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Today’s Top Lenders for Women-Owned Businesses

Editor’s note: At Lantern, we strive to help you make financial decisions with confidence. To do this, we occasionally feature content that includes information about our partners and their products or services. We do not provide, endorse, or guarantee any third-party product, service, information or recommendations—and our opinions are our own.
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Lantern

Updated May 6, 2021
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Today’s Top Lenders for Women-Owned Businesses; Women are making a big impact on the small business world. In fact, between 2014 and 2019, the number of women-owned businesses increased by an incredible 21%.
We know that weathering the COVID-19 pandemic has been stressful for small businesses owners. We’re here to help you find solutions. If you need support during this time, the U.S. Small Business Administration (SBA) has a number of programs to help women-owned small businesses just like yours, including the Paycheck Protection Program (PPP) and SBA Debt Relief, which is currently open until May 31, 2021. Be sure to check out the SBA’s website for the most current information regarding coronavirus relief options.Women are making a big impact on the small business world. In fact, between 2014 and 2019, the number of women-owned businesses increased by an incredible 21%.  If you’re joining this trend as a woman looking to start or grow your own business, a small business loan may be just the boost you need.Below, you’ll find small business loans for women from the nation’s top lenders. Compare your options so that you can apply for the funding your company needs.

Small Business Loans for Women: Our Top Picks

Below are Lantern’s top seven picks for small business loans for women (in alphabetic order). These picks are based on criteria including minimum credit score required, time to funding, and whether the lender offers special programs for women borrowers. See a full breakdown of our rating methodology at the end of the article. (Data used in our analysis was accurate as of March 3, 2021.)

Uses for Small Business Loans for Women

Whether you need to purchase new equipment or invest in a commercial property, there are small business loans and other financing options to help you meet your business goals. You might consider a business loan for items like:
  • Payroll financing
  • Expanding or relocating the business
  • Buying or repairing equipment
  • Hiring more employees
  • Consolidating other business debts
Our select group of lenders offers a wide array of financing options, including startup loans for women that can get you going with a strong foundation. Just one application can provide many solutions to keep your small business thriving.

Types of Small Business Loans for Women

With so many options, from Small Business Administration (SBA) loans for women to cash advances, it can be challenging to know which funding type is right for your business. We’re here to help.Check out the different types of business funding below so you can choose the option that meets your business’ needs.

1. Business Line of Credit

What is it?Similar to a personal credit card, a business line of credit gives you access to a set amount of money (say $50,000, for example), but you only pay interest on the amount you use. Typically, you can withdraw and repay as needed, as long as you don’t go over the approved credit limit.Each creditor has its own way of determining approvals, credit limits, and interest rates. A few factors that might be taken into consideration include:
  • Your business credit rating
  • Your personal credit score
  • The amount of time your business has been running
  • Revenue
  • Your business plan
Why choose it?A business line of credit may be a good option for business owners who want cash readily available for unexpected expenses, smaller purchases, or short-term financing. A business line of credit offers a balance of flexibility and control so you can spend only as you need to and replay only what you use (plus interest)..  Keep in mind:Typically, lenders want prospective borrowers to have a strong credit and revenue history. If you’ve been in business for only a short amount of time and haven’t built up your credit, you may find it more difficult to qualify for a business line of credit from a bank than would a more established business. Online lenders typically have looser approval requirements but may also have higher interest rates and lower credit limits.

2. Term Loan

What is it? A term loan allows you to borrow a set amount of money and then pay back with interest on a predetermined schedule.Why choose it? If you need a larger sum of money to invest in your business, term loans can be a great option. They give you the flexibility to use money for any part of your business and pay it back over a term that fits with your company’s growth.With long-term and short-term options, you can decide what is realistic for your business needs. Long-term small business loans  often have lower monthly payments, but you may end up paying more over the lifetime of the loan  because of the accrued interest over the extended repayment period. A short-term loan may result in higher monthly payments, but you’ll likely pay less in interest because of the shorter repayment period.  Keep in mind:Both banks and online lenders offer term loans. While banks typically offer lower annual percentage rates (APRs) for their customers, it can be challenging to get a term loan from one if your business is brand new or if your credit rating is low. Additionally, banks frequently require some form of collateral in case you default on your term loan.

