Best Small Business Loans For Women: Financing Guide For Female Entrepreneurs
Camino Financial21 Nov 2023
Small business loans for women have not only empowered countless female entrepreneurs but have also opened doors to incredible opportunities in the business world.
Discover the various financing options tailored specifically for visionary women like you, eager to nurture and grow their businesses.
Let's pave the way for success together!
Your business should be for-profit and based in the U.S.
The business owner should have invested time and money into the company.
You should prove the need for financing and specify how you'll use the funds.
Your business should qualify as a "small business" according to SBA guidelines.
Competitive Rates: Interest rates based on the prime rate plus a markup. APRs are generally more competitive than those of non-SBA lenders.
Low Fees:Lenders don't charge upfront guarantee fees or annual service fees for certain SBA loans. They reassess fee structures yearly.
Long Repayment Terms: Up to 10 years for working capital or equipment and 25 years for real estate.
Large Loan Amounts: Up to $5 million for SBA 7(a) loans and $5.5 million for 504/CDC programs.
Strict Eligibility: Need several years in business, solid finances, and good credit.
Slow Processing: Funds take 1-3 months to process. The application requires detailed and extensive documentation.
Personal Guarantee:Owners who hold 20% or more of the business must provide a personal guarantee. Lenders may also require collateral or down payments.
The SBA loan program also sponsors various business development programs. For example, the Women’s Business Centers (WBC). These centers help women start and grow their small businesses.
Accion Opportunity Fund
Max Loan Amount
Minimum Credit Score
Credit Flexibility: AOF accommodates those with poor credit or small loan needs, looking beyond just credit scores.
Custom Loans: Offers varied loan terms and, if unable, directs you to partners or alternative options.
Business Coaching: Provides free mentoring and business advice.
Expert Guidance: One-on-one sessions available on diverse business topics.
Educational Resources: Access to videos, articles, and learning tools in AOF's resource center.
Loan Range: Offers between $5,000 to $250,000.
Business Age: Qualify with just three months of operation.
Flexible Terms: Customized loan terms to suit your needs.
No Early Payment Fee: No penalties for paying off the loan early.
Slower Processing: Takes longer than most online lenders.
Limited Availability: Not accessible in all U.S. states.
Max Loan Amount
Minimum Credit Score
Quick Funding: Swift online application process with minimal information required. Possibility of receiving a same-day business loan, with funds transferred in as short as 24 hours. You can get the funds even quicker for an expedited wire transfer with a $15 fee.
Flexible Credit Requirements: Bluevine is more accommodating with its credit score qualifications than many lenders. Businesses with a FICO score as low as 625 can still qualify.
Emphasis on Cash Flow: Bluevine evaluates a business's cash flow along with the credit score. Connecting your business bank account or submitting bank statements is part of the application process.
Quick Fund Access: You can receive funds within 12 to 24 hours.
Multiple Term Options: Choose from various financing durations to fit your needs.
Low Credit Score Acceptance: They accommodate borrowers with low credit scores.
Weekly Repayments: You might need to make repayments every week.
Personal Guarantee Needed: You must provide a personal guarantee.
State Restrictions: They don't offer services in North Dakota, South Dakota, or Nevada.
Higher Interest Rates: They might charge higher rates than traditional lenders.
Max Loan Amount
Minimum Credit Score
Quick Fund Access: Apply online for funds in 24-72 hours, similar to Bluevine and OnDeck.
Prepayment Benefits: No penalties for early payments, with added discounts. Option to increase funding after 60% repayment.
Flexible Loan Qualifications: Minimum 500 credit score and six months in business. Ideal for startups and low-credit businesses. Potential UCC lien.
Credit Check Approach: Soft pull initially, hard pull only when funding.
Factor Rate Charges: Complicates cost comparison with other lenders.
No Business Credit Enhancement: Doesn't contribute to building business credit.
Short Loan Duration:The maximum loan term is 15 months.
Max Loan Amount
Minimum Credit Score
Quick Fund Access: Fundbox tailors to businesses that need quick working capital. Connecting an online application to your business account or accounting software can ensure funds by the next business day.
Easy Qualification: They have looser standards compared to many lenders. It's welcoming even to startups with just a few months in business and accepts credit scores as low as 600. Their evaluation process combines credit report data and business financial services insights.
Repayment Perks: Fundbox promotes financial flexibility. You can pay back early, save on fees, and avoid penalties. Plus, inactivity, account maintenance, and origination fees are absent.
