Microbusiness Support Act

Summary of Bill: Microbusiness Support Act (S. 4534, 119th Congress)

Purpose and intent

• Establish a direct loan program for microbusinesses within the Small Business Administration (SBA).
• The bill aims to expand SBA financing options by enabling the federal government to originate and disburse direct loans to microbusinesses, with the possibility of leveraging third-party partners.

Key provisions and changes

• Definition of microbusiness (new addition to Small Business Act, Section 7(a)):

  • An independently owned and operated for-profit business.
  • Employees: Not more than 10 full-time employees (FTEs), calculated on a full-time equivalent basis.
  • Annual revenue: Not more than the lesser of:
  • $5,000,000, or
  • The NAICS-based size standard for the relevant code (if any).
  • Full-time threshold: A person is considered full-time if they work at least 35 hours per week (or per other accepted standard in contracts).
  • The SBA Administrator may request documentation to verify that a business qualifies as a microbusiness.

• Program authority and operation:

  • The SBA Administrator is authorized to originate and disburse direct loans to microbusinesses, including through partnerships with third parties.
  • Loans can be originated and disbursed directly or via intermediaries as part of the program.

• Maximum loan amount:

  • Each microbusiness loan may be up to $100,000.

• Fees:

  • The Administrator, authorized third parties, or agents may impose and retain fees to cover costs related to:
  • Referring applications, originating, underwriting, disbursing, closing, servicing, or liquidating loans.
  • Fees related to revolving lines of credit (including unused and draw fees).
  • Payments to third parties (including direct lending agents and financial institutions) that assist in promoting or handling loans.

• Terms and implementation timeline:

  • Not later than 90 days after enactment, the SBA Administrator must issue interim final rules and revise existing rules to establish terms and conditions for direct microbusiness loans, covering repayment, underwriting criteria, interest rates, maturity, and other terms.
  • Interest rate for loans under this section: to follow SBA guidance under 15 U.S.C. § 636(a)(4)(A), but with the bill specifying that an interest rate of 6 percent per annum shall be substituted for the standard 1 percent per annum reference in the existing rule.

Who is affected

• Microbusinesses that meet the defined criteria (no more than 10 FTEs and revenue thresholds) could access direct SBA loans up to $100,000.
• Small businesses and entrepreneurs seeking financing for growth, working capital, equipment, or other needs typical of microenterprises.
• Lenders and intermediary partners (through third-party arrangements) that participate in the loan origination, underwriting, and servicing process.
• SBA and its administrative processes will need to implement new program rules, eligibility verification, and fee structures.

Procedural and timeline aspects

• Introduction date: May 14, 2026.
• Referral: Committee on Small Business and Entrepreneurship.
• Primary sponsors: Senator Catherine Cortez Masto and Senator Angela Alsobrooks (co-sponsors).
• Implementation timeline: Interim final rules required within 90 days of enactment, with explicit terms, interest rate, and underwriting criteria to be defined.

Potential impact considerations

• Could broaden access to capital for very small, locally owned businesses that traditionally struggle to obtain financing.
• The $100,000 loan cap aligns with microbusiness funding needs but may require careful underwriting to ensure repayment performance.
• Fee provisions may influence the overall cost of borrowing; transparency on fees will be important for borrower protections.
• The program’s effectiveness will depend on streamlined eligibility verification and efficient disbursement processes, including partnerships with third parties.