3. SBA Loan

What is it?These small business loans for women are guaranteed by the U.S. Small Business Administration (SBA) and offered by banks and other approved lenders. A loan guaranteed by the SBA may provide lower interest rates, flexible terms, educational opportunities, and business counseling for those who qualify.You can apply for any amount from $500 up to $5 million, depending on the type of loan, and use the capital for everything from working capital to real estate. Here are a couple of common SBA loans:
  • SBA 7(a): These may be ideal small business loans for women with established businesses that need up to $5 million for almost any business-related purchase, including property. Additional options include an SBA 7(a) Small Loan (for amounts up to $350,000), or an SBA Express loan, which has a turnaround time of 36 hours for well-qualified applicants.
  • SBA 504: These small business loans for women are meant for the purchase of new or existing buildings and land, renovation of property, new construction, or refinancing of debt related to the expansion of your business. You can borrow up to $5 million, but  bear in mind that SBA 504 loans can’t be used for working capital, inventory purchases, or real estate investment.
Why choose it?Compared to other lending options, SBA loans may offer lower interest rates and longer loan terms. They may also allow higher borrowing amounts that can be well-suited for larger purchases. If you’re looking to grow your business and have a strong credit history, among other factors, an SBA loan may be a great option.Additionally, if you’re a veteran, the SBA offers a wealth of resources and funding options to help get your business up and running. If you qualify, when comparing your choices, make sure you also evaluate small business loans for veterans.Keep in mind: Qualifications for an SBA loan can be stringent and the application process can be long and difficult. If you need funding fast or don’t have the strongest credit, this might not be the optimal choice for you.

4. Commercial Real Estate Loan

What is it?A commercial real estate loan is a loan specifically meant to fund the purchase of a building intended for use as office space, a retail shop, or any other commercial function.Why choose it?If you’re growing your business and need more space, or you’re expanding into the retail sector, a commercial real estate loan may be a good option to consider.Keep in mind: Commercial real estate loans can look very different depending on the lender and the value of the  property in question. How much financing you receive will depend on loan-to-value (LTV) ratio: the size of the loan compared to the value of the property. For example, if you purchase a building for $200,000, you may receive $150,000 or 75% of the total value. The remaining amount would need to be self-funded and act as a down payment on the property.Fees are another factor to consider. In addition to the down payment you’ll make on a commercial real estate loan, you may have to pay fees for the appraisal and inspection of the property, along with local filing fees. It’s a good idea to speak to your lender about the fees and additional expenses you should expect so you can accurately gauge whether a commercial real estate loan is the right choice for your needs.

5. Equipment Loan

What is it?Equipment loans offer financing for the purchase of machinery, vehicles, or other business-related equipment. The equipment you’re buying serves as the collateral on the loan. These can be great loans when you need equipment to get your brand-new business up and running or need to replace old equipment after years of use.Why choose it?Both new and established small businesses can benefit from equipment loans. If you need equipment but don’t have the capital to purchase it outright, equipment financing may help.Keep in mind: These may be useful small business loans for women business owners with bad credit since they don’t require collateral. That’s because the equipment itself acts as the collateral. But it’s important to try to make sure your loan term isn’t longer than the equipment’s useful life. And be aware, too, that if you’d rather not take out a loan, there are also options for equipment leases.

6. Personal Loan for Business Use

What is it?Personal loans  are based on your personal credit history and may provide funding for your business.Why choose it?Personal loans for business may help you obtain startup capital. If you don’t have business credit established, but you do have good personal credit, getting a personal loan may be a good option.Keep in mind:Personal lenders may have restrictions on what you can use the money for, including stipulations about business expenses. Additionally, unsecured personal loan amounts are typically smaller than other types of business-related loans secured by collateral, so you might need to combine a personal loan with other forms of financing to make larger purchases. 

7. Invoice Financing

What is it?If you’re waiting for customers to pay their invoices and you need cash for business expenses, invoice financing uses your unpaid invoices as collateral so that you can get a cash advance from your lender.Why choose it?If you have a business-to-business (B2B) service with irregular billing cycles, invoice financing can help pay for operating expenses as you wait for your customers to submit payments. A lender advances you a percentage of your outstanding invoice amounts. You can then use that money to reinvest in and grow your business more quickly than if you’d waited for your customers to pay their invoices.   Keep in mind:If you operate a business-to-consumer (B2C) service, you aren’t invoicing customers so you probably won’t qualify for invoice financing.Additionally, lenders often charge non-refundable processing and repayment fees for invoice financing. If your customers are late on invoice payments, you’re still responsible for paying the weekly fee associated with the invoice amount that hasn’t been paid back yet.

