In the case of both a microloan and a regular business loan, the borrower receives a lump sum of cash that they must repay in regular installments over a term that the lender sets. In both cases the lender might specify what the borrower is permitted to use the loan for.
The more prominent difference between microloans and regular business loans is the size. Microloans are by nature smaller—often capping out at $50,000. Many microloans are far lower, weighing in at $10,000–$15,000. But there are also differences in the details: borrowers are likely to get lower rates on microloans than they would on larger business loans, and they may have to pay them back faster.
Since microlenders tend to be mission-driven organizations that are focused on the success of business owners, they may provide technical assistance and business guidance to borrowers to help their businesses grow stronger. Traditional business lenders don’t typically provide this type of service to borrowers.