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11 Small Business Loans for Women

October 12, 2021 10:37

11 Small Business Loans for Women
woman business owner opens her small business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The number of women who own small businesses is growing. In 2021, nearly one-third (31%) of small business or franchise owners are women, an increase of four percent from the previous year. 

The businesses women are most likely to own involve health, beauty, and fitness services; restaurants and food; retail businesses; and business services.

More than half of women who own businesses spent less than $50,000 to start their companies, but it goes up from there: 17% spent between $50,000 and $100,000, while 9% spent from $175,000 to $1 million, and 2% invested more than that.

Established businesses also sometimes need infusions of cash to help them run smoothly and/or expand. That’s where business loans come in. Small business loans provide women entrepreneurs and business owners the opportunity for business growth and expansion. Fortunately, a number of loans are available to help women start and maintain their businesses. 

 

women-owned business financing statistics

Table of Contents

 

types of small business loans

 

Types of Small Business Loans

1. SBA Loans

SBA loan programs are available through the Small Business Administration. They're government-backed loans, and their low cost makes them accessible to entrepreneurs; the downside is that there’s a long application process involved, which means you probably won’t get money fast.

SBA 7(a) Loan

The Small Business Administration works with lending partners, some of which are listed below. It does not directly fund loans. There are multiple types of 7(a) loans that provide financial assistance for small businesses. Certain business types are not eligible, so be sure to research eligibility requirements. The maximum loan amount for a Standard 7(a) loan is $5 million, though borrowers must collateralize loans above $350,000.

Interest rates vary based on the loan length and amount. Maximum interest rates range from 2.25% to 4.75%. The SBA doesn’t list a specific credit score to qualify and the minimum credit score will vary by lender. Typically, most lenders require a credit score of at least 640. 

2. Term Loans

With a term loan, you receive a lump sum of cash that is repaid over a specified term. Term loans can be desirable because they offer relatively low-interest rates as well as fixed payments (although shorter-term loans may include balloon payments at the end). You’ll have fixed monthly payments that include interest, and you know when the loan will be paid off, so you have a goal to work toward. You can use a term loan for a variety of purposes, including things such as equipment purchases.

3. Commercial Real Estate Loans

Commercial real estate loans work like term loans in that they provide borrowers with a lump-sum payment upfront. A commercial real estate loan can be used to fund the purchase of existing business properties, new property, or expansion: things that count as commercial real estate and are therefore used for business — rather than residential — purposes. Offices, commercial kitchens, loading docks, warehouses, and retail space are examples.

4. Business Line of Credit

A business line of credit is like a credit card: You’re given a credit limit, and you can spend whatever you need up to that total as you need it. As you pay down your balance by making payments, you’ll free up more credit for future purchases. If you don’t know how much money you need, or need a continuing source of funds, a business line of credit can offer you more flexibility than a term loan. Also, like credit cards, they’re often unsecured, which means you don’t need to put up any collateral when you borrow. 

5. Franchise Loans

If you want to open a franchise, loans are available specifically to do that. A franchise is a license that allows you to operate using an established company’s trademarks, proprietary products, etc. Franchises are often fast food restaurants (McDonald’s, KFC, and Burger King are the top three), but they can be other kinds of businesses, as well, such as convenience stores and hardware stores. A franchise loan can fund your franchise fee and give you the money to open a franchise beyond what’s provided by the franchisor.   

6. Merchant Cash Advance

Merchant cash advances require you to borrow against future sales, obtaining a lump sum upfront that you pay back via weekly transfers from your bank account or a percentage of your daily credit card sales. These are short-term loans, like other cash advances (such as payday loans), and carry high-interest rates. They can be useful funding options for business owners with lower credit scores who may not qualify for other types of loans.

