A Guide for Small Business Loans for Women

About 40% of new entrepreneurs in the United States are now women. Women owned businesses have been growing at double the rate than those of male owned businesses. Compared to men, women are less likely to be approved or receive the full amount of the loan according to a report by the Federal Reserve. In order to improve the chances of being approved, doing your research is extremely important. Knowing which small business loans are available for women will increase the chances of being approved. There are also grants and other resources available to help women owned businesses. In this guide we will discuss the best small business loan providers for women.

The Best Small Business Loans for Women

The following are the best loans for women owned business. The one that suits your needs depends on your business’s financial profile, credit, your financing needs and overall business goals.

SBA Loans

Female or male, SBA (Small Business Administration) loans are one of the best loans for any small business.  SBA loans are very flexible in which they can be used for any business purpose and they have great terms and interest rates available compared to traditional bank loans and other types of lenders.

SBA loans are offered through lenders and have various small business loan programs that women who own small businesses can take advantage of when looking for capital. You can borrow up to $5 million through the SBA 7(a) program and the repayment term ranges from 5 to 10 years and up to 25 years if you are looking for financing a real estate purchase.

The following are ways you can typically use the capital for a 7(a) loan:

  • Payroll, hiring new employees, day-to-day working capital needs
  • Purchasing business equipment
  • Purchasing inventory
  • Renovating your business
  • Opening a new location

There is no minimum credit score that makes you eligible, but most SBA 7(a) lenders look for a credit score of at least 620. This will ensure you get qualified with a low interest rate. However, SBA loan applications have a lengthy process and could be more difficult to qualify for than other financing options. They also have a collateral and personal guarantee requirement in case you are unable to keep up with payments.

Another SBA loan to consider is a microloan, which are great if you are looking for smaller capital for your business or if you run your business as a sole proprietorship. This program offers up to $50,000 and have low interest rates like the 7(a) loan.

Online Business Loans

Another place that women can look for small business loans are online and alternative business lenders. Gender bias is reduced when applying online since algorithms are used to approve applicants.  They offer the same options that traditional banks do such as equipment financing, term loans, inventory and purchase order financing, and accounts receivable financing.

The great thing about online and alternative lenders is that they are quick to approve you and are convenient since they are online and can be done at your own convenient time. You can be approved for funds within a day or up to 48 hours and you get the funds you need right away.

Besides being convenient, they have also more relaxed criteria compared to traditional bank loans. For example, a bank loan typically required two years in business and a great credit history whereas an online lender may accept a one-year old business with a less than perfect credit history.

Examples of online business loans available are:

  • Working capital loans
  • Equipment loans
  • Inventory loans
  • Term loans
  • Merchant cash advances
  • Invoice financing
  • Business line of credit

Bank and Credit Union Small Business Loans 

Women can also get a small business loan through a bank and credit union.  The amount you can borrow depends on the bank or credit union as they have their own specific requirements. Some offer low and fixed interest rates for women; however you need to have excellent credit to be approved and have the lowest rates as possible.

Small Business Grants 

There are also small business grants available women can explore. Grants are “free” and usually don’t have to be repaid, and there are some out there that designed for women only. They are competitive however with a compelling story that you can share about you and your business and challenges you’ve faced in your life; you have high chances of getting approved.

Venture Capitalist Funding/Angel Investors

Equity financing is another option to consider for your women-owned business. Equity financing is when a business owner raises money from venture capital firms and investors. Investors get some of the equity in your business. Venture capitals are normally firms or corporations, an angel investor can be an individual.

As you can see, there many options to consider and do research on when determining where to get funding from for your woman-based business. The right financing for you depends on your needs and your qualifications so be sure to think about will be best for you and your business.