8. Microloan

What is it?Microloans are another type of small business startup loan women business owners may be interested in. They’re  usually offered at $50,000 or less by nonprofit organizations and peer-to-peer lenders. They may also be used by established businesses in need of smaller amounts of money.Why choose it?Microloans can be great options for any business that needs to borrow a small amount of money. They can be ideal small business loans for women with bad credit.Additionally, because many microloans come from mission-based lenders, you may be able to get specialty funding, like small business loans for minority women and other underserved communities. SBA microloans are also available and may carry advantages like longer terms and favorable interest rates for qualified borrowers.Keep in mind:Compared to the other lending options, microloans may be easier to qualify for, but that also means they can carry higher interest rates.

Applying for a Women-Owned Small Business Loan

Keep these steps in mind as you search for financing for your business: 
  1. Consider the specific need(s) your business has and why you need the loan.
  2. Choose a type of loan that aligns with your needs.
  3. Decide which type of lender(s) you’d like to use. Options to consider include:
    • An online lender
    • A bank
    • A credit union, which consists of members who all contribute and borrow from each other. Compared to banks, credit unions may have more desirable small business loan fees and customer service capabilities
    • A peer-to-peer network, which enables direct connection between investors and borrowers.
    • Know your business and personal credit history to help you determine what you’ll be able to qualify for.
  4. Prepare any appropriate documentation like bank statements, legal documents, business expenses, and tax returns.
  5. Compare small business lenders.
  6. Apply with the lender(s) that are a good fit in terms of what you qualify for, and what your business needs.  
Finding small business loans and grants that work for women shouldn’t be confusing. By comparing lenders through Lantern, you can streamline the process of securing capital for your company and devote more time to what matters most: growing your business.With one simple application, you get access to a variety of financing options for all types of women-owned businesses. From SBA programs to personal loans, one form can open many doors to help you grow your business.

Small Business Grants for Women

Women-owned small businesses can also obtain funding through grants designed specifically for women. In contrast to small business loans, most grants don’t need to be repaid, which is especially helpful for small business startups. Do keep in mind, however, that getting grants can be quite competitive, especially at the federal level. As you begin your search for grants, here are a few options to consider:
  • SBA Federal Contracting program
  • State and local grants
  • Nonprofit grants
  • Grants offered by private organizations
For a detailed list of grant opportunities, check out our guide on small business grants for women.

Get Certified as a Women-Owned Small Business (WOSB)

As a certified women-owned small business, you have the opportunity to compete for government contracts set aside for specific demographic sectors, like women. The two options for certification are self-certification and certification through an SBA-approved third-party. Both options require you to use certify.SBA.gov and have a profile at the SAM.gov site.Eligibility requirements for the women’s contracting program are as follows:
  • Your business must be a small business
  • Your business must be at least 51% owned and controlled by women who are US citizens
  • Women need to be responsible for your business’s day-to-day operations and making long-term decisions
For more information on government contract awards for women-owned small businesses, refer to the Office of Government Contracting.

Top Picks Methodology

To come up with our top lender picks, we analyzed 30 top banks and online lenders by monthly search volume. Then, we ran those lists against the following criteria: 
  • Minimum credit score is 650 or below
  • Minimum time in business is 1 year or less
  • Minimum annual revenue is $100,000 or less
  • No collateral required
  • Interest rates starting at 20% or below
  • Maximum loan term is 25 years or longer
  • Maximum loan amount is $500,000 or higher
  • Simple application (online, no mailing or going to bank required)
  • Time to funds is less than a week
  • Whether it offers 24/7 support (online or phone)
  • Special benefits/terms for the interest group (in this case, women)
Whichever lenders best met the above criteria received the highest rankings. (Data was accurate as of March 3, 2021.)
The 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.SOLC20001

Frequently Asked Questions

How do I apply for a small business loan for women?
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About the Author

Lantern

Lantern

Lantern is a product comparison site that makes it easy for individuals to shop for products and compare offers with top lenders. Lantern is owned and operated by SoFi Lending Corp., the digital personal finance company that has helped over one million people get their money right.
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