7. Microloans

Microloans, as the name suggests, provide borrowers with smaller amounts of cash and can be useful for funding relatively minor expenses, typically $50,000 or less. You can get them through government agencies such as the SBA or via nonprofits, but you may need to put up collateral to secure them. SBA microloan programs are often used by individuals starting a new business or looking to expand a small business. 

8. Working Capital Loans

If you need help with everyday expenses associated with running your small business, you can apply for a working capital loan. These loans are not used for long-term expenses but can help seasonal companies (such as ice cream shops and ski rental businesses) get through slow periods of the year when they may be low on cash needed to cover the cost of doing business.

9. Short-Term Business Loans

Short-term business loans can cover gaps in funding created by a cash-flow shortfall or emergency that requires an unexpected outlay. They’re generally offered with repayment terms of a year or less and can keep you from dipping into other funding sources from your business to remain operational.

10. Credit Union Business Loans

If you want quick approval for a relatively small loan, a credit union loan may be a good option. These loans tend to be for smaller amounts, which can help expedite approval. They’re typically approved by an underwriter instead of a committee, which also helps speed things up. You will probably have to specify the purpose of the loan and present a repayment plan. 

11. Equipment Loans

Equipment loans are designed specifically to help small business owners purchase the equipment they need to run a business, whether it’s a computer system, vehicles for a fleet, office furnishings, or display pieces for a retail store. As with a car purchase, the equipment you buy with the loan can be used as collateral if you are unable to pay back what you owe. 

Small Business Lending Options for Women

You’ve made your business plan. Now you’re looking at small business financing. You’ve got a number of options available, ranging from angel investors and venture capital to loans from traditional banks and other financial institutions, such as credit unions. You may also be able to pursue minority small business grants.

Here are some small business lenders and lending platforms to consider. 

Biz2credit

Loan amounts from Biz2Credit are available for up to $5 million for a business acquisition loan and up to 100% of the equipment’s value for equipment financing, with other ranges for different kinds of loans. Most loans can be funded in as little as 24 to 48 hours, although unsecured business loans can take a minimum of four days, and SBA loans, as mentioned earlier, take longer.

Estimated APR: As low as 3% for some business acquisition loans and as high as 36% for some unsecured business loans.

Minimum credit score: 670. You can plug in your credit score and other factors into the site’s BizAnalyzer to determine your creditworthiness.

Loan options: 

  • Business acquisition loans
  • Business lines of credit
  • Equipment financing
  • Merchant cash advances
  • SBA loans
  • Unsecured business loans

Funding Circle

Funding Circle offers relatively low-interest rates, and you make fixed monthly payments. Business owners are required to offer a personal guarantee and agree to a lien on their business assets.

Estimated APR: Fixed interest rates start at 4.3%.

Minimum credit score: 660. “Borrowers with all kinds of credit and entrepreneurial histories can qualify for small business loans with competitive interest rates,” according to Funding Circle’s website.

Loan options: 

  • Term loans
  • Working capital loans
  • Lines of credit
  • Merchant cash advances
  • SBA loans
  • Invoice factoring

Fundera

You can apply for Fundera loans easily online, and a loan specialist will use the information you provide to select the most helpful loan options for you. It promises funding "faster than at your bank." 

Estimated APR: Starting at 6%

Minimum credit score: 690

Loan options: 

  • Paycheck Protection Program
  • SBA disaster loans
  • SBA 7(a) loans
  • Term loans
  • Business lines of credit
  • Invoice financing

LiftFund

Loans of $500 to $1 million are available through LiftFund, with repayment terms of up to five years. Qualifying criteria are required for a business loan: You have to be at least 21 years old and have proof of outside income. You’ll also need to have lived and operated in the service area for at least six months. Loans are available to businesses across the South, from Florida north to Kentucky and west to New Mexico.

