What is microfinancing for small businesses?

Microfinancing provides very small loans (typically $500–$50,000) to entrepreneurs and small business owners who do not qualify for traditional bank loans, often due to lack of collateral, limited credit history, or low income. In the U.S., SBA Microloans (up to $50,000) are distributed through nonprofit intermediaries that also provide business training and technical assistance. CDFIs (Community Development Financial Institutions) also offer microloans with flexible terms. Interest rates are higher than bank rates but much lower than predatory lenders. Microloans are ideal for startups, sole proprietors, home-based businesses, and underserved entrepreneurs who need small amounts of capital to start or grow.