All You Need to Know About Business Loans for Women

What are Small Business Loans for Women?

In the lending world, small business loans aren’t anything new. In fact, between these and commercial mortgages, entrepreneurs across the US have been raising money for decades. However, as times have changed and more women have launched start-ups, a subsection of the small business loan market has developed. In practice, there aren’t any specific loans for women to start a business. However, certain programs and products have evolved to support women wanting to secure some cash.

The reason these auxiliary products and support services have emerged in recent years is to counter low acceptance rates. Getting a small business loan as a man or woman is never easy. However, the latter often experience more difficulties because of issues such as raising a child. Indeed, lenders often see new businesses as a risk because many of them fail within a few years. Add to this the fact a woman may need time off due to pregnancy and the issue is, rightly or wrongly, compounded. Support surrounding women-owned business loans is designed to remove these stigmas and level the playing field.

How SBA 7(a) Loans for Women Work

The Small Business Administration (SBA) is a federal body that supports entrepreneurs in the US. It offers a variety of funding options for small businesses and each one is backed by government funds. Again, there aren’t any specific small business loans for women. However, the terms of an SBA loan are favorable to those seeking smaller amounts of money. According to research from various funding agencies, women typically ask for $35,000 less than men women it comes to business loans. Based on that, SBA loans for women are ideal. In simple terms, the SBA provides a guarantee to lenders. This added level of assurance mitigates certain potential risks for the lender and, therefore, makes them more willing to give start-ups some cash. This is particularly useful for women as research shows acceptance rates can be as low as 30% under normal circumstances.

When should I Get a Small Business Loan for Women?

Like any loan, you should only apply if you need the money. Using an SBA women’s business loan or a grant to prop up your company’s failing finances is often a mistake. If you want to expand your business, purchase a property or make new investments, that’s fine. However, a women entrepreneurs loan shouldn’t be used as a way to correct a failing business.

Qualifying for Small Business Loans

Each lender will have its own requirements when it comes to small business loans for women or men. However, as a general rule, you’ll need to be classed as a “small business.” In the US, the SBA defines a small business as any company that has up to $35.5 million in sales and 1,500 employees or fewer. This can vary between industries but it’s a good general rule of thumb.

What Type of Small Business Loan is Right for Me?

The best way to find the right product for you and your business is to use a broker. When you survey the market, you’ll find that there are various loans for women to start a business. However, not all of them will be suitable. Brokers can help you assess offers and select the right one based on your business. However, as a quick guide, these are the main types of small business loans for women and men:

SBA Loans for Women

As we’ve said, SBA women’s business loans are federally backed products that allow you to borrow up to $2 million.

Short-Term Business Loan for Woman

If you only need cash for a short period of time, there are plenty of women-owned small business loans out there. In general, short-term loans are for a specific purpose and usually last for between three and 12 months.

Working Capital Loan for Women

Another popular type of women entrepreneurs loan is a working capital product. A short-term loan, these deals are designed to cover a company’s everyday operations (such as wages) and not long-term investments or buying assets.

Challenges for Women Seeking Business Loans

Why are there SBA grants for women? Well, we know that acceptance rates for business loans are low if you’re a woman. However, there are other reasons and loans for female business owners address the following issues:

A shortage of funding options.
Psychological barriers borrowers and lenders have based on prejudices such as “women are less likely to be successful in business.”
Aside from gender issues, men and women often fail to make the jump into business because they’re worried about failure.

What Else You Need to Know About SBA Loans For Women

If you’re ready to take a chance and start a company, or you want to grow the one you’ve already got, there are plenty of women's business loans from the government. Some of the most popular are:

Bank and Credit Union Small Business Loans for Women

In terms of business financing for women, small business loans are the most common. These usually don’t have fixed terms and deals are negotiated with lenders based on your personal circumstances. Therefore, you can get better interest rates and lending conditions as a female entrepreneur.

