Small businesses run by women are on the rise. As recently 2019, 42% of all businesses had a woman at the helm and that number is only set to rise. These businesses need innovative funding solutions to keep moving ahead.

Despite the fact that businesses run by women face a higher likelihood of being denied a small-business loan than those run by men, various opportunities and resources exist to help bridge the funding gap. 

This guide delves into different types of small business loans for women, offering valuable insights and assistance for women entrepreneurs seeking financial support.

Small business loans with a host of benefits, including:

  • Small business loans for women provide much-needed funding to start or expand businesses, helping women entrepreneurs overcome financial barriers that may otherwise hinder their success.
  • Loans support women in industries traditionally dominated by men, promoting gender equality in entrepreneurship and fostering a more diverse and inclusive business landscape.
  • These loans contribute to job creation, increased tax revenue, and overall economic development in local communities.
  • Access to financial resources empowers women to make decisions, develop business ideas, and gain economic independence, increasing their self-esteem and confidence.
  • Small business loans specifically designed for women can help address historical funding gaps and provide additional resources to women of color and those from economically disadvantaged backgrounds.

 

Types of Small Business Loans for Women

The loan that satisfies your funding requirements while keeping costs to a minimum is appropriate for your company. Various loan kinds are available to women-owned enterprises, including:

SBA Loans for Women

For women business owners, the U.S. Small Business Administration (SBA) has several financing programs available. These loans are offered by banks, online lenders, and other financial institutions; they have low-interest rates and lengthy repayment durations. The list also includes the flagship SBA 7(a) loan program. 

Banks, online lenders, and other financial institutions provide these loans, which come with low-interest rates and long repayment terms. In the 2021 fiscal year, women-owned small businesses received 13.7% ($5.01 billion) of approved SBA 7(a) loans.

The SBA Express loan, a faster alternative to the traditional SBA 7(a) loan, promises a decision within 36 hours. Although SBA Express loans have smaller maximum funding amounts, they still offer competitive interest rates and repayment terms for those who qualify.

Bank Business Loans for Women

Even though bank loans for small businesses often have the lowest rates and strictest eligibility requirements, they have proven to be a practical choice for women-owned firms. However, over time, the overall percentage of bank approvals has dramatically dropped.

There were 6,861 more women-owned enterprises in 2018 than there were in 2017, representing an increase of 1.1 million. These companies are requesting this critical cash. Bank loans are still an option for established women-owned firms with strong financials and good credit, notwithstanding the decline in acceptance rates.

Online Loans for Women Entrepreneurs

Alternative online lenders are a suitable choice for women entrepreneurs with lower credit scores or businesses whose operations have been in progress for fewer than two calendar years. These lenders offer various products which include, lines of credit, term loans, equipment financing, and invoice factoring. They specialize in speedy funding and have more lenient qualification requirements compared to traditional banks. However, the trade-off is that borrowing costs may be higher than other options.

Microloans for Women-Owned Businesses

Mission-based nonprofit organizations often provide microloans to local businesses, focusing on women, people of color, and veterans. There are even funding solutions for entrepreneurial women living in poverty. Microloans can be an excellent option for those who need help to qualify with a bank or online lender or need to fill a small financing gap.

Specialized Small Business Loans for Minority Women

Women business owners in historically underserved communities can access funding through SBA lenders, nonprofit organizations, and specialty programs, which may prove more fruitful than traditional business loans.

One such program is the SBA Community Advantage loan program, where nonprofit lenders and community development companies offer funding to minority- and women-run businesses in both rural and low-income communities.

Many nonprofit lenders also supply many forms of business funding, such as microloans, for women- and minority-owned businesses even beyond the scope of the SBA loan program. For instance, Accion Opportunity Fund states that its client based is comprised of nearly 90% women, people of color, or low-to-moderate income borrowers.

Some banks distribute minority business loans through specialty lending programs. Many programs provide loans and lines of credit to women-, veteran-, and minority-owned businesses with greater flexibility for qualifications than standard business loans.

 

Small Business Loans for Women with Bad Credit

Obtaining a business loan can be more challenging for women entrepreneurs with bad credit. However, some options exist for bad credit business loans, though interest rates tend not to be quite as competitive.

Online lenders today may even work with applicant with poor credit history. Moreso if you have strong finances. Some institutions require a minimum credit score for a business term loan.

Nonprofit Lenders and CDFIs for Women with Bad Credit

Nonprofit lenders and community financial development institutions (CDFIs) may also provide small-business loans for women with bad credit. These lenders often cater to traditionally underserved business owners, including those with poor or limited credit.

Many CDFIs offer various types of business loans, including term loans, while requiring a minimum credit score of 600 to qualify.

Startup Business Loans for Women

Although startup funding can be elusive, a suitable lender is in the market for applicants from all backgrounds. Improving your changes of securing a startup business loan for your women-owned venture takes work, but it’s very achievable.

SBA Microloans and Community Advantage Loans for Women Startups

The SBA microloan program, designed specifically for startups and early-stage businesses, is an excellent option for women entrepreneurs. In the 2021 fiscal year, startups received nearly 40% of all SBA microloans. For businesses who have opened their doors within the previous three years, SBA Community Advantage loans are sometimes a fit. Nonprofit organizations issue SBA microloans, and you can even find providers in your area on the SBA website.

Alternative Startup Funding Options for Women

Additional startup funding options for women-owned businesses include small-business grants and crowdfunding. Crowdfunding platforms, such as Kickstarter and Indiegogo, offer women-owned businesses an opportunity to raise funds by connecting with potential customers and supporters. Additionally, women entrepreneurs can explore grant programs specifically tailored for women, like the Amber Grant and the Cartier Women’s Initiative. 

Apart from these options, business owners can also consider participating in pitch competitions, where they can showcase their ideas to investors and secure funding. Networking within industry events and mentorship programs may lead to valuable connections and attract angel investors or venture capitalists interested in supporting women-led businesses.

Applications that have strong personal credit may even qualify for sizeable loans. For example, a personal loan with a $100,000 maximum loan amount can provide a much needed capital infusion for businesses. Business credit cards are another source of funding for women-owned small businesses that are just getting started or in need of working capital.

Other Resources for Women Entrepreneurs

Women entrepreneurs can receive free assistance from the government and charitable organizations. Resources extend to marketing, money management, business planning, and so much more for women entrepreneurs. Business owners can even find easy to follow guides to obtain a business loan or craft a business plan.

 

The Women’s Business Centers (WBCs) are a nationwide network of more than 100 educational facilities that support women in starting and expanding their enterprises. These SBA-funded facilities frequently present seminars and workshops on a range of subjects, including launching a business and generating money.

 

Federal Contracting Programs for Women-Owned Businesses

The Women-Owned Small Businesses Federal Contracting Program from the SBA targets women-owned businesses whose market is government contracts. Through a certifiation from the SBA the SBA 8(a) Development Program is also viable. This program allows for enterprises with social and economic disadvantages to compete on shored up footing. Federal contracts ing women) to compete for set-aside federal contracts.

Conclusion

Despite historical challenges, women entrepreneurs can access an array of funding sources to help their businesses thrive. By exploring SBA loans, bank business loans, online loans, microloans, specialized loans for minority women, bad credit business loans, and startup loans, women can identify the best financing option for their unique circumstances.

Ultimately, the key to securing funding as a woman entrepreneur lies in understanding the available options, identifying the most suitable financial product, and utilizing the resources specifically tailored to empower women-owned businesses.

Connect with the professionals at Small Business Bank to better understand the amazing options women-owned small businesses have today. 

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