Small Business Loans for Women

Anne Miller

Anne Miller

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Anne Miller

Senior Author

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Companies that Offer Small Business Loans for Women

Women owned small business loans are an important category of financing in the modern world. As an increasingly large number of women open and grow their own businesses, they’ll need access to capital. One of the most common sources of capital for any small business are small business loans.

Small business loans have many benefits if used correctly, and there are a number of different types of small business loans that women can get. These range from small business loans for women startup to bad credit business loans. No matter what kind of business you have, there’s something that a small business loan can do for you and a small business loan product that is designed to help grow your business. Small Business Loans for Women

The Advantages of Small Business Loans

There are a number of different advantages offered by small business loans. While you can use the money from a small business loan for almost anything, that kind of freedom can seem daunting to some people. We’ve put together a brief list of things you can use your small business loan for women for. Keep in mind that this is not a complete list, so don’t forget to take your own ideas into consideration.

Working Capital for Day to Day

One of the most common uses of a small business loan is to have the working capital you need on hand to run your business. A small business loan can give you the resources to be a bit more aggressive in your budgeting, and expand the number of tasks you can take on in a given day, as well as increasing the amount of resources you have available to deal with the tasks you already face. You can use small business loans for women for payroll, property, or nearly anything you’d want to use cash for in your small business.

Take on New Projects

The next thing that small business loans are good for is to take on new projects. This can be adding a new location to your business, or taking advantage of an unexpected opportunity that you hadn’t budgeted for. A small business loan for women can give you the resources you need to say yes to a sudden large order from a client, or to expand your marketing operations and start a new campaign to increase your clients and customers. The money can also be spent on renovations to your location so you can be more efficient or get more floor space to showcase your inventory or products.

Expand Production

One of the most difficult barriers to get past in a small business are production limitations. You can use a small business loan to hire more staff and run another shift, or you can use it to get more efficient machinery or equipment so that you can make more products in less time to keep up with your increasing orders. After all, plenty of small businesses have become victims of their own success, becoming popular to the point where orders outstrip supply, and then lose their popularity because they can’t keep up. Even if you’re not losing your popularity or clients, you still aren’t selling as many units as you could, and that means money that isn’t going into your pocket.

Lower Costs

Small business loans are also a great way to lower costs for many small businesses. They can be used to get better supply chains, or to take advantage of economies of scale and order products or raw materials in bulk so that they pay less per unit. This is a great way to increase your profit margins. However, to buy in bulk you need to have the capital on hand to afford the order, and to afford the storage space that you might need to hold your products or supplies. Small business loans give you the flexibility to do that, and, with careful planning, you can be sure all your bases are covered as you lower your costs and pad your margin.

Hire Staff

In today’s increasingly knowledge and skill based economy any female small business owner will tell you that you need to have the right staff in order to make your business thrive. Having the best staff can free up your time to find other ways to grow your business, and also allows you to hire someone to do the parts of the business you don’t care much for so you can focus on doing the things you love. Additionally, you can hire staff to help you out in the areas where you might be weakest. Not every great small business owner is a great marketer, or knows how to design and maintain a website. Small business loans give you the resources and the flexibility you need to fill vital roles at your company so you can do what you do best to grow your small business.

Types of Small Business Loans

There are several different types of loans. In addition to the types of small business loans that we’ll look at here, you should also research small business loans for women specific to the industry you operate in. Industry specific lending products are usually better suited to help small businesses operating in that industry, and can be a great way to narrow down the options when you’re choosing what kind of small business loan or small business lender you’re looking for.

Term Loan

The first type of small business loan for women owners is a term loan. A term loan is the basic loan that most people are familiar with. You get a lump sum of funding from your lender and make payments on the loan balance with interest. The lender makes money from the interest and you get access to funds to help you grow your business.

There are many different options for small business term loans. You should make sure that you understand the total cost of the loan before agreeing to a loan. For example, make sure you get a complete list of terms and fees so that you know how much the loan will cost you. That’s the only way to make sure that the growth you’ll experience from the loan will be enough to cover the cost of the debt.

Line of Credit

The most common type of small business loan is a business line of credit. These take the form of credit cards, and offer small business owners tremendous flexibility when it comes to managing their finances. You can use revolving lines of credit to make purchases and buy equipment, or just for the day to day operational expenses of the business. Lines of credit usually have a higher interest rate than a term loan, but they have the advantage of only you only having to pay for the money you actually spend, rather than having to pay back an entire lump sum. As a result, it’s a resource that’s there when you need it, but not one that you have to use all of the time. Because of this you can have lower revolving credit bill than you might get with a term loan.

