7 Best Small Business Loans for Women in 2023
Finding funding to get a new business started - especially without a lot of assets to back it up - is never easy.
But for women business owners, it can sometimes feel nearly impossible.
Getting the money to buy a new building, launch a new product, or just keep the bills paid during a downturn in profits requires patience, perseverance, and a little creativity.
Learn more about why SBA loans for women business owners are important, why getting funding can be challenging, and some great loan options for 2020:
Women-Owned Businesses by the Numbers
According to the National Association of Women Business Owners, more than 11.6 million businesses are owned by women.
When counting majority women-owned - with 51 percent or more women in leadership - businesses, women-led firms make up 39 percent of all privately held businesses in the United States.
These businesses employed 9 million people and, as of 2017, generated $1.7 trillion in sales.
Women of color are well-represented in these numbers, with 5.4 million firms being majority-women owned and generating $361 billion in annual revenues.
There are women-owned businesses in every industry, though they are more prevalent in the service industries.
Daycare centers, for example, are largely owned by women, with 89 percent of the operational daycare centers in 2017 being owned by women.
Like all enterprises, women-owned businesses need money to get off the ground and to stay in operation.
Unfortunately, it’s often more difficult for female entrepreneurs to get approved for the loans and other funding necessary for their businesses.
Why Finding Funding is Different for Women Business Owners
Even though women are becoming an increasingly larger portion of the business owners in the United States, many find it difficult to secure the loans they need to get running.
A 2017 study by Dun & Bradstreet and Pepperdine University found that only 30 percent of women who applied for bank loans for businesses were approved. The same study found that half of all business owners who applied for loans, showing that a disproportionately larger number of male-owned businesses received requested funding.
Why do women face more difficulties in receiving funding? Here are 4 common reasons:
They’re Taken Less Seriously
Even though women make up such a large portion of the business community, their ventures aren’t often taken as seriously as those headed up by men.
Of all the women-owned businesses, 99.9 percent of them qualify as “small” businesses. This means they employ fewer than 500 people.
A business with fewer employees is likely to experience growth at a slower rate than is a larger firm, making lenders wary of their ability to raise the capital to pay back loans.
Additionally, with women-owned businesses largely in the service sector, lenders are more likely to see them as risky investments.
After the 2008 recession, this struggle became even more pronounced as banks put tighter controls on the loans they approved.
Historically, the majority of businesses have been owned by men, run by men, and financed by men. The lending industry has been slower to embrace women-owned businesses than the market has.
Lower Personal Credit Scores
Banks and traditional lenders look very closely at a business owner’s personal credit score when determining whether or not they will approve a loan.
And, because of a variety of factors, women have slightly lower personal credit scores than do men.
This makes it far more difficult for women to get approved for traditional business loans at lower interest rates.
Shorter Business History
Many banks don’t approve loans – especially larger loans – for businesses that haven’t been in business for more than two years.
Women business owners often have less access to significant start-up capital than do male business owners, so they need funding earlier in the process. This leaves them applying for traditional bank loans at startup or with only a few months in business.
Without a few years of profit and loss statements, it’s far more difficult for women-owned businesses to prove the viability of their business. And, even if they have these profit and loss statements, it can be more difficult for a woman-owned business to show the positive cash flow many banks require.
Rather than helping businesses get off the ground or get over a slump, traditional lenders want to invest in businesses that will be profitable and have a higher chance of repaying the loan in a timely manner.
Not Enough Collateral
Loans made by traditional banks are secured loans, meaning they must be backed by a significant amount of collateral.
In many cases, that collateral is real estate holdings, cash savings, equipment, or other valuables that can be seized by the lender in the event of lack of repayment.
For many women, access to this collateral is limited compared to their male counterparts.
If you don’t have enough business collateral to secure the loan - a situation faced by many newly formed businesses - then personal assets must be put on the table.
Although female ownership of real estate and large assets is on the rise, men still outpace them in this respect.
Without access to the capital needed to secure a loan, it is far more difficult to get the funding necessary to run a business.
