Get a loan for women with their businesses – Female-owned and operated businesses often find trouble in getting funding, unlike their male counterparts. As per reports around 42% of overall firms in the United States are owned by women who employ 9 million individuals but they receive only 4% of all traditional business loan dollars and merely 2% of venture capital.
Women entrepreneurs have been historically denied business funding from investors, credit unions and traditional banks due to outdated stereotypes and unconscious biases. The good news is that a growing number of business loan programs are designed particularly for women entrepreneurs so that they can secure financing and run their businesses smoothly. This guide will throw light on how you can get a loan for women with their own businesses.
Recommended: How to find a federal business identification number
How To Qualify For Loans For Women Business Entrepreneurs?
Getting approval for loans as a woman-owned business can help you to scale your business, boost your business reputation and also become eligible for other lending opportunities and assistance programs. There is no universal set of qualifications as the criteria depend on the type of loan program you are applying for, your location and the organization.
The following are the general criteria that you need to fulfill to become eligible for a loan as a women business entrepreneur.
- Make sure your business is at least 51% owned by a woman who is a citizen of the United States
- Make sure the day-to-day business operations are managed by a female entrepreneur, co-founder or CEO
- Your business is a for-profit business
- Make sure your business is registered with the Secretary of State and is operating legally
- Applicant should be a citizen of the United States or a legal permanent resident
- Must fulfill the limitations set by the loan program on annual business revenue, nature and size of business, number of employees and the number of years the business has been in operation
- Must prove you are operating a business based in the United States of America. The business must be engaged in commercial activity within the United States of America and sell goods or services in America.
- All the taxes should be correct and in good standing. The company must have no outstanding tax liens or legal judgments unless exempted.
Recommended: Government Grants and Loans for Small business
Even though the eligibility criteria and documents required may vary a lot of agencies require similar requirements. You must be organized with the following documents if you’re applying for women-owned business loans.
- Business certification as well as registration paperwork
- Proof of citizenship and residency of the business owner
- Business license
- Proof of good standing with the Secretary of your state
- Brief history and details of the type of business you are running
- Business financial documents and valid paperwork like pay stubs, tax return forms, tax ID or EIN IRS letter for reference, and bank statements.
- Personal identification documents like government-issued photo ID, Social Security card, passport.
Recommended: Native American Small Business Start Up Grants
What Are The Different Types Of Loan Options Available To Female-led Businesses?
There are a variety of small business loans offered by the US Small Business Administration to female-led businesses and it is one of the best sources to obtain funding for non-binary and women entrepreneurs.
You can cover startup costs for a new enterprise, purchase real estate and meet working capital requirements through an SBA loan. These loans have low interest rates and flexible terms however they come with high credit score requirements to qualify. Some of the loans are as follows:
Women entrepreneurs looking for quick cash for their small businesses can apply for SBA Microloan programs that provide loan amounts up to $50,000 through designated lenders.
504 loan offers long-term and fixed-rate financing for major fixed assets and the maximum amount of loan you can avail of is $5 million. Women-led businesses have to prove that the assets are used for job creation or business growth.
SBA 7(a) loans provide loan amounts of up to $5 million that can be used for business expansion, equipment financing and working capital.
Recommended: Amber grants for women Owned Small Business
Bank Business Loans
Most entrepreneurs today look for finances through traditional banks. Banks provide typical term loans for a stipulated period and with a specified payment schedule.
Even though bank business loans are quite common among entrepreneurs it is difficult for minority and women business owners with poor credit to get approval for loans.
Online loans come from lenders who do not operate from traditional banks and conduct communications online. Online loans come in the form of peer-to-peer lending, business lines of credit, merchant cash advances and working capital loans.
A prime benefit of obtaining business loans from online lenders is getting quick approval of the loan amount. They come with less stringent requirements concerning financial history and credit score. They have greater convenience and approve your loan within a few minutes so they come with high interest rates.
Popularly known as small-dollar loans, Microloans refer to short-term loans that are capped at around $50,000. They are provided to small for-profit enterprises that are finding it difficult to secure financing from banks and other traditional financial institutions.
In addition to loan funding, they also offer training, mentoring and networking opportunities. A lot of nonprofit organizations provide micro-loans with flexible payment options and low-interest rates.
Recommended: Get Business Grants for women from minority groups
What Are The Best Business Loans For Women Entrepreneurs?
Following is the list of best small loans for women as well as non-binary-led entrepreneurs.
Female entrepreneurs operating in the New York Tri-State Area can become self-sufficient economically by applying for the Women’s Enterprise Action Loan Fund.
