Microloans for Women-Owned Small Businesses

Lauren WardUpdated September 21, 2021

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

There are 12.3 million women-owned businesses in the U.S., and they generate 1.8 trillion dollars per year. Nonetheless, in 2019, less than 3% of all venture capital funds went to female founders.It’s important for women business owners to explore all financing options to launch and grow their companies. One accessible source could be microloans.Microloans for women are an option well worth exploring. While microloan amounts are smaller than traditional bank loans, if you're a woman business owner, a small business microloan can add that extra boost that your business needs until you’re able to go after bigger financing options.

Microloan Programs for Women Business Owners

Take a moment to evaluate these top lenders for women-owned businesses. These five microloan lenders were chosen for their focus on empowering women business owners while offering funding at a variety of levels.

Accion Opportunity Fund

The Accion Opportunity Fund (AOF) focuses on lending to diverse clients. Almost 90% of the organization’s clients are women, people of color, or immigrants. The AOF offers business loans for women with bad credit as well as microloans for startups. Since it’s a nonprofit lender, the interest earned by AOF is reinvested in other small business borrowers.Qualifications needed for an AOF microloan include:

At least 12 months in business
At least 20% ownership in the business
$50,000 or more in annual sales
18 years or older

You can apply online and review multiple offers without hurting your credit score.

US Small Business Administration (SBA) Microloans

The SBA Microloan program doesn’t focus specifically on women, but it does offer funding to help any eligible business owner pay for things like working capital, inventory, furniture, or equipment. Intermediary lenders have their own eligibility criteria, so it may be a good idea to shop around. Microloans can go up to $50,000 but the average loan amount is $13,000. In addition to small businesses, this program also serves nonprofit daycare centers (a female-dominated industry). Applicants can apply through local community centers and may be required to complete training programs.

Kiva

Kiva is a peer-to-peer nonprofit lender that’s funded by individuals who choose loans to support. U.S. business owners may borrow up to $15,000 at 0% interest. The process works differently than traditional business loans. After filling out a brief application form, you’ll then invite your friends and family to lend to your business. Think of it as a referral. Then you’ll have 30 days to raise funds on the Kiva platform, followed by up to 36 months to repay the loan. One benefit that comes with borrowing through Kiva is that your lenders could also become customers.

Grameen America

Grameen America has invested over $2 billion with over 138,000 female business owners. The organization is also addressing the even greater financing gap faced by minority women business owners. It has launched an initiative to invest $1.3 billion in loans to Black women entrepreneurs over the next 10 years. Grameen focuses on women business owners living below the federal poverty line. The average loan size is $4,500. Microloans are also reported to Experian to help build credit as well. The process for applying for a Grameen America microloan is different from online lenders. You start off in a small group of women and together take a financial training program. After that, you’re eligible to receive a microloan as you continue to network and learn during weekly meetings.

LiftFund

LiftFund offers a range of small business loans, including microloans and SBA loans. It’s available in the following states: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Missouri, Mississippi, New York, New Mexico, Oklahoma, South Carolina, Tennessee, and Texas.In order to be eligible to apply, you must be at least 21 years old. Additionally, your business cannot be in the adult entertainment industry and you cannot have an active bankruptcy. LiftFund also provides support resources for borrowers, including a digital library of resources to help you learn new skills like marketing, finance, and management.

How to Find Microloans for Women-Owned Businesses

There are plenty of online microloans for women business owners to explore. There are several types to choose from.

Peer-to-peer microlenders like Kiva require some hustle in order to raise funds for a microloan.
SBA microloans are backed by the federal government but originated through third-party lenders.
Nonprofit microlenders vary in how they handle loan applications. Some offer online applications while others require in-person training and support.

Microloans for Women: Eligibility and Requirements

Each lender has its own eligibility requirements for approval. You’ll likely need to own a portion of your business and may also need to meet requirements for how long you’ve been in business. While credit qualifications may vary, lenders typically require that you have no recent bankruptcies, foreclosures, or tax liens. Many lenders may also want to see a clearly defined business plan. Check for eligibility requirements as part of your search for small business microloans for women to save yourself time and improve your chances of success.

How Can I Use a Microloan for a Woman-Owned Small Business?

Allowable microloan uses may vary by lender. The SBA program, for instance, allows the money to be used for things like working capital, inventory, and equipment. Peer-to-peer lenders, however, may require you to outline for potential investors how you plan to use the funds. Either way, for your own sake, it’s a good idea to have a clear plan for how you plan to use the funds and what results you expect to achieve because of the microloan. That way you may be more likely to use the funds to achieve your goals.

How to Apply for a Microloan

Getting pre-approved is a great way to shop around and compare small business loan rates. But you do need to be sure that the lender isn’t performing a hard credit check each time. This can damage your credit score. Instead, only submit forms that perform a soft pull on your credit score.While you’re shopping around, it can also be a good time to gather financial documentation for your business, which you’ll likely need to submit with your application. Once you find a microloan offer you’re happy with, you’ll finish the application process with the lender. Many microlenders offer an online application. You may even be able to submit a simple form and check your loan offer, including rates, terms, and monthly payment amount.

Additional Resources for Women-Owned Small Businesses

There are a number of resources available to support women business owners. Nonprofit organizations like the National Women’s Business Council and the U.S. Women’s Chamber of Commerce are good starting points. You can also explore local and online support groups in your industry. It’s a great way to network, learn from other women’s experiences, and even find new clients. These resources may also help you identify small business grants for women and other types of financing, like sole proprietor loans.

The Takeaway

Women-owned small business microloans can help take your company to the next level. In addition to exploring microloan programs, you may also want to explore all of your other financing options at Lantern by SoFi by filling out just one simple form.

Photo credit: iStock/andresrThe tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC0821151

About the Author

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.

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