be eligible anyway. 


SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.





Related: Soft vs. hard credit inquiry: What you need to know

Microloan programs available for startups

You won’t find as many companies offering microloans for startups as you do traditional loan lenders, since it’s a bit of a niche offering. But they are out there. Here are the five top lenders based on an internet search for “microloans for startups” performed on July 28, 2021.

1. Small Business Administration

Among the loan programs that the SBA sponsors for small businesses is its microloan program. SBA-approved lenders offer financing up to $50,000 to qualifying companies. SBA microloans charge interest rates set by the lenders, but those rates are typically between eight and 13%. Repayment periods are six years or less. Lenders may require collateral.

2. Accion Opportunity Fund

The Accion Opportunity Fund is just one example of a lender that specializes in microloans for women and minorities. Approved borrowers can get $5,000 to $100,000, with interest rates as low as 5.99%. In addition to offering financing, Accion also provides programs and coaching to help entrepreneurs succeed.

3. The Rising Tide

The Rising Tide Community Loan Fund is another option for microloans. You can borrow up to $50,000 to start your business or expand it. The Rising Tide is a Community Development Financial Institution (CDFI) and focuses on lending to underserved communities.

4. Lendza

Lendza provides up to $50,000 to small businesses, with terms up to six years. Interest rates fall between eight and 13%, depending on your credit and other qualifications.

5. Kabbage

Recently acquired by American Express, Kabbage offers lines of credit between $1,000 and $150,000. Rather than paying interest on the loan, borrowers pay a flat fee based on how much they borrow.

How to find microloans for startups

The examples above are just some of the lenders specializing in microloans for startups. You may find a local lender or bank that offers microloans as well. An internet search can present you with even more options. If you’re just starting out and haven’t built your business credit, or you have bad personal credit and find that you don’t qualify for other options, look at bad credit startup loans. Just be aware that these loans will likely have high interest rates and fees, so be sure you have a plan for how that money will help you make more. 

When you do find a few lenders you’re interested in, see what customers are saying about them. Often you can find online reviews on sites like that will give you an indication of whether a lender is a good company to work with or not. Remember: you’ll have a relationship with this lender for years, so you want to be assured that the company offers great customer service and isn’t a predatory lender out to take advantage of customers.

Microloans for startups: Eligibility and requirements

Eligibility standards for microloans will vary, depending on the lender. Those offering SBA loans may have more stringent credit score requirements than other microloan lenders. If you apply for a microloan with a lender like Accion that has a particular lending audience, you may need to be a female or minority entrepreneur. Other lenders may have requirements relating to factors like your annual revenues or time in business. However, when it comes to microloans for startups, investors typically care most about your credit. Even if your credit isn’t stellar, you’re likely to be able to find financing, but you may pay higher small business rates for the loan.

How can I use a microloan for a startup?

A microloan can be used for any business-related expense or as working capital. You could use the funds to hire staff, buy supplies or equipment, renovate your office, or pay for legal fees. Read through your loan paperwork to see whether there are any parameters for what you can or cannot spend the loan funds on before you sign your loan agreement.

How to apply for a microloan for my startup

If you’re ready to apply for a microloan, review what the lender requires of you. Many online applications for microloans for startups are simple and ask little more than your business details, revenues, and personal information, since you may be required to personally guarantee the loan. Once you submit your application, you might be approved within minutes, unless the lender needs to spend more time reviewing your application. 

If you apply for an SBA microloan through a bank or other lender, the process may require more paperwork, such as financial statements. You may have to apply in person rather than online. It’s generally a good idea to check what you’ll need to apply beforehand, gather all the details and paperwork, and then dedicate some time to the process. Otherwise, you risk not being properly prepared and your application being delayed because you’re missing some key piece of information.

Additional resources for startups

If your startup is brand new, you can probably use help. There are free resources like the following you can use to find mentors, get help with creating a business plan, and attend free workshops and training.

The takeaway

Sometimes you need to borrow a large amount of money. Sometimes you need just a little. Finding the right lender for the size of loan you need is important, as is finding one willing to lend to a new startup. 

