MICRO-2020-02 | SBA OCAML 20 001

Frequently Asked Questions (FAQs)

What is MICRO-2020-02 (SBA OCAML 20 001)?

MICRO-2020-02 (SBA OCAML 20 001) is a Small Business Administration (SBA) discretionary grant opportunity under CFDA 59.046. It focuses on expanding access to small-dollar financing and business support in communities where traditional credit is scarce, particularly during economic downturns.

What is the main goal of this grant opportunity?

The main goal is to strengthen a network of local intermediary lenders so they can provide microloans and hands-on business assistance to small businesses that may not qualify for conventional bank financing. The program is designed to reach women, low-income, and minority entrepreneurs, as well as other capable prospective business owners.

Who is this opportunity intended to ultimately help?

While the grant is awarded to intermediary organizations (not directly to entrepreneurs), the program is intended to benefit start-ups, newly established firms, and growing small businesses that need modest amounts of capital to launch, stabilize, or expand. It places special emphasis on serving women, low-income, and minority entrepreneurs and communities with limited access to traditional credit.

Does the SBA provide loans directly to individual small business owners through this opportunity?

No. Under this structure, the SBA does not lend directly to individual entrepreneurs. Instead, the SBA works through intermediary lenders that operate within local markets.

How does the intermediary lending structure work?

The SBA makes loans to, or provides guarantees for, intermediary lenders (typically private nonprofit or quasi-governmental organizations embedded in local markets). Those intermediaries then issue short-term, fixed interest rate microloans to eligible small business concerns.

What is the maximum microloan amount that can be made available to an eligible small business?

Intermediary lenders can issue microloans of up to $50,000 to eligible small business concerns.

What types of businesses are targeted for microloans under this program?

The target borrowers include start-ups, newly established firms, and growing small businesses that need smaller amounts of capital and may not qualify for conventional bank financing.

What can microloan funds be used for?

Microloan funds can be used exclusively for working capital and for purchasing or financing inventory, supplies, furniture, fixtures, machinery, and equipment. The permitted uses are narrowly defined to support day-to-day operations and tangible business assets.

Can microloan funds be used for purposes outside the listed categories?

Based on the information provided, microloan funds are described as being exclusively limited to working capital and the listed asset and operating needs (inventory, supplies, furniture, fixtures, machinery, and equipment). Uses outside those categories are not described here as allowed.

What kinds of support services are included alongside financing?

A key feature is pairing capital with capacity-building. The SBA provides grants to participating intermediaries to deliver marketing, management, and technical assistance to both prospective borrowers and microloan recipients. This reflects the idea that financing alone may not be sufficient for early-stage and underserved entrepreneurs.

What types of technical assistance may be provided to borrowers and prospective borrowers?

The information provided indicates the technical assistance focuses on marketing, management, and other forms of practical business support. Examples referenced include help with business planning, cash flow management, recordkeeping, and market development.

Does the SBA provide any support or training to the intermediary lenders themselves?

Yes. The SBA also provides training to intermediary lenders to support consistent program delivery and to strengthen their ability to underwrite responsibly and support borrowers effectively.

Who is eligible to apply for the grant?

Eligibility for applicants is limited to nonprofit organizations, including nonprofits with 501(c)(3) status and nonprofits without 501(c)(3) status, as long as they are not institutions of higher education.

Are institutions of higher education eligible to apply?

No. Nonprofit applicants are eligible only if they are not institutions of higher education.

What type of organization typically serves as an intermediary lender?

Intermediary lenders are typically private nonprofit or quasi-governmental organizations embedded in local markets.

What is the funding instrument for this opportunity?

The funding instrument listed is a grant.

What is the activity category for this opportunity?

The activity category is Business and Commerce.

What is the award ceiling listed for this opportunity?

The listed award ceiling is $800,000.

What is the CFDA number associated with this program?

The opportunity is listed under CFDA 59.046.

When was this opportunity created and when did it close (for the cycle described)?

The opportunity shows a creation date of 2020-03-03 and an original closing date of 2020-03-04, indicating a narrowly timed posting window for that cycle.

What is the program trying to address in the market?

The program is focused on expanding access to credit and business support in areas where traditional credit is scarce, with particular emphasis during economic downturns. It is structured to help small businesses that may not qualify for conventional bank financing.

Is the program limited to lending only, or does it include business development support?

It includes both. The program supports intermediary lending activity and also provides grant funding so intermediaries can offer marketing, management, and technical assistance to prospective borrowers and microloan recipients.