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When you’re a woman and you want to start your own business, it can be tough to find the right loan. The good news is that there are plenty of options available, and we’re here to help you find the best one for your needs. In this article, we’ll discuss 10 business loans for women, as well as how to choose the right one for you. We’ll also talk about other financing options available to women entrepreneurs. So whether you’re just starting out or you’ve been in business for a while, we have something for you!
What is a Women-Owned Business Loan?
A women-owned business loan is a specific type of loan that’s designed to help women entrepreneurs get the financing they need to start or grow their businesses. There are a number of different lenders who offer these types of loans to women business owners, and they can be used for a variety of purposes. Whether you need working capital, equipment financing, or even real estate financing, there’s a good chance you’ll be able to find a loan that fits your needs.
Types of Loans for Women-Owned Businesses
The main loan types for women-owned businesses, whether they are just venturing out or have been in business for a while, generally fall under the following:
- Term loans: These are loans that have a fixed repayment schedule and a set interest rate. They can be used for a variety of purposes, such as buying new equipment or expanding your business.
- Line of credit: Similar to a credit card, this is a type of loan that allows you to borrow money as needed, up to a certain limit. It’s ideal for businesses that need short-term financing for things like inventory or working capital.
- SBA loans: These loans are offered through the Small Business Administration, and they come with a number of benefits, including low-interest rates and long terms.
- Invoice factoring and invoice financing: These are financing options that allow you to get cash immediately based on the value of your outstanding invoices.
- Equipment loans: These loans are designed to help businesses finance the purchase of new or used equipment.
- Commercial real estate loans: These loans can be used to purchase business property or to fund renovations or expansions.
- Microloans: These are small loans that are typically available from community-based organizations. They can be used for a variety of purposes, such as working capital or inventory financing.
- Peer-to-peer lending: This is a type of loan that’s funded by individuals, rather than traditional financial institutions.
- Merchant cash advances: This is a type of financing that gives you a lump sum of cash in exchange for a percentage of your future sales.
Besides these financing options for small businesses, small business grants and crowdfunding efforts can help you get part or all of the funds you need for founding or running a well-established company. Even better, you don’t have to pay the money back with both of these options.
Also, if you have a good personal credit score, you may eligible for a personal loan for your business. These small business loans go up to as much as $100,000. Additionally, the majority of personal loans are unsecured, which means that you don’t have to put up any collateral.
How to Choose the Best Women-Owned Business Loan
As a part of women’s business ownership, it is important to choose the right loan. The wrong type of loan can not only be costly, but it can also delay your business growth. Here are a few questions to ask yourself that will help you choose the best women-owned business loan:
- How much money do I need? The first step in choosing the right loan is to determine how much money you actually need. This will give you a good starting point for your search, and it will help you narrow down your options and choose a loan that’s right for your business.
- What will the loan be used for? Some loans are specifically designed for working capital, while others are for purchasing equipment or real estate. Make sure you choose a loan that fits your needs.
- What kind of lender do I need? Look for a lender who specializes in women’s business loans. This will ensure that you’re getting a product that’s been designed specifically for your needs.
- Do I understand all the terms and conditions? Make sure you understand the terms and conditions of the loan before you apply. This will help you understand what you’re agreeing to, and it will also help you avoid any surprises down the road. This includes things like going over the interest rate, repayment schedule and any fees or penalties associated with late payments.
- Will the loan help me meet my business goals? Consider your business goals and make sure the loan will help you achieve them. For example, if you’re looking for working capital, make sure the loan has a short repayment term so you can quickly pay it back.
- Am I getting the best deal from my potential lender? Lastly, don’t forget to shop around. It’s important to compare rates and terms from different lenders before making a decision.
Start-Up Business Loans for Women
First things first, if you are just now making your foray into the world of business loans for women, you probably want to know what a startup is. The term refers to a group of loan options available to you during your initial stages of growth. How long are you considered a startup? The answer to that question can figure into the type of loan you want, so the answer is important.