Moreover, if you pay your credit line off every month then the interest won’t accumulate so you’ll wind up paying less over time. Finally, many lines of credit have rewards that you can use to help your small business or to treat yourself to something nice. The range of rewards stretches from different cash back options, going from 1-5%, to points or miles based systems that can be redeemed for airline tickets, hotel stays, concert tickets and other purchases.

Invoice Factoring

Invoice factoring is a process whereby you sell outstanding invoices to a factoring company. The factoring service pays you a percentage of the invoice up front, and then pays the rest when they get paid for the invoice by your client. Most companies pay for 80% of the invoice upfront, and some will pay as much as 95% an invoice. The company charges a discount fee, so you’ll wind up getting between 95-99% of the overall value of the invoice. Invoice factoring is useful for industries that have an expectation of a large net on their invoices. It’s also a good option for capital intensive industries like construction where waiting for a client to pay can mean the difference between having the resources to take on a new project and having to pass on a chance to grow.

One drawback with invoice factoring is that your clients will pay your factoring service instead of you. This can be problematic in some industries if clients will be confused or worried that they are getting a bill from a strange company. However, those business are mostly those that interact with the general public, B2B companies will have no problem with clients and invoice factoring.

Purchase Order Financing

Sometimes you get an order for a product and wonder how you’re ever going to be able to fill it. You might not have the raw materials on hand or the labor supply necessary to complete the order on time. Of course, you can always hire more workers or buy more materials, but you may not have the capital for that.

This is where purchase order financing comes in. This product involves a financial firm paying for the value of the purchase order when the order comes in, and then taking payment out of the final payment for the completed order. It’s best for manufacturing companies and distribution firms.

Cash Advance

The final type of small business loan we’ll discuss is a cash advance. A cash advance is a short term solution to a cash crunch. You can use this type of loan to do things like cover payroll or get the money you need to order more inventory. The loan is usually paid back as a percentage of each day’s revenue until the balance is paid off. Cash advances are good options for companies that are facing an unexpected and temporary setback, or those that are confident that what they will use the loan on will more than pay for the cost of the loan. These loans usually have a higher interest rate, but the shorter terms of the loan mean that you might not wind up paying as much as you think you would with a longer term loan.

As with any financial product, make sure you read the terms and conditions of the loan carefully so you can understand what kinds of fees and charges you can expect. This will allow you to get a firm idea of the overall cost of the loan so you can tell if it’s worth your time and effort.

Preparing for a Small Business Loan Application

As a female small business owner, you know that sometimes people will look for any excuse to discount your efforts and your business. That’s why it’s important to make sure you have all your bases covered when you are thinking about applying for a small business loan for women.

Research

The first step is to research. You should research your business as well as the different lending options you’re considering. It’s good to get a broad overview of how your business is doing so that you can come up with a plan regarding how you intend to use the loan. You should also research the different types of small business loans available.

We listed some of the most common examples of small business financing in the previous section, but there are plenty more options when it comes to finding small business loans and small business grants for women. Whether you’re looking for loans for women to start a business, or small business loans for women with bad credit, or even small business loans for black women, you’re certain to find a number of specialized and specific products designed to fit your needs. Specialized products are usually a good choice because the lender will have a better idea of the specific circumstances you are facing.

Once you have an idea of what type of loan product you want, you should research different lenders that offer those products. Compare the interest rates and terms that each lender offers, and be sure to inquire about any additional charges or fees associated with the loan. For example, some lenders charge an origination fee for a loan, and that fee can be as high as 3-4%. As a result, you can get a loan for $100k, but only receive $96k in financing. This can be devastating if you had your loan finances budgeted tightly or if you work in an industry with thin profit margins. A business loan calculator can be really helpful at this stage. 

The most important figures to understand are the final amount of money you’ll get from your loan and what the total cost of the loan will be for you. If you have these numbers you can determine how much profit the loan needs to generate to cover the cost of the debt, and then compare that figure to your projections if you execute the actions you plan on using the loan for. If the projections are high enough to cover the cost of the debt then the loan is probably a good decision. They key is finding the loan that creates the biggest profit gap between the cost of the loan and your projections.