Learn more:

This article originally appeared on and was syndicated by

Lantern by SoFi:

This Lantern website is owned by SoFi Lending Corp., a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. (

All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. There is no guarantee you will be approved or qualify for the advertised rates, fees, or terms presented. The actual terms you may receive depends on the things like benefits requested, your credit score, usage, history and other factors.

*Check your rate: To check the rates and terms you qualify for, Lantern conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender(s) you choose will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown on this website are from lenders and are estimates based upon the limited information you provided and are for information purposes only. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors. The loan terms and rates presented are provided by the lenders and not by SoFi Lending Corp. or Lantern. Please review each lender’s Terms and Conditions for additional details.

Personal Loan:

SoFi Lending Corp. (“SoFi”) operates this Personal Loan product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lenders/partners receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and DisclosuresTerms of Service, and Privacy Policy.

Student Loan Refinance:

SoFi Lending Corp. (“SoFi”) operates this Student Loan Refinance product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lender’s receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and DisclosuresTerms of Service, and Privacy Policy.

Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).

Notice: Recent legislative changes have suspended all federal student loan payments and waived interest charges on federally held loans until 09/30/21. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.

Auto Loan Refinance:

Automobile refinancing loan information presented on this Lantern website is from MotoRefi. Auto loan refinance information presented on this Lantern site is indicative and subject to you fulfilling the lender’s requirements, including: you must meet the lender’s credit standards, the loan amount must be at least $10,000, and the vehicle is no more than 10 years old with odometer reading of no more than 125,000 miles. Loan rates and terms as presented on this Lantern site are subject to change when you reach the lender and may depend on your creditworthiness. Additional terms and conditions may apply and all terms may vary by your state of residence.

Secured Lending Disclosure:

Terms, conditions, state restrictions, and minimum loan amounts apply. Before you apply for a secured loan, we encourage you to carefully consider whether this loan type is the right choice for you. If you can’t make your payments on a secured personal loan, you could end up losing the assets you provided for collateral. Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on the ability to meet underwriting requirements (including, but not limited to, a responsible credit history, sufficient income after monthly expenses, and availability of collateral) that will vary by lender.

Life Insurance:

Information about insurance is provided on Lantern by SoFi Life Insurance Agency, LLC. 

How do student loans affect your credit score?

If you have student loan debt, you have plenty of company: nearly 45 million brethren, in fact.

One upside of having a student loan is that regular on-time payments may boost your credit score and even allow you to build a credit history that could help when it comes time to get a mortgage or take out a car loan.

Student loans are considered installment loans similar to mortgages and auto loans because they’re repaid over time with a fixed number of monthly payments, or “installments,” resulting in eventual full repayment.

In comparison, a credit card is considered revolving credit because the balance goes up and down, is open-ended, and depends on when you make a purchase and how much you spend.

Both can affect a credit score, but much of your score can depend on how you manage your student loans: Do you make your payments on time? Have you missed any payments?

Here’s a look at how student loans can factor into your credit status.

Related: Do student loans count as income?


The answer depends on whether you’re talking about federal or private student loans.

Most federal loans don’t take credit scores into account, which is why nearly every borrower gets the same interest rate regardless of financial profile. However, federal PLUS loans for parents require that borrowers not have an adverse credit history.

For private lenders, your credit score is usually a key factor in determining not only student loan approval but also the attached interest rate.

The better your score, the better your rate, generally.

Most private student loan lenders use a base FICO score, from 300 to 850, to determine whether to extend credit and at what interest rate.

Because FICO is used widely throughout the lending industry, including by mortgage, auto loan and credit card providers, it gives lenders an apples-to-apples comparison of potential borrowers.

Unfortunately, how FICO calculates your credit score is kind of a black box. While the various factors and weightings  used in the calculation are publicly available on FICO’s website, its algorithm is proprietary, which means that no one can predict exactly how a specific financial event will affect your score.

A late payment will likely reduce your score, but by how many points is anyone’s guess.

That said, there are generally three key ways to improve your credit score: Pay bills on time, keep credit card balances low and reduce the amount of debt you owe.

Making payments on time is obviously important, but what you might not realize is exactly how damaging it is to not pay on time.