Why a Business Loan is Important
It’s expensive to start up a business or keep one up and running, and even a successful, profitable business could use some funding help from time to time.
Here are some common reasons having access to SBA loans for women is important:
To Purchase Real Estate & Expand Operations
Growing businesses need more space.
Whether that’s more space to serve customers, create products, or house more employees, having access to the money needed to buy and outfit a bigger building is important to keeping business from getting stagnant.
To Purchase Equipment
When it comes to getting expensive equipment for a business, owners have two options: lease or purchase.
Leases may seem attractive, as they offer lower initial costs than buying the equipment. However, once the lease term is up, you aren’t guaranteed to be able to re-lease the equipment if you still need it, and you don’t own the equipment outright.
Financing the purchase price of equipment allows the business to get what they need for a lower price, and then the business owns the equipment at the end of the loan.
To Increase Working Capital
Businesses require a lot of money to remain running, whether it’s to pay utilities, make payroll, or purchase goods necessary to serve customers.
As a newer business, funding these daily operations is tricky.
Getting a loan to help increase working capital can help a business get its feet under it enough to be able to survive on its own revenues.
To Increase Access to Ownership
If business development were left entirely up to the owner having the start-up capital on their own, the barriers to entry into the business world would be much higher than they are now.
Being able to access loans to help businesses get started or survive rough patches allows people with good ideas but not a lot of money to achieve their dreams.
To Diversify the Business World
The business world is full of revolutionary ideas that turned into success stories. Amazon, Apple, and Tesla all started out as new, unique ideas that grew into successful businesses.
Without investors and lenders willing to take a risk and fund a seemingly crazy idea, the business world would be full of the same, safe types of businesses.
7 Best SBA Loans for Women
To help women business owners find the best options for financing their business, we’ve compiled this list of the 7 best SBA loans for women, including how to apply, pros and cons, and other details you need to know:
Lendio is an online lending marketplace that helps match business owners with the best loans to meet their needs.
Their application is quick - taking only 15 minutes to complete - and requests for additional information are usually limited to an extra document or two.
Once a loan is approved, business owners can have their funding in as little as 24 hours, making them a great option for people who need fast funding for a last-minute project.
Pros of Choosing Lendio
- Access to loans from over 75 lenders, including PayPal, Bank of America, and American Express
- Fast application and decision process
- Minimum credit score requirement of 550, a great option for those with lower credit scores
- Personal funding managers offer individual support through the process
- Additional services including credit repair, bookkeeping services, and credit repair
- Loan minimums of $1,000 and maximums of $5 million
Cons of Choosing Lendio
- Requires businesses to have 6 months of history and $10,000 per month in revenue, meaning start-ups are excluded
- You’re working with a broker, not directly with the lender Reviewers report poor customer service and hidden fees
How to Apply with Lendio
- Visit www.lendio.com and enter the amount of funding you need.
- You’ll be asked to select your personal credit score from a range of values. Choose the range that applies to you.
- Enter the date you started your business.
- Choose the range that best applies to your business’s monthly revenue.
- You will be asked to select from a list which options apply to your business, such as had a bankruptcy, accepts credit cards, and non-profit.
- You’ll be asked more information about your business, such as the industry you’re in and your percentage of ownership.
- Once you have provided all the necessary information, you will be presented with a series of options for loans. Select the one that’s most attractive to you.
- You may be asked to supply additional information.
- You should have a decision on whether your loan application was approved quickly, and may be able to access your capital within 24 hours.
2. Lending Club
Lending Club is a peer-to-peer lender that offers flexible options for business, personal, and auto loans with interest rates starting at 4.99%.
They partner with the U.S. Women’s Chamber of Commerce with the aim of helping more women-owned businesses access funding, making them a great option for female entrepreneurs.
Apply quickly and receive multiple quotes to compare and choose from.