Quick Fund Access: You can obtain funds within a day after approval.
Easy Application: Streamlined application process requiring minimal documentation.
Startup Welcoming: Suitable for businesses as young as six months old.
No Hidden Fees: No charges for early repayment, account upkeep, or inactivity.
High Rates: Costlier compared to conventional banks.
Personal Guarantee: Borrowers might need to provide a personal assurance.
Short-term Commitment: Lenders expect weekly repayments, and terms last up to only 24 weeks.
Different Types Of Financing Options That Women-Owned Businesses Can Access
Online Business Loans
Female minorities often choose online loans because they provide a convenient way to access cash quickly.
Online lenders offer the main advantages of speed and the ability to apply anytime, anywhere. The application and funding process is simpler and faster, sometimes taking as little as 2 days!
That's why many consider that online lenders offer the best small business loans for women in the market.
Some lenders offer bad credit score loans
Quick and easy application and funding
Interest rates can be higher compared to banks
Camino Financial is an online lender with the mission to help as many business owners as possible. Our online business loans can help you make the investments you dream of.
Apply for a business loan today
Loans From Traditional Lenders
While loans offered by banks and credit unions tend to have great terms, they have stringent lending guidelines. This prevents many women business owners from getting funding.
When choosing the right bank or credit union, compare:
minimum and maximum borrowing limits
Some lenders may require applicants to have established businesses with a hefty annual revenue.
Depending on the financial institution, you can repay from 3 to 10 years to accommodate your budget.
Some have the lowest interest rates for business loans
The financial institutions have many branches scattered throughout
They provide in-person customer service
Approvals can take up to 4 weeks or more
On average, they only approve 13% of applications
They require applicants to have good credit
May require collateral to secure the loan
Equipment financinghelps entrepreneurs buy business equipment. Lenders offer to finance with an APR ranging from 8% to 25%.
The APR on these business loans depends on
The resale value of the equipment
Your credit score
Your business' industry
Equipment covers a broad term. It can range from baking ovens, coffee machines, and specialized production machinery.
Predictable monthly payments
Helps in boosting business credit
Relatively low APR
The equipment is the collateral
These small business loans for women offer quick access to cash
It requires a high credit score for good terms
There's a cash shortfall when customers take over 30 days to pay an outstanding invoice. One solution is applying for women-owned business loans. Theyoffer an advance on unpaid invoices (80% to 90%).
The cost of invoice financing can get pretty expensive. The total invoice amount is between 1% to 3% a month. You may need to ask your clients to pay the financing company instead of you, which could be disruptive.
Accessible to early-stage or unprofitable businesses
It could be disruptive to client relationships
Expensive if used for over 30 days
Personal Loans For Business Use
A personal loan can be a viable solution for businesses needing startup funding to get off the ground. Its requirements are less strict than traditional business loans.
They are usually the most accessible types of financing to get approved for.
Lenders can process quickly, providing rapid capital for urgent business needs.
They often have lower interest rates than other options, making them more affordable.
Borrowers can use the funds from a personal loan for any business purpose with few restrictions.
You are personally responsible for repaying the loan, which can be risky if your business fails.
They might not provide enough capital for larger business initiatives.
Unlike business loans, personal loans may not offer certain business-centered benefits.
Asset-Based Line Of Credit
With an asset-based line of credit (LOC), the company's assets work as collateral: the more assets you have, the more you can get.
You can draw cash from your account and only pay interest on the outstanding balance. You'll also need to pay a periodic fee, typically lower than the interest rate, based on the undrawn balance of the LOC.
Typically, the borrowing limits range from $5,000 to $150,000. The challenge of getting a LOC is the application process. It takes more than two months and demands a lot of a business owner's attention.
Flexible repayment terms
Most suitable to fund working capital gaps
Long application process
Requires business assets to secure these small business loans for women
Merchant Cash Advance (MCA)
Merchant cash advances are a trendy type of small business loan. Why? They are easy to get, and these alternative lenders don't usually consider your credit score.
Lenders give you an advance based on your credit card sales. So, if you make a lot of credit/debit card sales, you'll receive a lot of cash.
After, you pay with a percentage of each future credit card sale. But here's the catch: they are costly, and the APR can go up as high as 400%.Pros
The application process is simple
You can receive the capital fairly quickly
Personal assets (e.g., home, car) won't work as the collateral for the loan.