Estimated APR: Up to 18%

Minimum credit score: Not provided 

Loan options: 

  • Working capital loans
  • Equipment loans
  • Recovery funding
  • SBA 7(a) Community Advantage
  • SBA 504 loans

Kiva

Loans start at $25 and go as high as $15,000. The system is similar to crowdfunding platforms in that you have to enlist people to support your business before you receive your loan. Applications take 20 to 30 minutes, then you prove your creditworthiness by inviting people to support you. You have up to 15 days to solicit invitations, up to 30 days to fundraise, and up to three years to pay off your loan.

Estimated APR: Loans are for 0% interest (Kiva is a nonprofit).

Minimum credit score: Not provided

Loan options are available to: 

  • Small businesses
  • Artisans
  • Developing communities

BlueVine

To work with BlueVine, you must have been in business for at least three months and have at least $10,000 in monthly revenue to qualify, plus your company must be business-to-business.

Estimated APR: Loans are for 0.25% interest weekly.

Minimum credit score: 530 FICO® score

Loan options: 

  • Small business loans
  • Invoice factoring

Fundbox

Fundbox offers lines of credit up to $150,000 with no minimum revenue requirements and no prepayment penalties. For lines of credit, you can choose 12- or 24-week repayment plans each time you draw, and with term loans, you can choose repayment plans of 24 or 52 weeks. Eligibility depends on being a U.S.-based business that’s been operating for at least six months, with a business checking account and $100,000 or more in annual revenue.

Estimated APR: 4.66% for 12 weeks or 8.99% for 24 weeks

Minimum credit score: 600 FICO® score

Loan options: 

  • Lines of credit
  • Term loans

National Funding

Some lenders dispense with prepayment penalties, but National Funding goes even further by providing early payoff discounts. You can get loans of up to $500,000 for your business needs with no upfront costs for terms of six to 15 months.

Estimated APR: 4.66% for 12 weeks or 8.99% for 24 weeks

Minimum credit score: 500

Loan options: 

  • Working capital loans
  • Equipment financing

OnDeck

OnDeck provides loans to businesses with a business bank account and annual revenue of $100,000 or more. Lines of credit are available for $6,000 to $100,000, with a 12-month repayment term that resets after each withdrawal. Term loans of $5,000 to $250,000 are available, with an option to apply for more when you paid off half of what you owe.

You have to sign a personal guarantee of repayment and agree to a lien on all your business assets as collateral. You also need to pay a $20 monthly maintenance fee on a line of credit, and you have to choose between a prepayment penalty or higher interest rates.

Estimated APR: Starting at 35%

Minimum credit score: 600

Loan options: 

  • Term loans
  • Lines of credit
  • SBA PPP loans

Kabbage 

Kabbage is an American Express Company. In order to qualify for a loan, you must have been in business for at least a year and have $100,000 or more in annual revenue, including at least $4,200 over the past three months. Terms of the loans range from six to 12 months, and the maximum lending amount is $250,000. Retail and wholesale loans are also available for various types of businesses, including beauty salons, pawnshops, restaurants, and auto repair businesses.

Estimated APR: 1.5% to 10% monthly fee

Minimum credit score: 600

Loan options: 

  • Lines of credit
  • Online loans
  • Equipment loans
  • SBA loans
  • Working capital loans
  • Short-term business loans
  • Commercial loans
  • Inventory loans

Lendio

Lendio allows prospective borrowers to explore business funding opportunities available from more than 75 traditional lenders and alternative lenders, which creates a number of financing options. Lenders include American Express, Bank of America, Fundbox, Funding Circle, On Deck, and Mulligan Funding. Loan applications take 15 minutes to complete, and you can get funded in as little as 24 hours. Lendio doesn’t charge a fee to connect with lenders.

Estimated APR: Starting at 6%

Minimum credit score: 560

Loan options: 

  • Lines of credit
  • Short-term loans
  • Equipment financing
  • SBA loans
  • Business acquisition loans
  • Term loans
  • Commercial mortgages
  • Startup loans

How Small Businesses Use Their Loans

How you use your small business loan depends largely on your goals and where you are in the process of setting up or running your business. 