Timewise, a business in its initial years of trading—to roughly five years is generally considered a start-up. Also, you are not considered a startup if you have revenue that: 1) exceeds $50 million, 2) have over 100 employees, and 3) have a value of more than $500 million.
So, if you meet the criteria, you’ll want to shop around for the best lending option for your startup business. The following 5 startup options can help women-owned small businesses acquire the funding they need to grow.
1. An SBA Microloan
Loan Type: Microloan
Requirements: To get this loan, you work with a local SBA-approved intermediary. For further information, you can contact your area’s SBA District Office or refer to the list of Microloan Intermediary Lenders in the report below. See the Participating Microloan Intermediaries Report.
An SBA Microloan is one of the best programs for financing women-owned startups. Microloans can be applied to business resources such as supplies, working capital and equipment. When you apply, you are matched with intermediary lenders who make decisions and administer the Microloan program for eligible borrowers. These specifically designated lenders all have their own lending and credit requirements. The maximum loan amount for the SBA microloan is $50,000, and the maximum payback term is six years.
Loan Type: Lines of Credit, Invoice Financing
Requirements: To qualify for a BlueVine line of credit, you will need to:
- Provide your year-to-date bank statements or bank connection.
- Have a minimum of 600 or more FICO score.
- Earn at least $10,000 in revenue/month.
BlueVine is a startup-friendly financial tech company and lending institution. They accept borrowers who have a minimum of six months in operation. More importantly, they offer exceptional cash flow loans such as invoice financing, allowing female entrepreneurs to unlock cash that’s tied up in unpaid invoices. Additionally, BlueVine offers lines of credit (LOC) that provide rapid working capital for short-term borrowing when you need to use it. LOC interest rates are as low as 4.8%. Credit lines go up to $250,000, giving you the flexibility to cover unexpected expenses or take advantage of opportunities as they arise.
Loan Type: Commercial mortgage, term loans, LOCs, and equipment financing.
Requirements: To be eligible for a loan through Lendio, Your business must:
- Be operational for 6 months minimum.
- Have a 560 minimum credit score.
- Be earning $50,000 minimum revenue.
One of the best overall small business loans for women is Lendio. It is a lending marketplace that connects small company owners with a network of over 75 lenders. This means that you can compare loan options from a variety of sources, including banks, credit unions, and online lenders, all in one place. Lendio’s business loans’ lowest listed interest rate is 4.25% interest. Their business loans start at $1,000 and go up to $5,000,000.
4. ACH Loans
Loan Type: ACH Loan
Requirements: Compared to other loans, an ACH doesn’t require as much paperwork To qualify, you need to provide proof of the following when applying:
- You’ve been in business for at least 3 months.
- You own at least 51% of the business.
- You have no bankruptcies.
- You are earning $25,000 minimum in monthly revenue.
- You have made an average of six bank deposits every month for the past three months.
ACH loans are an option for women business owners that need to borrow a smaller amount of money, don’t have the best credit, haven’t been in business long or need their funds quickly. The process of getting an ACH loan is often very fast, and your funds are often available in as little as 24-48 hours. One of their main downsides is that their interest rates are often very high, as much as 20% at times. ACH loans are considered short-term loans too, so you can expect a payback term of 3-6 months.
5. Accion Opportunity Loans
Loan Type: Term loans
Requirements: Accion does not have a minimum annual revenue, credit score or time in business requirement. You will be required to sell yourself and your business, though. To get loan approval, they ask for collateral in the form of a personal guarantee and assets in certain situations.
Accion is a nonprofit lender that offers term loans to small businesses. They have a lengthy application process that lets you really sell yourself and your business plan. They are excellent for women-owned businesses because they help disadvantaged groups get loans. Loan amounts range from $5,000 to $100,000, and they have fixed interest rates of 5.99% – 25.99% APR. Term lengths at Accion are 12, 24, 36 or 60 months.
