The 13 Best Small Business Loans for Women (2022)

  • by Brandon Boushy
  • 1 month ago
  • Blog
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A man writing on a white notebook about business loans

Did you know that women own 40% of businesses in the United States? Furthermore, ⅙ of women are self-employed. Unfortunately, women-owned businesses don’t get their fair share of loans. 

The Small Business Administration (SBA) shares that less than $1 of every $7 of SBA loans goes to a woman-owned business. Fortunately, business loans for women can be found through other sources as well. Jazmin, CEO and Founder of BlkSunflower, was able to get a line of credit from Shopify without even pursuing it.

We will share with you several types of business loans for women-owned businesses and how to compare small business loans. We will also look at some of the best small business loans for women entrepreneurs.

Then, we’ll share some other small business resources like grants, certifications, and organizations focused on helping expand women’s business ownership. Get ready to learn about the types of small business loans for women.

Small Business Loans for Women

There are a variety of business loans for women. We’ll go over 13 of the most commonly used business loans available to female business owners, including:

  1. SBA 7(a) loans
  2. SBA microloans
  3. 504 loans
  4. Bank loans 
  5. Online loans
  6. Microloans from Non-Profits (NPOs)
  7. Working capital loans
  8. Equipment loans
  9. Inventory loans
  10. Term loans
  11. Merchant cash advances
  12. Invoice financing
  13. Business lines of credit

Let’s start by looking at the three types of SBA loan programs.

#1. SBA 7(a) loan program 

The 7(a) program is for small business owners that operate for a profit and have a demonstrable need for small business financing. This type of small business loan can be used to pay for:

  • Funds for revolving needs like existing inventory and receivables 
  • Equipment, machinery, furniture, fixtures, supplies, or materials 
  • Land and buildings 
  • Working capital ( both short-term and long-term
  • Construction and renovation
  • Starting, buying, or expanding a business
  • Refinancing business debt (conditions apply)

$5 billion of the SBA 7(a) loans approved in 2021 were for small businesses that were at least 50% owned by women entrepreneurs. For full details or to find an SBA lender, go to the SBA 7(a) page.

Parm Bhullar and her family bought an ARCO gas station for $3.5 million. She told us:

“We put down $1 million and got a $2.5 million SBA loan at 5% for the other $2.5 million.”

Watch our interview with her below.

Keep reading for more loan opportunities for women small business owners.

#2. SBA 504 Loans

A 504 loan is an SBA loan used for land, buildings, remodeling, and equipment financing. The SBA approved $712 million in 504 small business loans for women-owned businesses in the fiscal year 2021. 

If you only need business financing for physical assets, this may be the loan option for you. Go to the SBA 504 loan page to learn more about how a businesswoman can get a loan for business equipment, buildings, and land.

#3. SBA Micro-loans for women

A micro-loan is a small business lending option with the smallest loan amounts, a max of $50K. They provide financial resources that can be used for:

  • Fixtures 
  • Machinery 
  • Supplies 
  • Furniture 
  • Equipment 
  • Working capital 
  • Inventory 

Just don’t use them for real estate or debt. There are other financial resources for small businesses to fund those purchases. Learn more about SBA micro-loans on their website.

Keep reading to find out more about other types of women-led business loans.

#4. Bank loans

Traditional lenders (banks and credit unions) usually have some of the lowest costs for a small business loan, but the ease of obtaining one will vary over time.

Big banks approve business loan applications about 14% of the time, while credit unions approve nearly 20% of business loans. Traditional lenders may have lower rates and better terms for established businesses, but online lenders might be better if you have less than perfect credit.

#5. Online loans

If you have a FICO score between 300 and 689 and are a new business, consider alternative lenders such as BlueVine. Most lenders have several business loan options, and the approval process takes minutes if you meet their requirements. 

Alternative lenders will typically offer a small business loan at a higher rate than a credit union or big bank. Still, the business owner often benefits because they approve 25% of related applications.

#6. Microloans from Non-Profit Organizations

Blue paper strips and a calculator on a desk

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 might be an excellent way to go if you can’t qualify with a bank or online lender or have a small financing gap.

#7. Working capital loans

A working capital loan can be given to women-owned businesses to cover employee pay, inventory payments, and other operating expenses. They may have higher interest rates than other business loans for women because these are meant to be short-term loans.

#8. Equipment loans

Equipment loans tend to be secured loans to help women-owned businesses buy the equipment they need for business growth. These loans will normally require a 600+ credit score and a personal guarantee.

Be prepared to make the monthly payments, or they will take the equipment and your cash flow with it. You can get these types of loans online or from SBA-approved lenders under the 504 and 7(a) programs.

#9. Inventory loans

A healthy business may be able to get a loan from an online lender to help cover business expenses associated with inventory. Loan operators will usually cover these under an online term loan or a line of credit. Most online vendors will require a minimum credit score of 600 and $100K annual revenue.

#10. Term loans

Term loans are typically short-term loans that can be anywhere from 30 days to 6 years. The terms will typically be fixed interest rates.

Make sure to read the terms well when reviewing online lenders. Some providers require you to pay the full-term interest even if you pay the loan off early.