One lender, Square Loans, did a survey of how small businesses used their loans, and found that the majority fell into one of two categories:

  • Purchasing inventory (31%)
  • Purchasing equipment (30%)

Inventory, as you might expect, was the runaway leader among retail businesses, which spent 60% of their funds on that particular expense.

Working capital loans were also popular, with 17% of borrowers spending their loans on covering day-to-day expenses, while 9% used loans to refinance or pay down other debts, and 6% used them for marketing.

resources for female entrepreneurs

 

More Resources for Female Entrepreneurs

If you don’t want to pursue loans, you have other options, including grants and support from a number of organizations. Here are a few:

National Association of Women Business Owners

Founded in 1975, the National Association of Women Business Owners (NAWBO) is a dues-based organization that represents women entrepreneurs in any industry. It hosts virtual and in-person events to support women in business, facilitate networking, and provide education.

The NAWBO is dedicated to promoting economic development for its members, building strategic alliances, and transforming public policy.

Association of Women’s Business Centers

This nonprofit group partners with the SBA to promote women-owned businesses. The SBA has more than 100 business centers across the country that provide mentoring, training, business development, and financing opportunities to women entrepreneurs. More than 150,000 take advantage of the centers’ offerings every year. 

On Sept. 7, 2021, 14 of the centers received grants totaling $2.7 million from the SBA Office of Women’s Business Ownership. 

Ladies Who Launch

Ladies Who Launch is a 501(c)(3) charitable organization with a mission to “empower a global community of early-stage women entrepreneurs by providing resources, grants, mentorship, and networking opportunities.”

It has hosted 100 free events, meetups, webinars, and virtual events for women, and has used its Shop Women Owned Guides to direct an estimated $5 million in revenue toward women-owned businesses. In addition, it says it has provided $200,000 in capital to women-owned businesses.

National Association for Female Executives

Founded in 1972, the NAFE is a networking and advocacy group for women who serve in executive positions and who own businesses. It hosts conferences and highlights women and women-owned companies for achievement and excellence.

SBA Office of Women’s Business Ownership

The Office of Women’s Business Ownership (OWBO) is an arm of the SBA that provides “advocacy, outreach, education, and support” for women entrepreneurs, focusing especially on those who are socially or economically disadvantaged. Established in 1979, it operates through local SBA district offices. It established the Women’s Business Center Program in 1988.

Center for Women & Enterprise 

The Center for Women & Enterprise (CWE) is a nonprofit organization that focuses on women in the New England area. Since 1995, it has worked with more than 46,000 entrepreneurs in Massachusetts, New Hampshire, Rhode Island, and Vermont. The CWE describes itself as “an inclusive economic empowerment organization” that helps women launch and expand businesses of all sizes through education, training, technical assistance, and certifications. 

Business Grants for Women

A variety of grants are available to female business owners, as well. They include:

The Amber Grant

Amber Grants are available on a monthly basis throughout the year. A $10,000 grant winner is announced on the 22nd of each month, with one of the 12 monthly winners receiving $25,000 more at the end of the year. To be eligible, applicants must be women who own businesses, provide specific plans for how the grant would be used, and detail the background of their businesses.

Backstage Capital

Backstage Capital offers grants and programs to “underestimated founders”: women, people of color, and LGBTQ+ business owners. Any stage company from any industry may apply, including solo founders. Initial investments have ranged from $25,000 to $100,000. For more information, see the group’s FAQ page.

Chicago Foundation for Women

The Chicago Foundation for Women awards grants ranging from $15,000 to $150,000 to women in the Chicago area. The group has two grantmaking cycles, funding freedom from violence and health in the spring and economic security in the fall.

The number of women entrepreneurs is growing, and the number of opportunities for women to gain a foothold with new businesses is growing, too. With these opportunities, you can see what loans will best serve your goals, both in the short term and in the long run for growing and managing your business.


 

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