The loan fund combines no and low-interest loans and provides assistance up to $10,000 with mentoring sessions. Business loans are granted without any requirement for collateral or personal guarantees and this makes it one of the best and highly accessible loans for entrepreneurs of color and women business owners.
A nonprofit community development financial institution known as Grameen America offers micro-loans to small entrepreneurs and business owners. The loan is awarded to applicants who belong to underserved United States communities.
First-time loans from the organization are capped out at $2000 however members can be eligible to receive larger loans every six months. There is no requirement for business income, credit score or collateral to receive this micro loan.
The objective of Union Bank Business Diversity Lending is to empower small businesses particularly those run and operated by minorities, women and veterans. The loan products are similar to the traditional business loan of Union Bank and businesses can secure funding up to $2.5 million.
The Diversity Lending Program by the bank provides flexible credit rules and opens the door to numerous business owners who are unable to secure funding from other sources due to poor credit.
To be eligible businesses must be in operation for a minimum of two years and show that at least 51% of businesses are owned, controlled and operated actively by a woman, veteran or minority.
A specific portion of loan funds are set by the USDA Farm Service Agency for women farmers, minorities and ranchers. You should be a woman or belong to a federally recognized tribe like African American, Native American, Alaska Native, Native Hawaiian, Asian American or Pacific Islander for the targeted funding.
There are three different types of loans that women entrepreneurs can avail from this resource.
Such loans range up to $50,000 and cover the financing needs of small businesses like completing niche operations, non-traditional farms or small farms.
The loans are capped out at $600,000 and assist ranchers and farmers to buy or enlarge family farms, increase productivity, help with land tenure to save the farmland for their future generation and expand current operation.
Such loans are capped out at $400,000 and help to finance the cost of operating a new farm as well as purchasing equipment and livestock.
Recommended: Small-Business Grants for Women owned businesses
Women entrepreneurs get assistance from the Tory Burch Foundation to overcome all hurdles through education, networking, access to financial capital and mentorship. The foundation created the Capital Program in collaboration with Bank of America to assist female entrepreneurs in gaining access to loan funding.
The foundation offers funding to different community development financial institutions that emphasize small business development. These institutions provide loans ranging between $500 to $100,000 to establish U.S. business whereas Bank of America offers financial mentorship to successful candidates.
The company Coralus is bringing together female and non-binary entrepreneurs from different backgrounds called Activators so that they can volunteer and contribute to the perpetual fund. The funding is provided at a 0% interest rate to eligible non-binary and women-led ventures.
Since its inception in 2015, Coralus has supported nearly 107 ventures from 7000 activators worth $7 million in loan funding. To qualify you must prove you have generated income between $50,000 to $2 million, your business is majority owner led by women or non-binary people and you’re working to make the world a better place through your business product from a model or service.
Refugee, immigrant and underserved business owners in the New York area can access financial education, affordable loans, business practices and training in technology through Accompany Capital.
The organization provides SBA-backed loans in the range of $75,000 to $250,000 to qualifying small businesses owned by women, refugees or immigrants in the Bronx, Manhattan and Brooklyn counties.
A popular black woman-owned fintech loan provider that serves minority-owned businesses is known as EnrichHER. The company has deployed $14 million in capital to businesses that are owned by people of color and women entrepreneurs.
They provide lines of credit and direct loans in the range of $10,000 to $250,000 with flexible repayment periods between 12 to 36 months. The loan application procedure is painless and quick and applicants can receive funding within 48 hours.
Bluevine lines of credit range up to $250,000 and the repayment term is 6 or 12 months. Business lines of credit enable business owners to draw money as per their needs instead of loaning a huge sum of cash at a time.
You can pay interest only on the amount of money you have used and the full amount of credit will be available to you once you repay the debt. To be eligible for Bluevine lines of credit borrowers need to run their business for a minimum of 24 months and have a minimum credit score of 625 with a monthly revenue of $40,000. Interest rates are at 6.20% for a 26-week repayment schedule.
National Funding is an online lender that offers equipment loans up to $150,000. The repayment term can range up to 60 months.
Women-owned startup companies without excellent credit history, credit scores and valuable assets can apply for equipment loans from National Funding and pay for the equipment or machinery little by little over time.
Eligible business owners need to show they’ve been running a business for more than six months and have a credit score of 600 to apply.
An online lender known as Credibly offers working capital loans or short-term loans up to $400,000 with a repayment term between 3 and 15 months.
Working capital loans help to finance the day-to-day operation of business and come with higher interest rates due to short repayment terms.