Online Business Loans

To overcome the stigma of meeting a lender face-to-face, online business loans can be a great option for women. Crowdfunding sites are a common source of online business loans. Because lenders are more willing to consider personal circumstances, it can make them a better option for female borrowers.

Microloans

SBA microloans for women are small investments designed to help a business grow and cover operational expenses. Microloans allow you to borrow between $500 and $100,000.

Small Business Grants for Women

If borrowing up to $2 million via an SBA loan isn’t appealing, there are SBA grants for women. Alongside dozens of federally sponsored grants, you can use the Small Business Innovation Research and Small Business Technology Transfer programs. Run by the SBA, these programs are a way for women in business to fund projects that contribute to federal research and development.

Business Loans for Minority Women

Just as there aren’t business loans for women, minorities aren’t specifically catered for. However, support services based around business loans for black women are available. The same applies to small business loans for Hispanic females. In general, grants are the go-to option for minority groups. Some popular options include the Girlboss Foundation Grant, the Amber Grant for Women and those offered by the Minority Business Development Agency.

Top 3 Small Business Loans For Women

Funding Circle

Business loans for women can be difficult to obtain, but thankfully there’s a growing number of lenders that are committed to helping female owners of small businesses thrive. Funding Circle is one of these lenders and is 100% focused on faster and flexible loans for women in business, thanks to its specialist SBA loans for women. With a variety of awards picked up over the year, including a Best in Business Lending award and Top Small Business Lending Platform, it's simple online application process makes it simple for female entrepreneurs to get access to the financing they need.

Once your application is submitted, you’ll hear back from a member of the Funding Circle team within an hour, and will be contacted personally to answer any questions you might have. You’ll get a final decision on your application within 24 hours, with the money credited just one working day later. Funding Circle’s fixed, affordable monthly payments are a stress-free way of taking out loans of up to $5 million. Funding Circle even offers advice on how to apply for small business grants for women alongside a wealth of additional resources for women entrepreneurs.

StreetShares

Through a recent partnership with Her Corner – a community of women entrepreneurs that support each other through networking, resources, and education to help businesses grow – StreetShares offers a specialist package for women business owners. Her Corner business owners who have been in business for at least one year are now able to access 3-36 month term loans ranging from $2000–$250,000 in value with no prepayment penalties, fixed rates that never increase and instant access to the funding that female entrepreneurs need.

On top of all of this, StreetShares’ women business loans even come with the stamp of approval from the CEO and founder of Her Corner, Fredirique Irwin. As well as being able to access finance, female business owners will also find plenty of useful resources and materials on the StreetShares website to help support them every step of the way along their business journey. StreetShares even goes a step further by paying back a portion of your loan for you if you’re a female business owner. That’s a difficult offer to beat.

LendingClub

Lending Club offers a range of loans for small and independent businesses, making it much easier to access finance from them rather than banks or other financial institutions. It recently expanded its loan offerings through a partnership with Funding Circle and a not-for-profit lender called Opportunity Fund. This has allowed LendingClub to provide specialist services for women business owners, with reduced rates and relaxed eligibility requirements.

There’s a wide range of loan amounts on offer and if you qualify you can borrow anything from $5000–$5 million, repayable at a fixed interest rate. Applications only take a couple of minutes to complete and you could have the money you need in your account within 24 hours. Despite the fantastic rates and support available from LendingClub, the only thing letting it down is that business owners do need to prove they’ve been in business longer than two years in order to apply for women-owned business loans.

Small Business Loans For Women with Bad Credit

Small business loans for women with bad credit aren’t any different from those designed for males with poor finances. There are lenders that provide specific business loans for women with bad credit and the best way to find deals deal is to use a broker. Doing this allows you to find the right product with the least amount of effort.

Become a Female Entrepreneur with the Right Business Loan

Even though small business loans for women are any different from those aimed at males, that’s not the end of the story. Thanks to a range of support services and grants, there are ways for women to get a business line of credit. This guide should serve as a starting point for your financial endeavors. Using this and a broker, you can secure the capital you need and, hopefully, fulfill your dream of becoming a successful female entrepreneur.