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Microloans and Micro-Factoring

Microloans and Micro-Factoring refer to those loans and factoring facilities which are small in nature (under $50,000 but usually even small) and which specifically address the needs of very early stage companies with little or no credit history.  They are two of the most powerful tools available to startups and very early-stage business entrepreneurs.


Microloans are very small business loans which traditional commercial banks shun simply because of their size.  True microloans have interest rates of between 8% and 13% and the average size is about $13,000 although loans of as little as $1,000 are available.  The SBA's Microloan program is by far the best source for such loans and the loans are underwritten on a local level by special SBA intermediaries.


Micro-Factoring is provided by very entrepreneurial small business factors which tend to operate locally rather than on a national basis.  Though fees for micro-factoring are slightly higher than those posted by the larger, full service factors, micro-factoring fills a very important niche in small business finance and tends to be of much lower cost than Merchant Cash or ACH Cash arrangements. 

Uses for Microloans

There are really few use limitations for microloans although the SBA does set some restrictive requirements.  Typical uses of term loans are for...

Uses for Micro-Factoring

As with all factoring, its is used in B2B finance applications only for the financing of invoices and their terms of payment.  The proceeds (cash freed up), however, can be used for any purpose and is very often used to meet timely payroll expenses.

Applying for Microloan Financing and Micro-Factoring

Microloan financing is specialized and to explore its availability in your locale, you should speak with a SCORE representative or with local SBDC mentors. 

Micro-factoring is so specialized in its nature you will almost assuredly need to speak with a commercial finance consultant familiar with providers of such services in your local area. 

Enlisting the Assistance of a Commercial Finance Consultant

Enlisting the assistance of a professional Commercial Finance Consultant can...

Virtually all Commercial Finance Consultants provide free consultations and in most cases, all placement fees are paid by the lender and not the small business owner.  This means for those businesses in urgent need of growth and working capital, the services of their highly-trained consultant come at very little or no cost.

Find a Consultant to Work With Now!

You can find a professional Commercial Finance Consultant to work with and assist you in your search for business financing by selecting your location from the Search Box (upper right) which provides a direct link to the the consultant's business website.  Once contacted, you could be just a few days away from accessing the growth and working capital your business enterprise needs and deserves.