Once you’ve narrowed down the different loan options and lenders you’re most interested in, make careful note of what all of the application requirements are. Different lenders have different requirements, but it’s important to remember that the requirements that are listed are the minimum requirements, so you should prepare above and beyond what the loan companies are asking you to provide.

Paperwork

The next thing you’ll want to do is get your paperwork in order. Each lender will have different requirements and expectations when it comes to offering different financial products. You should certainly plan to have several basic things ready, no matter what kind of loan you’re trying to get.

The first piece of paperwork you should have are tax returns and profit/loss statements. These forms and records will help give lenders an idea of how you’ve handled money in the past and give them a good sense of your overall business health. In addition to profit/loss statements and tax returns, some lenders may want to see your full books going back as far as possible.

You should also prepare any business plan materials, business projects and growth expectations that you can produce. The overall goal of the paperwork you submit is to show the lender that you are a good option when it comes to lending money, that your business will grow as a result of the loan, and that you’ll be able to make your payments on time. It’s also good to remember that the point of the application process is to demonstrate just that, you’ll be able to pay the loan back.

You might also look into ways to make the loan even less risky for your lenders if you expect to have problems meeting the basic requirements for your loan option of choice. One way to do this might involve investigating what kind of collateral you can offer. Collateral can be any asset that has value. Sometimes this might be equipment or property, but it can also be equity in the business. Be sure that you understand the implications of using an asset as collateral before you agree to this though, as failure to follow the terms of the loan can result in the loss of your asset.

Applying

The final step is applying for the loan. You can apply to a few different lenders, as applying for many similar loans is recognized as “shopping around” by the credit reporting agencies and will only appear as a single inquiry on your credit report, rather than as a series of them.

When you apply for the loan you should make sure that you submit all the required paperwork. Having this paperwork and the needed records ready and organized will help make the application process faster. Speeding up the application process means you get a decision on the loan faster and also get your money faster, so it’s in your best interest to ensure that you’ve got everything ready and on hand.

Once you submit the paperwork, make sure you monitor your points of contact for your lenders so you can rapidly supply any additional information they might ask for. Some lenders might ask to see your business plan and projections. You might have to present your business plan for certain lenders, so it’s a good idea to prepare a presentation so that you aren’t rushed or under pressure if you’re asked for more information.

Small Business Loans for Women

There are a few programs designed specifically to provide funding for small businesses owned and operated by women. These programs have different restrictions and aspects to their offers, but each one is a potential source of capital to help your small business grow.

Elizabeth Street Capital

Elizabeth Street Capital is the result of a partnership between Tory Burch and Bank of America. The organization offers small business loans for female-owned businesses ranging from $500-$50,000. In addition to business funding, the organization also offers different opportunities for mentorship and provides other resources for support of women owned small businesses.

Grameen America

If you’re looking for small business startup loans, then Grameen America might be a good place to look. The program was founded by Nobel Prize winner Muhammad Yunus, and focuses on providing micro-loans for female entrepreneurs. In addition to micro-loan financing, the organization also provides a number of helpful educational resources that you can take advantage of.

Union Bank

Union Bank is one of the most popular lenders for small business loans for women. They have a number of different diversity oriented programs, including a number of small business loan programs that focus on women, minorities, and veterans.

Women’s Capital Connection

This is an organization that offers venture capital opportunities for people to invest in female owned small businesses. It isn’t a loan per se, rather a source of venture capital that your business can use for startup or for expansion.

Women’s Venture Fund

Women’s Venture Fund is an organization that helps women calculate loan needs through a comprehensive consulting process. As a result, women can not only get the loan they need through the fund, but they can also understand how much money it will actually take to get their business up and running.

FAQ

In this FAQ section, we address the most common questions have about women-owned small businesses and other matters in relation to them. It is divided into four subsections:

  • Getting Certified as a Women-Owned Small Business
  • Women-Owned Business Loans and Grants
  • Minority Women-Owned Business
  • FAQ on Woman Discrimination in the Business Arena and Other Miscellaneous Concerns

With the information we have provided for you below, you should be able to complete the process of getting certified and gain the most benefit that comes with the certification.

Getting Certified as a Women-Owned Business

In this section, we attempt to cover everything you should know about getting certified and the advantages of it.

