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How to get a small business loan for women

Small Business Loans

How to get a small business loan for women

Updated: April 26th, 2024

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FAQs, resources, and tips for success

As a woman-owned business, you’re part of an increasingly influential and fast-growing sector of the economy (and labor force), but you also face unique challenges. One of the biggest obstacles women-owned businesses encounter is securing business financing. 

There are countless reasons for this—including the fact that women-owned businesses didn’t have widespread recognition or equal rights until the late ‘70s—but here are a few of the most current issues. Keep in mind that women business owners who identify as Black, Indigenous, or people of color (BIPOC) have historically faced additional challenges when trying to access funding

  • Investor bias: Due to roadblocks like gender bias and lack of visibility, women entrepreneurs seeking capital through investors raise a paltry amount compared to their male counterparts. According to Crunchbase data, female startup founders received only 2.3% of all venture capital funds in 2020 (the record high was 2.8% in 2019). 
  • Average credit: Biz2Credit’s 2020 Women-Owned Business Study reported that the average credit score for women business owners in 2020 was 597, 23 points lower than the average score for men. Lower credit scores are likely the result of a combination of different factors, including the fact that women have typically relied on loans from friends and family over loans from traditional financial institutions, which means they’ve had less time and opportunity to build up business credit.
  • Lack of marketing support: Thirty-nine percent of women business owners surveyed in PlanBeyond’s 2019 Small Business Owner Report said their businesses didn’t have enough marketing support, compared to just 15% of male business owners. Without this support, women business owners may have a harder time growing their operations and demonstrating profit potential to lenders. The result is a vicious cycle: without effective growth strategies in place, you may not generate as much revenue. Less revenue means your expense-to-income ratio is higher, which lenders see as risky. 
  • Self-eliminations: Many women business owners are reluctant to invest time and energy into applying for a business loan if they think they’ll be rejected, so they take themselves out of the running. Biz2Credit’s report found that only 27% of 2020 loan applications came from women, while 72% came from men. 

Small business loans for women: frequently asked questions

Before we dive into financing specifics, let’s clarify a few key questions about women business owners and business financing. 

Are there specific business loans for women entrepreneurs? 

No. Women and gender nonbinary business owners are eligible for the same loans as everyone else. Lenders can’t discriminate against loan applicants based on gender. At Funding Circle, the right to inclusive credit access is part of our Small Business Borrowers’ Bill of Rights

Are there specific business grants for women business owners? 

Yes! There are a handful of different business grants specifically designed for and given to women (keep reading for more information). 

Can women business owners get a small business loan with poor credit? 

Yes, but only with certain lenders. Small Business Administration (SBA) loans, bank loans, and many online lenders typically require applicants to have credit scores of at least 650. If you have a lower credit score, though, don’t stress. You can still qualify for financing, but you may have to cast a wider net and consider different financing solutions—from merchant cash advances to microloans

Can women business owners get business loans for startup expenses? 

Yes, it’s possible. However, many lenders want to know that you’ve been operating for at least two years. 

The best small business loans for women entrepreneurs 

The small business loan that works best for you depends on your industry, finances, goals, and preferences, but certain financing solutions are more appealing than others—for good reason. The best small business loans for women are the ones that offer flexible terms and uses, helpful resources, and personalized support and guidance. 

Here are four options to consider: 

1. Online term loan 

Business term loans are great solutions for growth projects and working capital needs, but not every term loan is alike. Banks tend to have tedious application processes and rigid qualifications compared to online lenders. Not only do online lenders generally have more efficient underwriting processes, they also offer more flexibility with their terms. 

At Funding Circle, for example, you can apply online in just a few minutes, and receive funding in as few as three days. If you qualify, you can borrow anywhere between $25,000 and $500,000, with repayment terms ranging from six months to five years. The best part: you’ll have predictable monthly payments and no prepayment penalties. 

2. SBA 7(a) loan

The SBA 7(a) loan program stands out for its versatile uses and affordable interest rates. Open to all small business owners who meet the SBA’s eligibility criteria and small business size guidelines, the 7(a) loan is a great way to refinance debt, renovate, invest in real estate, or purchase equipment, materials, and supplies for your business. 

You can qualify for up to $5 million in funds, and get a repayment term between five and 25 years. The interest rates are also among the lowest out there, ranging from 5-11%. You can also take advantage of the SBA’s small business development centers around the country to find mentors and get business training. 