Pros of Choosing Lending Club
- Offer both short- and long-term loans
- Low interest rates
- Reasonable payment terms
- No collateral requirements
- Loans available from $5,000 to $500,000
- No early repayment fees
- Commitment to helping women-owned businesses
Cons of Choosing Lending Club
- Requires 1 year in business and $50,000 annual revenue, meaning it’s inaccessible for start-ups
- Requires a minimum credit score of “Fair”
- High origination fees
How to Apply for Lending Club
- Visit www.lendingclub.com/business.
- Enter the amount of money you want to borrow and what you want to use the money for (Ex: Working capital, remodeling, marketing).
- You’ll be asked to enter information about your business, including its legal name, number of employees, and business structure.
- Enter your personal and financial information.
- You’ll receive a listing of quotes. Compare and contrast the terms and choose the one that you like best.
- If you’re approved, the funds will be deposited into your account in as little as a few days.
With an A+ rating with the Better Business Bureau, OnDeck offers both traditional loans and lines of credit. This provides businesses with flexible funding options to suit their needs.
Additionally, OnDeck rewards repeat borrowers with significant discounts.
Pros of Choosing OnDeck
- Options for lines of credit and loans
- Great customer service
- Loans from $5,000 to $500,000
- Loyalty discounts
- Funds available within 2 days in some cases
Cons of Choosing OnDeck
- Higher introductory interest rates than other online lenders, starting at 9.99%
- Frequent payment requirements
- Minimum requirements: 1 year in business, a credit score of 600, and at least $100,000 in annual revenue
How to Apply for OnDeck
- Visit www.ondeck.com.
- Enter how much money you need, how quickly you need it, and a short description of what you plan to use the funding for.
- Enter information about your business, such as the amount of time in business and annual revenue.
- Fill out the required personal information.
- Upload three months’ worth of bank statements to prove cash flow.
- Receive a call from your dedicated loan expert to discuss your options within one business day.
- If you’re approved, you’ll choose your term, loan amount, and payback schedule. You’ll then complete your checkout online.
- The money will be deposited to your account in as little as two business days.
Kabbage is a modern online lender that offers easy access to funds with an optional Kabbage Card.
You can link your business accounting or bookkeeping software directly to Kabbage, allowing those deciding on whether you qualify for a loan to see the health of your business.
Pros of Choosing Kabbage
- Easy application process
- Easy access to funds
- Loans up to $250,000
- No prepayment penalties
- Flexible credit score requirements, with a minimum requirement of 560
Cons of Choosing Kabbage
- No funding greater than $250,000 available
- High interest rates
- Complicated fee structure
- Requires at least 1 year in business and $50,000 annual revenue, or $4,200 monthly revenue over the last three months
How to Apply for Kabbage
- Visit www.kabbage.com.
- Create a login, allowing you to return to Kabbage any time.
- Enter basic business information, including the amount of time in business and annual revenue.
- Link your business accounts, including PayPal, Stripe, and QuickBooks for easy review of your business accounts.
- Receive a decision on whether or not you qualify, and the terms, quickly.
5. Funding Circle
Funding Circle Offering competitive interest rates and exceptional customer service, Funding Circle is the choice for businesses seeking more than $25,000 in loans.
Its transparent application system doesn’t discriminate against gender in applicants, and the company has committed to lending more than $500,000 to women-owned businesses.
Pros of Choosing Funding Circle
- Highly rated customer service
- Competitive terms and fees
- Transparent application process
- Loan terms from 6 months to 5 years
- The application process only takes 10 minutes
- Loans from $25,000 to $500,000
Cons of Choosing Funding Circle
- Slow access to funds
- Require you to be in business for at least 2 years
- A minimum credit score of 620 required
How to Apply for Funding Circle
- Visit www.fundingcircle.com.
- Enter how much you’re hoping to borrow and how long you want to take to repay your loan.
- Fill out information on your business and yourself.
- You will hear from your personal loan specialist within an hour to collect any additional documentation and answer any questions.
- Receive a decision on whether or not you’re approved within 24 hours.
- Once you’ve accepted the loan terms, you will receive funds in as little as five days.