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What is a women-owned business?
From the most basic sense of the word, a woman-owned business is one which is owned by a woman. The official qualifications, however, are more defined in terms of how the business operates and are stricter.
What are the advantages of a woman-owned business?
As it is harder for women to get loans generally, having a certification as a woman-owned business lets you access loans exclusive to women and to industries where women are underrepresented. Moreover, there are certain tax benefits as well as mentorship programs for certified woman-owned businesses.
How can you tell if you're already certified woman-owned business?
You should receive an email to notify you at which step your application is already at, including if you have already gained the certification. You can also contact your certifier should you need more information.
What documents do I need to file as a small woman-owned business?

Essentially, all the documentation your certifier will ask for are to back your claims of meeting all the qualifications for a woman-owned small business. The list of all the documents you have to submit is listed here.

Why should one certify my business as woman owned?
Every business that is certified as women-owned helps elevate the status of women in the eyes of investors as well as mark women as significant players in the field. Eventually, this would make it easier for women to obtain funding. However, there are more practical reasons such as exclusive access to grants and loans as well as tax benefits.
How to register for free for small women-owned business?
Register at Sam.gov then at Certify.SBA.gov after 24 hours, and comply with all the requirements. Just note that you will need an EIN, a DUNS number, and MPIN to successfully register at those sites.
How do I become a certified woman-owned small business?
You can go to third-party certifiers approved by the SBA or you can self-certify online. Remember though it’s not enough that a woman or women owns at least 51 percent of the business. A full-time working woman should also hold the highest officer position, and a woman should also make long-term decisions for the company, among others.
What is an economically disadvantaged women-owned small business?
An economically disadvantaged women-owned small business should meet all the requirements for a woman-owned business. Moreover, the owner of the company should have a net worth of less than $750,000, a three-year average gross income of $350,000 or less, $6 million or less in all assets.
How to become a certified minority woman-owned business?
You should acquire certification both as a Woman Business Enterprise and as a Minority Business Enterprise. Those are applied for separately at different third-party certifiers.
What are the requirements to be a woman-owned business?

Your business should:

  • Be 51 percent owned by a woman or women having U.S. Citizenship
  • Have a woman in charge of long-term decisions of the company
  • Have a woman hold the highest officer position in the company
  • Have a woman manage daily operations

You would also be required to submit documents to verify your status as well as have a site visit for an authorized member of the certifying company.

How many years valid are woman-owned small business benefits?

The benefits end when your certification does, which is every year. That’s why you should prepare everything you need for the application before your certification expires for your benefits not to lapse.

Women-Owned Business Loans and Grants

Taking the biggest chunk of the FAQ, we clarify and explain questions about loans and grants. Issues about bad credit, collateral, and other situations in relation to women-owned small business are also discussed at length here.

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Can a housewife apply for a loan?

If you absolutely have no source of income, no. However, you can still get one if you have someone with a steady salary to cosign the loan. 

Can an unemployed person get a loan?

Most lenders are more likely to turn you away if you are unemployed, but if you have an asset you can put up as a collateral, you may be able to get a loan. Personal loans may also be an option, but you’ll be confined only to alternative lenders that charge high-interest rates. There are also microloans for small business startup ideas.

How do women obtain a small business loan with bad credit?

Go to alternative lenders as they usually work with people with bad credit. The only problem here is their APR varies. You can try for SBA’s microloans, 7(a), and 504 as well.

How to apply for a small business loan for women?

Access information for various loan programs available through the National Women’s Business Council and SCORE. They provide complete information as well as how to apply.

What does it take to acquire a loan for a new business for a woman?

A collateral and a good credit score would always help your case. As you want to start a business, you would also need the perfect business plan to convince lenders to fund your business venture.

Can you get an SBA loan to start a business?

Yes, the SBA offers 7(a), but it is very hard to get as they usually prefer borrowers who have a collateral. Even if you qualify, it can take several months for you to get the funding. Check current SBA loan rates.

How do I apply for a new business loan?

First, you should assess your options based on your credit score, your business plan, and the other factors that may affect your eligibility. Then, simply submit the necessary requirements and documentation for the loans you choose to apply for.

How do I get a government loan for a small business?

For bigger, long-term loans, you need to have a strong credit score, an at least 2-year old profitable business, and proof that you have been rejected after applying for a regular loan. However, other government loans are more lenient with the requirements but are exclusive to businesses in specific industries or locations.