Loan qualification criteria are less strict compared to conventional banksCons
The interest rates in these small business loans for women are incredibly high. They can end up hurting your business.
You may have to make daily payments.
There is no set period to repay the MCA. It depends on how good your sales are (if you're going through a low season, it will take longer to repay)
They have a lot of fees
Purchase Order Loans
Sales you acquire through a purchase order secure the small business loan. It's like invoice financing.
When you receive products, the lender pays suppliers directly. That way, the manufacturer (you) can fill customer orders quickly. Customers pay the lender directly. Then, the lender sends a payment to you minus fees.
These small business loans for women are a helpful financial alternative for quick capital.
These businesses are often low on cash and can't pay suppliers upfront.
If customers don't pay the lender in a timely fashion, the lender won't pay you.
Also, women business owners stay out of the loop, so they don't have the chance to develop ongoing relationships with suppliers and customers.
Home Equity Loan
If you have a mortgage on your home, you've built up equity that you can borrow against. As long as you have enough income and a good credit rating, most lenders have no problem offering this type of loan.
Lenders don't require a business plan, copies of tax returns, or financial statements.
You make monthly payments on the loan, usually at a fixed rate and term.
The interest you pay annually toward repayment of the loan is generally tax-deductible.
Since your home is the collateral, you risk foreclosure if you can't make payments.
A nonprofit loan is ideal for women and other minority small business owners. The funding comes from nonprofit lenders within the community. A nonprofit loan offers economic aid to small business owners.
You can get capital for your business up to $50,000.
Lenders may also offer a secondary microloan if you need more cash.
Lenders may or may not require collateral to secure the loan.
If you don't have a strong business plan or excellent credit, the lender may not approve small business loans for women.
Rollover For Business Startups (ROBS)
Imagine you've already put money away for retirement in a 401(k) and are in your 30s and 40s.
Pulling money out of your retirement fund ("roll over" the money) to start a new business is a viable option.
They can be good loans for female business owners. Although, they are not the best for someone about to retire.
You won't pay an early withdrawal penalty if you transfer money directly to a business account.
Also, you don't pay interest on a ROBS.
You could lose your retirement savings if your business fails.
The lender usually charges fees when transferring funds from your 401(k) to your business bank account.
Hard Money Loans
These business loans are a type of asset-based financing. Aborrower receives funds secured by collateral in the form of real property.
This type of loan is suitable for someone who flips houses and doesn't need long-term financing.
These small business loans for women are available to borrowers with a lower credit score.
Getting a hard money loan takes far less time than a loan from a traditional lender.
You may get a better rate at a traditional bank if your credit score is excellent.
Interest rates are in the 10%-20% range.
Also, if you default on the loan, investors go after the collateral to sell the assets to recoup losses.
Equity financing is when a company raises money from investors for partial ownership of the company.
Commonly, this takes the form of selling shares (stocks) in a company.
The most obvious advantage of equity financing is that it can give companies access to the money they need to continue growing.
This is especially true of young companies who haven't yet reached a point where they can be profitable and generate enough revenue from their products or services.
How To Compare Small Business Loans
It's good to compare lender requirements to choose the best one. For example:
Minimum credit score and revenue requirements
Available loan amounts
Also, pay attention to consumer 4 or 5-star ratings. Here are some guidelines to understand the terms you'll compare:
APRs: The rate includes all the fees the lender charges the borrower. Lenders charge rates based on how much risk they will assume to approve a loan.
Cost to borrow: The total interest and fees charged by a lender represent how much it costs to get a loan for a specific term.
Fees charged: Typical fees: origination, late, insufficient funds, prepayment penalty, payment processing, and service. Choose a lender with fewer fees.
Short or long-term loan: A shorter term in business loans means your monthly payment is higher, but you pay less interest because you pay off the loan quicker. You'll pay more interest with a long-term loan because it takes longer to repay the loan.
How To Get A Small Business Loan As A Woman?
Decide on how much money you need to borrow and how you'll use it
A female business owner has many options for using their loan proceeds, as long as they are business-related expenses. For example:
Launch a startup business
Hiring more staff
Buying equipment to launch a new product or service
Purchasing land for a future warehouse
Above all, women should use their business loans to get the best return on their investment.
The Importance Of Loans For Women-Owned Small Businesses
According to Fundera:
"There are 12.3 million women-owned businesses in the U.S. by 2022", and according to the 2020 Annual Business Survey (ABS), approximately 18.7% (1.1 million) of U.S. employer businesses were minority-owned.
