Microlenders are organizations that specialize in making small loans, typically in the range of $5,000 to $50,000, to entrepreneurs who can’t secure funding from more traditional sources. Many microlenders are non-profits that rely on donations from charities for their loan funds. And some focus on lending to specific categories or types of borrowers, such as women-owned or minority-owned businesses, or ethnic markets, such as Hispanic business owners.
Microlenders often provide education and training to their clients, in addition to money. Microloans generally carry higher interest rates than bank loans, ranging from 8% to 13%. Often, they are subsidized by federal, state, and local grants.