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Small Business Loans for Women

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%.
Lantern
LanternUpdated February 24, 2023
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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.
If you’re 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 information on small business loans for women, getting certified as a women-owned small business, applying for a loan, and alternatives to business loans for women. 

Small Business Loans for Women: Our Top Picks

Below are Lantern’s top seven picks for small business loans for women (in alphabetical order). These selections are based on criteria including minimum credit score required, time to receive 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.)

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 loans for women so you can choose the option that meets your business’ needs.

1. Business Line of Credit

What Is a Business Line of Credit?

Like 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 if 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 a Business Line of Credit?

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.  This funding method offers a balance of flexibility and control so you can spend as you need to and repay only what you use (plus interest).

Keep in Mind

Typically, lenders want prospective borrowers to have a strong credit and revenue history. However, 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 a Term Loan?

A term loan allows you to borrow a set amount of money and then pay it back with interest on a predetermined schedule.

Why Choose a Term Loan?

Term loans can be a great option for women-owned small businesses in need of a larger sum of money. Term loans give you the flexibility to use the funds for any part of your business and pay the money back over a term that fits 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 loan's lifetime 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 an SBA Loan?

The U.S. Small Business Administration (SBA) guarantees small business loans for women that are offered by banks and other approved lenders.  An SBA loan for women may provide lower interest rates, flexible terms, educational opportunities, and business counseling for those who qualify. You can apply for amounts from $500 to $5 million and use the capital for nearly any business purpose, depending on the type of loan. Here are a couple of common SBA loans for women:
  • SBA 7(a): Small business loans for women with established businesses. Financing up to $5 million for almost any business-related purchase, including property. 
    • Additional options include an SBA 7(a) Small Loan (up to $350,000) or an SBA Express loan, which has a turnaround time of 36 hours for qualified applicants.
  • SBA 504: These small business loans for women are meant to purchase new or existing buildings and land, renovation of property, new construction, or refinancing of debt related to the expansion of your business.

Why Choose an SBA Loan?

SBA loans may offer lower interest rates and longer loan terms compared to other lending options. They may also allow higher borrowing amounts that can be well-suited for larger purchases.  So if you’re looking to grow your women-owned business and have a strong credit history, an SBA loan may be a great option. Additionally, if you’re a veteran, the SBA offers many 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. So 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 a Commercial Real Estate Loan?

A commercial real estate loan funds the purchase of a building intended for use as office space, a retail shop, or any other commercial function.

Why Choose a Commercial Real Estate Loan?

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 an option to consider.

Keep in Mind

Commercial real estate loans can look different depending on the lender and the property's value.  How much financing you receive depends 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 needs to be self-funded and acts as a down payment. In addition to the down payment, you may encounter appraisal, inspection, and local filing fees. It’s a good idea to speak to your lender about the fees and additional expenses to expect so you can accurately gauge whether a commercial real estate loan is right for your needs.

5. Equipment Loan

What Is an Equipment Loan?

Equipment loans offer to finance the purchase of machinery, vehicles, or other business-related equipment. The equipment you’re buying serves as the collateral on the loan. 

Why Choose an Equipment Loan?

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 helpful small business loans for women who have bad credit, since the equipment acts as the collateral.  But it’s essential to try to make sure your loan term isn’t longer than the equipment’s useful life.  If you’d rather not take out a loan, there are also options for equipment leases.

6. Personal Loan for Business Use

What Is a Personal Loan for Business?

Personal loans are based on your personal credit history and may provide funding for your business.

Why Choose a Personal Loan for Business?

Personal loans for business may help you obtain startup capital. If you don’t have business credit established but have good personal credit, 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.  Unsecured personal loan amounts are typically smaller than loans secured by collateral, so you might need to combine a personal loan with other financing to make large purchases. 

7. Invoice Financing

What Is Invoice Financing?

Invoice financing uses your unpaid invoices as collateral for a cash advance.

Why Choose Invoice Financing?

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 use that money to reinvest in and grow your business more quickly than if you’d waited for your customers to pay.

Keep in Mind

If you operate a business-to-consumer (B2C) service, you typically don't invoice customers and won’t qualify for invoice financing. Additionally, lenders often charge non-refundable processing and repayment fees for invoice financing.  Finally, 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 a Microloan?

Microloans are usually offered at $50,000 or less by nonprofit organizations and peer-to-peer lenders.

Why Choose a Microloan?

Microloans can be great options for any business that needs to borrow a small amount of money. In addition, they can be ideal small business loans for women with bad credit. 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 they also may carry higher interest rates.

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

Before applying for many small business loans for women, you must become certified as a women-owned small business (WOSB).  As a certified WOSB, you can 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 on SAM.gov. Eligibility requirements for the women’s contracting program are:
  • Your business must be small.
  • 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. Note: In most states, WOSB status is only granted when the women were assigned female at birth. The government is working to determine the best path to offering loans and grants to LGBTQ+ business owners.

Applying for Women-Owned Small Business Loans

Applying for a small business loan for women is like applying for other small business loans, except you have opportunities to apply for ones exclusively reserved for women. While applications vary by lender, here are steps you can generally expect to follow when applying for a loan for women entrepreneurs: 1. Become certified as a women-owned small business, as detailed above.2. Consider the specific need(s) your company has and why you need the loan.3. Research types of business loans for women, like those outlined above.4. Investigate your business and personal credit histories to help determine what you may qualify for.5. Research types of lenders who offer your chosen loan type. Options to consider include:
  • Online lender
  • Bank
  • Credit union
  • Peer-to-peer network
6. Compare small business lenders. Ensure you meet their minimum qualifications for borrowers. Also check to see if they offer special programs or perks for woman small business owners. Then, look for those that offer loans with the amount, rates, and terms you desire.7. Prepare any appropriate documentation those lenders need, like bank statements, legal documents, business expenses, and tax returns.8. Apply with the lender(s) that are a good fit for you.
  • Ideally, try to pre-qualify, so you don't have any unnecessary hard credit pulls.

Alternatives to Loans: Small Business Grants for Women

Women-owned small businesses can also obtain funding through grants for women. In contrast to small business loans for women, most grants don’t need to be repaid, which is especially helpful for small business startups.  Getting grants can be pretty competitive. As you begin your search for grants, here are a few options to consider:
  • 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.

Find Funding for Your Women-Owned Business

Finding small business loans 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 application, you get access to various 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.

Top Picks Methodology

We analyzed 30 leading banks and online lenders by monthly search volume to develop our top lender picks. 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.)

Frequently Asked Questions

How do I apply for a small business loan for women?
Are there small business loans for women with bad credit?
What are the benefits of small business loans for women?
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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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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