How do I get a small business loan?

Getting a small business loan can be condensed in five steps: 1) identify why you need the money in the first place, 2) search for potential loans where you can get the funding, 3) compare lenders to find the best deal, 4) see if you qualify for your target lenders, 5) prepare the documents you need and apply.

Are there grants available for women who want to start a small business?

Grantors prefer those who already are in business. However, there are still several opportunities for you to explore if you have not started out yet such as the Eileen Fisher Women-Owned Business Grant Program and the Halstead Grant.

Where do women need to go for a new business loan?

Nonprofit microloans and SBA startup loans, while not exclusively for women, are both very viable options. If you are willing to risk a collateral, you can also try getting a home equity loan to get the financial capital you need.

How to get a business loan with bad credit and no collateral for women?

If you have bad credit, you shouldn’t go for credit unions and traditional banks as their application process is more demanding. Fortunately, you have other options offered by various alternative lending companies who cater to business owners with lower credit scores such as unsecured business loans and merchant cash advance.

How do I qualify for a small business loan as a woman?

The qualification requirements for a loan do not change whether you are a man or a woman. However, as you already know that investors favor men, you should make your application as strong as possible. The better your business and your credit score are, the better your chance is of getting approved.

How to look up finding grants for small business women?

Grants.gov compiles all the grants that you can apply for, but it’s not filtered to be just for women. There are also commercial businesses that offer grants to women, but those are usually industry-specific.

How to apply for a small business loan for women to start up a business?

The best way to attack this problem is by raising your credit score fast as that would open more options for you. Should you not qualify for enough funding, you can always augment your capital with personal business loans and credit cards. You may want to check out unsecured startup business loans from different lenders.

How to get grants and loans for a small business for women?

It is rare to find grants that are offered to women-owned businesses in all industries, the same goes for loans. So, you only need to find those fitting your business’s description and submit all the requirements.

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Minority Women-Owned Businesses

Women who are also part of a minority group gains a wider access to exclusive grants and loans. In this section, we address their most common questions.

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How to get minority women business grant?

Search for grants in the site of Minority Business Development Authority. To narrow down your competition, consider for grants available only to the minority group you belong in.

What are the going loan rates for minority business women?

With SBA, it’s around 8 to 13 percent, depending on your credit score. However, other lenders may charge higher rates depending on many factors. Read more about minority business loans.

What loans are available for black women business owners?

A lot. Wells Fargo, for example, has been the leading lender to black women business owners since 2010. There is also organization supporting this sector such as Accion and Black Founders.

Where to apply for a Latina women business loan?

Aspen Capital, Astia, and Kapor Capital all provide funding for Latina business women. However, you should not limit your options to these three and try for government loans as well if you qualify.

How to get a small business loan with bad credit for minority women?

Angel investors and venture capitalists are a good option since they care more about your business plan than your credit score. You can also try peer-to-peer lending, but the APR is usually very high.

Difficulties for Women and Other Miscellaneous Concerns

Here, we talk about how difficult it is for women to obtain a business loan and what institutions do to address the issue.

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How hard is it for older women to get business loans?

In general, it is harder for women to obtain loans but a little less for older women since they already have the opportunity to accumulate wealth and build their credit.

How hard is it to get a business loan for women?

Process-wise, it is just as hard for women to apply for a loan as it is for men. How hard women have it can be better explained in sheer numbers: the loan approval rates for women in business are 20 percent lower than men’s.

How much is the federal set aside for women-owned economically disadvantaged small business?

In 2017, 5 percent out of all federal contracts were awarded to women-owned and economically disadvantaged businesses. It amounted to $508.4 billion last year but has always been at 5 percent since 2015.

How do certified WBENC companies help women-owned business?

Aside from aiding with the certification process, WBENC companies also help connect women-owned businesses to major corporations needing their service.

Why it is difficult for women-owned business to obtain loans?

There are many reasons, all of which are based on patriarchy. For one, many investors are male and they tend to support their own. Moreover, what they deem the ‘perfect entrepreneur’ is male. Fortunately, the government, as well as nonprofits, are helping level the playing field for women.


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Anne Miller


Anne is a Senior Author for SBL. She began her career as an independent consultant for local businesses after graduating with a BA in Management. Since that time, she’s expanded to writing as well as consulting to spread helpful knowledge to small business owners across the country.

 

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