Best Small Business Loans for Women
The best small business loan programs for women, and small business owners in general, are ones that give you the best chance for approval, offer low-interest rates and don’t require a lot of collateral. Here’s a list of the top five business loans for women.
6. SBA Loans
Loan Type: Even though the 7(a) loan is used as a blanket term, the SBA 7(a) loan program actually is made up of the different loan types listed below, along with the max loan amount and funding purpose of the loan:
- Standard 7(a) loan; $5 million; business and real estate expansion, working capital, and equipment and supplies purchases.
- 7(a) small loan; $350,000; smaller financing needs.
- Express loan: $500,000; expedited funding for small loan amounts.
- Export express loan; $500,000; expedited funding to elevate a company’s export development.
- Export working capital loan: $5 million; fund working capital to support a company’s export sales.
- International trade loan; $5 million; Long-term funding to better contend with foreign competitors through modernization. They also offer long-term funding to expand export sales.
- CAPLines of credit; $5 million; finances short-term loans and seasonal working capital requirements.
Requirements: To be eligible for an SBA 7(a) loan, you must:
- Be a for-profit business operating in the U.S. Religious organizations, real estate investment firms and gambling establishments are not eligible for this type of loan.
- Be a small business, as defined by the SBA.
- Have, as a business owner, invested your own money and time into your business.
- Have searched for other forms of financing before turning to the SBA 7 (a) loan.
- Be able to provide proof you need the loan and show the lender the purpose for which you’ll utilize the funds.
- Do not have any delinquencies on any current government loans you have.
- Have a minimum credit score of roughly 640. However, the odds are better for approval if you have a minimum credit score of 680 or more.
We’ve already discussed the SBA microloan program, but there are several types of SBA Loans. A good small-business loan for female entrepreneurs is the SBA’s most common loan program, the SBA 7(a). It is pretty much the Cadillac of small business loans, but it can be hard to qualify for it. However, if you do, the turnaround time is quick: typically 24 hours to 10 days in most cases. In addition, it’s ideal for small business financing because of its low interest and long repayment terms. Plus, 7(a) loans can be used for a variety of purposes.
7. Union Bank Diversity Lending Program
Loan Type: Term loans and LOC
Requirements: For female entrepreneurs to qualify for a loan through Union Bank’s specialty lending program, your company must be:
- In businesses operation for two years or more.
- At least 51% actively owning, controlling or managing your company.
- A U.S. citizen or legal resident.
- Making at least $100,000 in revenue annually but not over $20 million annually.
If you are a female entrepreneur who doesn’t qualify for a traditional bank loan, Union Bank offers specialty lending programs with more flexible qualifications than its regular term loans. Known as the Diversity Lending Program, it is geared specifically towards women, veterans and minority-owned businesses. Female business owners can apply for financing for up to $2.5 million through the program.
8. Online Loans
Loan Type: Online LOC and term loans
Requirements: Varies by financial institution.
For a woman-owned business with a less than stellar credit score (FICO between 300 and 689), online loan companies can be a good option for funding. These lenders usually don’t require collateral, have looser eligibility requirements and offer quick funding turnaround times. Examples of online loan companies include OnDeck, Funding Circle and Kabbage. One of their main downsides is that their interest rates are usually higher than traditional lenders. The estimated APR on their business line of credit and term loans can go as high as 99%, depending on your creditworthiness and the online bank.
9. Community Banks
Loan Type: Secured and unsecured LOCs, business assets and commercial real estate term loans and SBA loans.
Requirements: Although it often varies by the lender and the type of loan you are applying for, you will likely need to meet the following to be eligible:
- A personal credit score of 680 or higher; a business score of 75 or higher
- At least two years in business.
- Bank and tax statements.
- Business stability; Enough revenue to support the loan.
- An existing relationship with the bank.
- A well-written business plan with projections.