3. SBA microloan

The SBA microloan program is perfect for businesses that need small, short-term financing help. The main appeal of microloans is that they’re generally easier to qualify for than other types of loans; you don’t need excellent credit to apply, nor do you need to be an established business owner with a history of revenue. 

You can get up to $50,000 through the SBA’s intermediary lenders for working capital, startup expenses, inventory, machinery, or equipment. However, the average microloan amount is $13,000 (with interest rates ranging from 8-13%). Depending on the lender you connect with, you may have the opportunity to undergo business training or receive mentorship, too. 

4. Business line of credit

Flexible in nature and fairly easy to qualify for, a business line of credit is a fantastic solution for short-term financing needs, ongoing operating expenses, or business emergencies. Once you get approved for a line of credit, you have access to a set amount of credit every month, and can dip into it repeatedly to replenish inventory, cover regular overhead costs, or take advantage of an exciting opportunity. 

What women-owned businesses need to evaluate when choosing financing

Before you start applying for loans, take some time to clarify your financing needs, assess your business’s financial health, and review your short and long-term business goals. From there, it’s a good idea to consider the following factors: 

The flexibility of the loan or lender

Having a loan or lender that’s flexible in nature is one less thing to worry about as you run your operation. In addition to reviewing the qualifications for a particular loan, make sure you know the average borrowing amounts, repayment terms, interest rates, and expected fees

The customer service

Compassionate, reliable customer service can save you time and stress, making the financing experience easier and more enjoyable. Consider each potential lender’s commitment to service. For example, do they streamline the application, offer one-on-one support during the process, and take time to answer all your questions?

The lender’s reputation

No lender can legally discriminate against applicants based on gender, but certain lenders may have more of a history for serving and uplifting women-owned businesses. To get a better sense of a lender’s track record, read their online reviews or consider reaching out to other women business owners for their feedback. Does the lender you’re looking at regularly support women-owned businesses or offer resources tailored to women? Have other women business owners had positive experiences working with them? 

Small business grants for women business owners

If you don’t want to worry about repaying your loan, consider searching for a small business grant. Many government agencies, corporations, and organizations offer grants to business owners who meet certain criteria. Grants are notoriously competitive, though, so it’s a good idea to apply for several different ones—and make sure you have the right qualifications for each. 

You can start by looking for federal and state-sponsored grants, then research grants in your niche or industry. It’s also smart to look for opportunities within the professional or business associations you belong to. 

Here’s a handful of popular grants designed for women business owners:

Financing tips for women business owners

Before you start applying for small business loans, take the following steps to set yourself up for success: 

1. Write a stellar business plan

A thorough business plan is a critical component of a strong loan application. Your business plan doesn’t just explain your mission, company history, and financing needs—it also gives lenders insight into how you plan to market and grow your operation. Before they give you a loan, lenders want to see that you have the skills and strategies necessary to acquire new customers and turn a profit. 

Make sure you demonstrate in-depth knowledge of your market, customer demographic, and competitors, and take the time to list the various marketing techniques and channels you’ll use to stand out and bring in new business. 

2. Build up your business credit 

Having an excellent business credit score can make it easier to qualify for financing opportunities (and receive lower interest rates). Here are a few ways to improve your score:

  • Open a business credit card, use it to make regular purchases, and bring your balance back to zero each month. 
  • Check out your business credit profile and correct any inaccuracies. 
  • Maintain good credit with your suppliers and vendors. 
  • Pay all your bills and debts repayments on time. You can set up automatic recurring payments or turn on your calendar notifications. 

3. Network with other business owners

Forging relationships with other business owners can help you grow your operation. You might get referrals, score tips from more established business owners, or build partnerships for cross-promotions and collaborations. Start by joining industry-specific associations and women-centric business groups, like Lean In or The Boss Network. From there, you can attend conferences, promote businesses you admire, and look for ways to get involved in your local business community. 

4. Take advantage of helpful resources 

Starting and maintaining a business isn’t a one-person job. To build a profitable, lasting operation, you need support and mentorship. Here are just a few women-focused resources and communities that can help you reach your business goals: 

Getting a small business loan with Funding Circle

At Funding Circle, we’re dedicated to supporting and uplifting women and gender nonbinary business owners in every industry. Whether you need financing to get ahead or gain more day-to-day stability, we’re here to help. 

Our business term loans, SBA 7(a) loans, and business lines of credit have straightforward online applications, fast turnaround times, and affordable interest rates. Plus, you’ll be assigned a dedicated account manager to walk you through the process and answer any questions you have. Learn more about our term loans or apply today


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