Small businesses needing small-scale financing and technical assistance for startup or expansion may be able to obtain up to $35,000 through short-term loans of public money called "microloans." The average loan size is about $10,500. These loans are administered through responsible nonprofit groups, such as local economic development organizations or state finance authorities, that are selected and approved by the SBA. The SBA loans the money to the nonprofit organization which then pools the funds with local money and administers direct loans to small businesses.
These loans are administered much like a line of credit and are intended for the purchase of machinery and equipment, furniture and fixtures, inventory, supplies and working capital. The funds are intended to be dispersed with close monitoring of the recipient and a self-employment training program may accompany the loan. The maximum maturity for a microloan is six years. The loan cannot be used to pay existing debts.
The microloan program has received a fair amount of political attention as a model for government-sponsored assistance to local businesses, but the overall money allocated to this program is relatively limited.
More detailed Microloan information can be found on the SBA site at this page.