If you have cost savings in mind for your woman-owned business and have a great personal and business credit score, small banks, otherwise known as community banks, could be the right choice for your borrowing needs. Community banks often offer lower interest rates and more competitive terms than large national banks and online lenders. However, the approval process can take more time. The funds you get from small banks are ideal for aspects such as short-term working capital, payroll, equipment, inventory and more.
10. Friends & Family
Loan Type: Unsecured personal loans.
Requirements: Varies by lender.
Small business loans from your friends and family? Yes, it’s a thing, even though friends and family are typically not what you think of first in the realm of business financing. In fact, 38% of startup companies relied on funds from their family or friends, according to a survey by Fundable.
It’s definitely an option worth considering, especially if your friends and family are already knowledgeable or involved in business endeavors. This type of loan is usually unsecured and can come in handy when you need quick financing and have exhausted all other options. They’ll likely be more understanding if you get sick or injured too.
However, it’s important to tread carefully when taking out a loan from friends or family. Make sure you draw up a contract that includes clear repayment terms and interest rates (if any) to avoid hurting your relationships. There are many templates for drawing up a loan contract online. It is also good to talk to a business lawyer to make sure there are no unforeseen legal problems.
How do You Get a Female Entrepreneur Loan?
In reality, there really isn’t a female entrepreneur loan. If lenders called it that, it would be illegal since there are laws against discriminating against someone based on race, color, religion, national origin or sex.
There are, however, equal opportunity lending programs specifically for women, vets, minorities, etc. that allow them to borrow money for their business. For instance, The SBA and the Union Bank Diversity Lending Program are examples of financial institutions that offer a variety of loan products that are catered to the unique needs of female business owners.
So, Applying for a loan as a female entrepreneur is similar to the process for any small business owner. Meanwhile, there is no one-size-fits-all answer to this question, as the requirements for qualifying for a company loan will vary from lender to lender.
Here are some general steps that female business owners can take to apply for a small company loan:
- Develop a good credit score: The first step in securing financing as a female entrepreneur is to develop a good business or personal credit score as possible. This will give you access to loans with more favorable terms, such as lower interest rates and longer repayment periods. You can build your credit score by paying your bills on time, maintaining a good credit history and using a business credit card.
- Research your loan options: Once you have established your business credit, the next step is to research different types of loans available to women-owned businesses. There are a variety of lenders that offer unique loan products specifically for female entrepreneurs, such as The Union Bank Diversity Lending Program or the SBA’s Women-Owned Small Business Program.
- Start the loan application process: Once you have selected a few loan options that fit your needs, the next step is to begin the loan application process. This will vary depending on the lender, but generally, you will need to fill out a loan application and provide financial documents such as tax returns, bank statements and business financial statements.
- Sign the loan agreement: After you have submitted your loan application, the lender will review your documentation and make a decision on whether or not to approve your loan. If you are approved, you will then need to sign the loan agreement and begin making payments according to the terms of the loan.
Here are a few other resources for women small business owners:
- The National Women’s Business Council (nwbc.gov/) serves as an independent source counsel and advisory committee to the U.S. President, Congress, and the SBA on important economic issues that are important to female entrepreneurs.
- The Women’s Business Development Center (wbdc.org/) is a national nonprofit organization that helps female entrepreneurs start, grow and succeed in business.
- U.S. Small Business Administration’s Office of Women’s Business Ownership (OWBO) (sba.gov/about-offices-content/0) provides information and resources on starting, growing and succeeding in business as a woman.
- The National Association of Women Business Owners (NAWBO) (nawbo.org/) is the largest organization in the U.S. for female business owners, with over 60,000 members in more than 600 chapters across the country.
- SCORE – A Resource Partner with the SBA, SCORE offers free and confidential business mentoring services to small company owners (score.org/)
- Women’s Business Enterprise National Council (WBENC) (wbenc.org/) is the largest certifier of businesses owned and operated by women in the U.S. and a leading advocate for female business owners and entrepreneurs.