Small Business Loans For Women

Small business loans for women: What’s available and how to qualify

5 min read
Susan Payton

Despite the fact that there are more companies run by women today than ever before, females seek business funding less frequently than males. In fact, according to Fundera Ledger, an online resource for small business owners, women request approximately $35,000 less in business financing than their male counterparts. Why? Perhaps female entrepreneurs don’t know what small business loans for women are available. Fortunately, there are multiple lending options available to help fund a small business.

Small Business Administration loans

The place most entrepreneurs — female and otherwise — start in seeking financing to launch or grow a small business is the Small Business Administration (SBA). The SBA offers loans that are backed by the U.S. government. These tend to have the lowest interest rates and longest repayment periods of all the options we’ll cover.

Who qualifies for SBA loans

In order to be considered for an SBA loan, there are certain criteria you must meet. To qualify, your business has to:

  • Be considered a small business, as defined by SBA (under 500 employees or less than $7.5 million in annual sales)
  • Hold a 680 or higher FICO score
  • Have the ability to make a downpayment of 10 percent or more if you’re using the loan proceeds to purchase a business or real estate
  • Be in business two or more years before applying
  • Have proof that the company is profitable

If your business is in relatively good shape and you have been earning a profit for a few years, an SBA loan could be a great option.

Small Business Loans For Women SignatureGrants for women-run businesses

While grants aren’t loans (they don’t need to be paid back), they’re another excellent source for funding your woman-run business. There are several grants that are geared specifically toward women, so there’s less competition to win them.

Some corporations offer annual grants to women who run their own businesses, and other state-led business resource centers provide additional grant opportunities. Some industries even have their own grants. Do some research to find special women-owned business grants you may be eligible to apply for.

Who qualifies for grants

Each grant has its own criteria, but there are likely several options available for your company. Consider becoming a Certified Women-Owned Small Business, which can open you up to grants, as well as contracting opportunities. If you want to expand your options, you can look beyond those that cater directly to women-run businesses.

Short-term small business loans for women

An alternative to a more traditional business loan is a short-term loan. Companies like Kabbage, PayPal and OnDeck Capital cater to business owners who need quick access to cash and don’t have time to wait for a bank to process their applications.

Please note, however, that these loans must be paid back a lot faster than SBA loans. Most have a repayment period of 36 months or less.

The advantage to short-term loans is that you can get whatever amount you need, whether it’s as small as $2,000 or as much as $500,000, as long as you qualify. Be aware that interest rates are much higher than with traditional loans, and even if you pay it off in only a year, it will come with a significant increase in the total amount paid — just for the privilege of getting access to cash quickly.

Who qualifies for short-term loans

The great thing about short-term loans is that they’re ideal for people who don’t fit the bill for traditional financing. The required credit score is typically much lower on a short-term loan than one from the SBA (some companies don’t even look at your credit score), and if you haven’t been in business long, that doesn’t disqualify you. Each company has different considerations when deciding to approve you, but expect recent revenues to be part of that assessment.

Credit cards as business funding

While ideally you wouldn’t fund the launch or growth of your business with a credit card, there are instances where this could be a smart move. For example, if you can get a zero or low interest rate, it could cost you less to charge business expenses than to take out a loan to pay for them.

Also if you get a card with rewards, you can quickly rack up points to use toward business travel or purchases.

Just be sure to pay off your monthly balance whenever possible.

Who qualifies to use credit cards

Each business credit card has its own criteria for approving candidates. If you don’t have much business credit history, the company will look at your personal credit history to determine eligibility and interest rate.

Still not sure where to begin in your quest for small-business funding? There are many resources for women through the SBA, Women’s Business Centers, and local economic development offices, which can guide you to making the choice that’s best for your company.

If you aren’t able to get a loan through one of these methods, consider fundraising as an alternate option for sourcing capital.