Microloans are?

• A. Long-term loans provided by the SBA through intermediaries.
• B. Small short-term loans provided by the SBA through intermediaries.
• C. Long-term equity investments.
• D. Grants for research.

Answer: (B)

Microloans are small, accessible financing designed to help startups and small businesses get off the ground or grow. They’re not lent directly by the SBA; instead, the SBA provides funds to intermediary lenders—typically nonprofit community organizations—that then issue the loans to borrowers. The amounts are modest, up to $50,000, and the repayment terms are relatively short compared with many traditional loans, often up to six years. Because they’re loans, they must be repaid with interest, and they’re not equity investments or grants. They’re especially useful for covering startup costs, equipment, inventory, or working capital when other financing might be harder to obtain.