Types of small-business loans for women
SBA loans. There are several SBA loans that female entrepreneurs can tap for financing, including the flagship SBA 7(a) loan program. Banks, online lenders and other financial institutions offer these loans, which are backed by the U.S. Small Business Administration.
The SBA 7(a) loan program requires solid finances and an established business. Small businesses that are more than 50% female-owned received 13.7%, or $5.01 billion, of the SBA 7(a) loans approved in fiscal year 2021, according to the SBA. But other programs, such as SBA startup loans, are geared toward new businesses and borrowers with bad credit. Bank business loans. Small-business loans from banks typically come with the lowest costs but toughest eligibility qualifications. In 2016, large banks approved 50% of women-owned business applications and small banks approved 67% — the highest among all funding sources — according to the most recent data from the Federal Reserve. However, overall bank approvals have shrunk greatly since then, with Biz2Credit’s October 2021 data finding 14.1% and 19.7% approval rates at large and small banks, respectively. Online loans. If you have a lower credit score (a FICO score between 300 and 689) or have been in business for less than two years, an alternative online lender could be a good choice. These lenders offer multiple products (including terms loans, lines of credit and invoice factoring), specialize in speedy funding and have looser eligibility requirements than banks. The trade-off for those conveniences is borrowing costs may be higher than other options. Microloans. Many mission-based nonprofit organizations offer microloans to local businesses, often focusing on businesses owned by women, people of color and veterans. For example, Grameen America provides loans of $2,000 to $15,000 to entrepreneurial women who live in poverty. Microloans can be a good option if you can’t qualify with a bank or online lender or have a small financing gap.
Business loans for minority women
Female business owners in historically underserved communities can access funding from SBA lenders, nonprofit organizations and speciality programs — and may have more success with these options than applying for traditional business loans.
Through the SBA Community Advantage loan program, nonprofit lenders and community development companies offer funding to minority- and female-run businesses in low-income and rural communities.
Many nonprofit lenders also offer microloans and other forms of business financing for women- and minority-owned businesses in their communities outside of the SBA loan program. For example, Accion Opportunity Fund says nearly 90% of its clients are women, people of color or immigrants.
Some banks, like Union Bank, distribute minority business loans through speciality lending programs. Union Bank’s program offers loans and lines of credit to women-, veteran- and minority-owned businesses with more flexible qualifications than its standard business loans.
Funding options for women-owned startups
Startup funding is elusive, but targeting the right lenders and programs can improve your chances of securing a startup business loan.
The SBA microloan program is designed specifically for startups and early-stage businesses (startups received 30% of all SBA microloans in fiscal year 2020). And SBA Community Advantage loans typically go to businesses that have been in operation for fewer than three years.
Additional funding options include small-business grants and crowdfunding. If you have good personal credit, you may qualify for a personal loan for business. Most personal loans are unsecured, and some loan amounts go as high as $100,000. Business credit cards also offer financing for women-owned small businesses who are starting out or looking for working capital.
Other resources for female entrepreneurs
Government and nonprofit organizations offer free assistance to women entrepreneurs. These programs may provide women with help completing steps to getting a small-business loan, like writing a business plan, and guidance on topics like starting a business, financial management and marketing.
Women-owned businesses can get free funding through grants from government agencies and nonprofit organizations. Here are places to look for small-business grants for women.
Women’s Business Centers
The Women’s Business Centers are a network of more than 100 educational centers around the United States that help women start and grow their businesses. These SBA-funded centers typically offer seminars and workshops on a range of topics, including how to start a business and raise capital.
Federal contracting programs
Ascent online learning platform
Ascent is a free digital tool launched in 2021 as part of a joint initiative between the White House, SBA, the U.S. Department of Labor’s Women’s Bureau and the U.S. Department of the Treasury. This online platform offers tools, quizzes and other learning resources designed to help women entrepreneurs who are looking to grow their businesses.
National Association of Women Business Owners
The National Association of Women Business Owners, based in Washington, D.C., has 5,000 members and nearly 60 chapters across the country. It offers training and information on topics such as access to capital, government contracting and business certification.
National Women’s Business Council
The National Women’s Business Council works with the Office of the President, Congress and the SBA on issues related to women business owners. Resources include help for startups, alternative lender programs, conferences and mentor groups.
Compare small-business loans