Even if your credit history is pristine, it only takes one report of 30 days past due to change your score. Whether you were short on cash or simply forgot to make the payment, the FICO algorithm doesn’t distinguish — and the result is the same.

FICO base scores are determined by data in five categories, and payment history leads the pack:

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New credit: 10%
  • Credit mix: 10%

Once a late payment is reported to the credit bureaus, it could remain on your credit report for up to seven years.

If you have trouble remembering to make your payments, you might want to set up an automatic payment plan. Most lenders will give you a small discount on your interest rate for doing so.

When you know that you can’t make a payment on time, talk to your lender or loan servicer right away.

The U.S. Department of Education, which is the lender for four types of Direct Loans, and some private lenders offer loan deferment and/or forbearance, allowing a borrower to temporarily suspend payments, which will minimize the impact on your credit score.

One of the purposes of a credit score is to show lenders how likely you are to repay your debts. Making your student loan payments on time and in full each month will likely have a positive effect on your credit score.

Doucefleur / istockphoto

This question pops up a lot from grad school borrowers and people who are refinancing student loans to get the best interest rate possible on a private loan.

One factor that can be a red flag for FICO is the number of inquiries it receives from lenders wanting to see your credit report. In other words, if it looks like you apply for more credit often, it could hurt your score. But the good news is that FICO attempts to distinguish between a request for a single loan and a request for many new credit lines. As long as you rate-shop in a concentrated period of time, you should be OK.

If you really want to avoid inquiry overload, do your homework before applying for a loan. Private lenders typically list online the range of rates they offer, as well as general eligibility criteria. Researching that information will give you a good idea of whether you’ll qualify before you formally apply.

Also, you may want to ask lenders if they can tell you the interest rate you would receive without doing a “hard” credit pull, which might affect your score. You can’t get a loan without an eventual hard inquiry, but getting prequalified allows you to compare interest rates with no effect on your credit score.

William_Potter / istockphoto

Refinancing student loans at a lower interest rate can have an indirect positive effect on your credit. For example, if refinancing lowers your monthly payments, that may make it less likely you’ll miss or be late with a payment.

If you refinance federal loans with a private lender (in effect, turn your federal loans into a private loan), rest assured that credit bureaus don’t view these two types of loans any differently.


Some people reason that because education debt is “good debt,” FICO must view it more favorably than other types of debt. And because credit scores can be improved by having open accounts that are paid on time, they think that paying off a student loan early might actually work against their score.

There’s no definitive answer to this question (remember: black box), but keep a few things to keep before buying into this belief.

First, FICO doesn’t see your student loan debt as good or bad. The agency doesn’t distinguish it from any other type of installment debt, such as mortgage or auto loan debt. Incidentally, while installment debt is different from revolving debt (like credit card debt), it’s generally best to have a positive track record with both types of loans.

Second, it’s true that FICO likes to see how you manage your debt. So, if you have an open account in good standing, that could help your score, but the impact would likely be small. And closing any account satisfactorily is generally a positive thing for your credit, so that could help your score, too.

Bottom line: Instead of worrying about how prematurely paying off your student loan could affect your credit score, consider the potential tradeoffs. For example, how much extra interest are you paying by leaving the account open? Also, a high loan balance may make it harder to qualify for new loans—something to think about when it comes time to buy a home.

fizkes / istockphoto

The worst thing you can do is ignore your monthly loan payment. If you are even one day late with your payment, you’ll be considered delinquent and you’ll be charged a penalty for missing that payment.

Once a missed payment is more than 90 days delinquent, your loan servicer will report it to the three major national credit bureaus.

This could lower your credit score and hurt your ability to get a new credit card or qualify for a car loan or mortgage.

After 270 days of a missed student loan payment, your status changes to default and your student loans are due in full with any accrued interest, fines, and penalties.


Most student loan holders don’t love having that debt, but making steady, on-time payments helps build creditworthiness, which eases the way for future borrowing opportunities and attractive interest rates.

Learn more:

This article
originally appeared on and was
syndicated by

SoFi Student Loan Refinance
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See for more information. To view payment examples, click here undergraduate student loans rates. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Kerkez / istockphoto

Featured Image Credit: Deposit Photos.