These numbers show the importance of female and minority small business owners. They strengthen the state of the economy. They play an essential role in fighting unemployment in underserved communities.
Minority businesses should continue to open new businesses and keep them running successfully. The economy grows thanks to the hard work of these entrepreneurs.
Small Business Grants For Women
There are grants only available to female entrepreneurs. Nonprofit organizations usually offer them. Below, we have listed 7 of these small business grants for women.
The InnovateHER Challenge takes place yearly. It awards women entrepreneurs with three grants totaling $70,000.
This SBA-sponsored grant aims to help women-owned businesses develop innovative products and services that empower and influence the lives of families and women in the industry.
The SBA chooses at least 10 finalist applicants to participate in a national challenge. The finalists will then pitch the ideas, products, or services.
The top 3 winners will get grants for female business owners for $40,000, $20,000, and $10,000.
The Amber Grant debuted in 1998. It honors Amber, a young female entrepreneur who perished before her vision became a reality. The Amber Grant helps female entrepreneurs to fulfill their business dreams.
The program awards 12 female entrepreneurs $10,000 each, with one grant awarded each month. More so, it awards a $25,000 grant to one of the 12 winners at the end of every year.
Cartier Women's Initiative Award
The Cartier Women's Initiative focuses on women business owners actively generating revenue. It's exclusive to women entrepreneurs owning a business for 1-3 years. Top finalists win up to $100,000; other award winners receive $30,000.
Besides, each finalist gets personal mentoring and business training. Plus, they get to attend network, entrepreneur, and coaching seminars.
Tory Burch Foundation
With the Tory Burch Foundation, women can present their businesses to influential leaders. You can receive $5,000 for business education. Plus, a one-year fellowship to contact fellow women entrepreneurs.
The Tory Burch Foundation also offers workshops and networking opportunities to fellowship winners. It supports and empowers female entrepreneurs by awarding $15,000 grants.
Eileen Fisher Women-Owned Business Grant
Eileen Fisher Women-Owned Business Grant gave private grants each year to women-owned businesses.
There have been no updates since 2019, though. You must prove that your business is ready for growth. Also, it supports innovation, sustainability, and awareness of human rights.
How To Apply For Woman-Owned Business Grants
Are these small business grants for women-owned businesses suitable for you? Follow these steps:
The process is not that difficult if you want to get a grant for your small business. It can be pretty lengthy, though.
First, find a grant that appeals to you and fits your business.
Go to their site and check their requirements.
Ensure you meet them all, or your application will be in vain.
Then, it's just a matter of waiting.
These foundations take a lot of time to review all the applications.
Get The Financing Your Small Business Needs!
Access to finances is one of the significant challenges many people face. Especially women entrepreneurs.
Luckily, there are solutions like Camino Financial. We provide speedy and convenient business financing to immigrantsand minority business owners.
Our primary goal is to see small entrepreneurs rise and become giants in the business field. We can even approve your loan if you have less-than-perfect credit or no previous credit history. We want to help you achieve success!
Apply for a business loan today
Do women face difficulties obtaining business loans compared to men?
Yes, women often encounter challenges when seeking business loans, sometimes more than male business owners. This difficulty arises due to historical biases and perceptions. However, perseverance can lead to success, and there are female-friendly lenders available.
Can women with bad personal credit or only an ITIN obtain a business loan?
Yes. Online lenders might provide loans to women with bad credit or just an ITIN. They base approval on factors such as revenue, years in business, outstanding debts, and profitability.
But, interest rates could be higher, and they might require collateral.
Why are women-owned businesses often denied loans?
Bias plays a significant role. Historically, men-owned businesses might have had higher revenues and credit scores, contributing to some lenders' reluctance. Also, some women entrepreneurs have reported facing gender bias during the loan process.
What should women prepare when seeking a business loan?
Lenders typically review personal and business credit scores, business statistics like annual revenue and time in business, and various documents like tax returns, bank statements, and business licenses. Having a business plan can also be beneficial.
Apart from loans, how can women fund their business ventures?
Women can pitch to potential investors, such as angel investors or venture capitalists. They can also:
seek government grants,
apply for funding programs for women entrepreneurs,
or try crowdfunding on platforms like Kickstarter or Indiegogo.
*The lenders and business loans in this article are not specific for women; instead, they are financial products that can help any entrepreneur grow, thrive, and reach success.