This non-traditional lender aims to help businesses who have previously been rejected from funding.
Accion offers loans globally, and credit score requirements vary depending on where you live. Accion provides flexible repayment terms and affordable loans.
Pros of Choosing Accion
- Flexible credit score requirements, with minimum requirements starting at 575
- They help businesses with poor credit history or other difficulties getting loans
- Flexible repayment terms
- Nonprofit global lender
- Specialized small business loans available in some areas
- Loans available from $300 to $250,000
- They offer funding specifically for startups
Cons of Choosing Accion
- Slow decision time
- Potentially higher interest rates
- Additional fees
How to Apply for Accion
- Visit www.accion.org and choose your region.
- Fill out basic information about yourself, including your name and email address.
- Choose from the loan type you would like to apply for. Available loans include Flash Loans, Start-Up Business Loans, and Existing Business Loans.
- Provide information about you and your business, including whether you’ve filed for bankruptcy recently and if your business regularly generates revenue.
- Complete the rest of the required information about yourself and your business.
- You will receive a decision from Accion within two business days.
- If you are a good fit for Accion, you will work with a lending team member to collect documentation necessary for your application.
If bad credit is keeping you from qualifying for a business loan, then Fundbox may be a great option.
They also offer special loans for women- and minority-owned businesses, meaning they’re committed to helping people get the money they need. They do only offer short-term loans with weekly payment options, so if you’re looking for a loan that you can repay over a number of months or years, Fundbox isn’t going to be your choice.
Pros of Choosing Fundbox
- Invoice financing and lines of credit available
- Fast funding
- Flexible options for those with bad credit
- Focus on lending to women and minorities
- Get a lending decision in under 3 minutes
- Pay only for the money you withdraw, even if you’re approved for more
Cons of Choosing Fundbox
- No loan options over $100,000
- Need to prove $50,000 in annual revenue and at least 3 months in business
- Limited software and bank account compatibility
- Short-term repayments
- Weekly payments only
How to Apply for Fundbox
- Visit www.app.fundbox.com.
- Enter basic information about yourself and your business, including time in business and annual revenue.
- You will receive a decision on whether you’re approved within 3 minutes.
- Receive access to your funds quickly, as soon as the next business day.
Small Business Funding Tips from Female Entrepreneurs
Looking for inspiration when it comes to running a thriving business? Check out these helpful business tips from thriving female business owners.
Write Up a Business Plan
“Have a clear vision and solid business plan. Be open to other ideas. Create banking relationships. … Save and invest your profits to grow your financial statement.” - Vonda White
Create a Budget
“Create a budget and a measurement process to keep track of how you are doing monthly. If you don't know where you stand financially and have neither short- nor long-term financial goals, then you are just letting fate dictate your success, and we know those odds aren't too good. Control your own destiny!” - Sylvia Browder
“Negotiate over and over, again – everything. Loans, fees, rates, you name it – call and say you are reviewing other options and want to know you have the best value for the price. As the buyer, you are in control and you'll see how nice it is when true partners want to keep you loyal and work with you.” - Sue Ennis
Build Your Network
“Most importantly, network both online and offline and find a mentor for both. I feel there is more of an advantage to being a woman business owner as other women entrepreneurs are more open to reaching out to you.” - Ros Guerrero
Research Your Options
“Research, research, research. You can do many things yourself without having to spend extra money. It will take more time to teach yourself, but it's worth it in the end when you aren't staring at a pile of bills you can't pay. That way, you can focus on the important things about getting your business started versus how you will pay the bills tumbling in the door.” - Molly Quarles
Compare Business Loans for Women
Choosing the right loan for your business is almost as important as selecting your name -- the wrong loan can truly sink your business’s chances.
At the Credit Review, you can find all the best loan options for women in one place, allowing you to compare and contrast rates, terms, and requirements in minutes. Start your comparison today.
How can a small business loan help me?
A small business loan can help your business grow in various ways, including purchasing real estate and equipment, expanding your business, increase working capital, and cover any additional expenses such as invoice financing.
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