The lender uses factor rates for calculating the interest which are generally decimal figures instead of percentage points. Women business owners must show they have been running the business for at least six months and have a monthly bank deposit of $15,000 with a minimum credit score of 500 to apply for funding.
Ondeck is another online business lender that offers short-term loans in the range of $5000 to $250,000 with long repayment loan terms. Short-term loans are similar to regular-term loans that require business owners to pay the loan in a short period for instance 18 to 24 months.
These loans require businesses to operate for a minimum of one year, have high interest rates and fees and the loan amount is generally small. Ondeck requires business owners to show annual revenue of $100,000 and a credit score of 625 or higher.
Fundbox is another online lender that provides flexible loan requirements and quick approval of loans by looking at your business finances. It is one of the best female-owned business loans with automated procedures and flexible eligibility criteria.
The minimum credit score requirement is 600 and businesses should show they have been in operations for six months and have a minimum annual revenue of $100,000.
Fast funding with automated application are few advantages that women businesses can get by choosing this online provider however the two drawbacks are high APR and low maximum loan amount.
A direct lender known as Backd specializes in assisting established finances in getting financing options. Female-led business owners are required to meet a few eligibility criteria to qualify for their loans, for instance having a minimum of two years of business operation.
If you are looking for a good loan option with flexible rates then this loan option will provide you working capital and lines of credit. They have resources for women’s business funding and excellent customer service.
Women-led businesses who are interested in Small Business Administration loans must give SmartBiz a try. The lender claims to simplify the application procedure of SBA loans with its loan marketplace.
Unlike other lenders, SmartBiz deals particularly in government-backed SBA loans and helps to make the eligibility requirements and paperwork stiffer at low rates.
The company can streamline your application procedure if you meet the qualification criteria for SBA loans. They deliver your application to multiple loan providers and help you match with the best options.
One of the most preferred loan options for women-owned businesses is Lendio. It is a lending marketplace where you have to submit an application and the company will match you with affordable loans and providers that you can qualify for.
Business owners should have a minimum credit score of 560 and must show an annual revenue of $50,000 to qualify. They must be in business operation for a minimum of six months to be eligible.
Lendio works for all sorts of female business owners and comes with personalized expertise and guidance. With a large number of lenders and small business loans through Lendio, you can surely find a financing option for your business by meeting a few eligibility criteria.
Other Valuable Funding Resources For Women-Owned Small Businesses
Loans are the common way to finance women-led businesses however they are not the only option and you can explore other new avenues to access funds such as the following.
- Government-backed small business grants
- Personal savings
- Personal loans
- Investment from friends and family
- Angel investors
- Crowdfunding grants
- Venture capital.
- Women’s Business Centers
- National Association of Women Business Owners (NAWBO)
Some national organizations offer business loans for women entrepreneurs. For instance Accion specializes in providing loans of around $50,000 for women entrepreneurs who are unable to get traditional loans.
Another group is the Women’s Funding Network. Search sites like Grants.gov provide tools to assist small business owners to find groups that provide business loans for women.
The United States Small Business Administration is another source for women entrepreneurs. The SBA works in unity with local banks to provide business loans for women entrepreneurs.
Funding your enterprise or business may sound simple: just fulfill the eligibility criteria, apply for the loan and get the capital. However, if you are a female entrepreneur then you may face a harder time getting finances than you expect. Female-owned businesses are often rejected for funding and loans compared to their male counterparts. Fortunately there are dozens of organizations and loan providers that are offering business loans and financial support for women to fix the gender disparity existing in the business world and encourage entrepreneurship among women.
As you delve into loan options for women, also learn about specific Texas Small Business Grants – Texas Business Grants? Navigate to our blog post at Get Government Grants to learn how to improve your living situation.
Frequently Asked Question
How Difficult Is It For A Woman To Get Approval For Business Loan?
As per the Federal Reserve, female-owned businesses are less likely to get approval for loans unlike businesses owned and operated by men. However, female-owned businesses established with strong finances and good credit are generally in the best position to obtain loans.
Where Can Women Get Business Loans?
Female entrepreneurs can obtain business loans through online lenders, banks, credit unions and nonprofit lenders. While online lenders provide more convenience, more speed and less stringent eligibility criteria they charge higher interest rates compared to banks and credit unions.
How Can You Apply For A Woman’s Business Loan?
To apply for a woman’s business loan you need to compare different options, find a suitable lender that offers affordable rates within your budget, provide personal financial documents related to you and your business and complete the application form accurately. Depending on the type of loan you are choosing, you need to show that your company is majority-owned and operated by a female.