#11. Merchant cash advances

A merchant cash advance (MCA) isn’t technically a loan. This financing option may be suitable for women-owned businesses that operate on platforms like Shopify. In fact, Jazmin got a merchant cash advance through Shopify. She told us:

“After a few months, Shopify offered me a loan, I accepted it, and they just take a portion of my sales each day ‘til it’s paid off.”

Learn more about Shopify Merchant loans or check out our interview with Jazmin below.

#12. Invoice financing

Invoice financing is when a company loans you money against your outstanding invoices. If you have outstanding invoices of $100,000, you can get a loan on the invoices for up to the full $100K. The loan will typically work similarly to this:

  1. Loan approved for $100K
  2. Sends you 85%
  3. Holds 15% 
  4. Charges a factoring fee, typically .5-3% percent per week or month
  5. Charges a processing fee
  6. Once paid, they return the 15% minus the processing and factoring fee

#13. Business Line of Credit

When considering business loans for women, a business line of credit is unique. It works like a credit card but with a lower interest rate. You get approved for a predetermined limit and can use it as needed. You only pay interest on the amount outstanding. Then when you pay off a portion, it is available to use again.

Business Credit Card

Business credit cards aren’t technically a business loan, but they let you pay business expenses when your expenses and income happen at different times. They are some of the highest interest rates so make sure it is worthwhile.

How to Compare Small Business Loans

Before applying for financing, make sure you have a business plan, financial statements, and a minimum credit score of at least 600, and 650+ is even better!

Here are the steps for seeking small business loans for women:

  1. Establish how much money you need and how to use it.
  2. Compare requirements from different lenders.
  3. Apply to see if you prequalify.
  4. Share the tax returns, business licenses, bank statements, photo ID, financial statements, and other documents they request.
  5. Sign the contract once approved.
  6. Receive your capital!

If you are ready to begin the application process, we’ll discuss some small business loans for women you’ll want to consider.

Best Small Business Loans for Women

A white notebook and a cup of on a desk

Best government-backed small-business loans for women

If you are looking for a government-backed loan, the SBA 7(a) program is the best option because they offer:

  • Loans up to $5 million.
  • A setting in which the federal government backs 75% of the loan.
  • Loan terms up to 25 years.
  • The most diverse range of permitted uses.
  • Clear requirements for approval compared to other business startup loans.

To find out more about the SBA 7(a) loans, check out their terms and conditions, then go to the most active lenders list to find one to approach. Huntington Bank has the most approvals and a solid reputation, so it is a good place to start.

Keep reading for more of the best business loans.

Best Line of credit for women with low credit scores

Fundbox is one of the best lines of credit for women with low credit scores. They have a 4.8 Trustpilot Score and are openly disclosive about their terms. They offer businesses owned by women lines of credit up to $200,000 as long as you meet the following requirements:

  • Based in the US
  • 600+ credit score
  • $100,000 revenue
  • Business checking account
  • At least six months in business.

The drawback is that the payments are weekly instead of monthly like a traditional loan, but when the payment is made, it goes right back into the available credit (minus the interest, of course.) Check out Fundbox lines of credit to see if they are right for you.

Best Term Loan for women with low credit

If you don’t have a good credit score and are looking for a good term loan, consider OnDeck. OnDeck offers small business loans of up to $250K with 24 months to pay it back.

Similar to Fundbox, OnDeck requires:

  • A business checking account
  • $100,000 revenue
  • 600+ credit score
  • One year or more of business history
  • Weekly payments.

OnDeck is one of the faster lenders on the market if you apply for small business loans, so we consider it a better term loan for women business owners.

Best online Term Loan for a woman-owned business over two years old

Funding Circle and Credibility Capital are two of the best online term loans for women-owned businesses with over two years of business history. 

Funding Circle 

Wooden dice with letters

Funding Circle is a marketplace that connects small business owners with financial institutions and venture capital companies. Funding Circle can help women-owned businesses find small business loans if they have:

  • More than two years in business
  • 650+ credit score
  • A need for $25K to $500K loans

Credibility Capital 

Credibility Capital works similarly to Funding Circle, but their loans start at $50K. If this is your first loan, you will probably find better opportunities by applying for loans with lower minimum loan amounts.

Best Women’s Startup loans

SBA Microloans are the easiest to get approved for if you need a startup loan. They offer loans up to $50K that can be used for most aspects of business, except for paying off debt and buying real estate. 

According to the SBA website, the average loan is $13,000, which is enough to run a business for a few months as long as you are frugal with using the small business loan.

These SBA loans are handled by intermediaries that each have their own requirements. To find one in your location, use the SBA lender match.

Best Line of Credit for Women-owned Startups

BlueVine is one of the quickest ways for women-led startup companies to get lines of credit up to $250,000 at 4.9% interest as long as they meet the following criteria:

  • 600+ Credit score
  • Corporation or LLC
  • At least six months in business
  • At least $10K per month revenue
  • Not based in Nevada, North Dakota, or South Dakota

Small Business Loans for Black Women & Other Female Minorities

Most small business loans for female minorities are classified as loans for economically and socially disadvantaged communities. They do this because financial providers cannot discriminate based on sex or race. They legally offer additional assistance to neighborhoods with less wealth, though.

To establish whether you would qualify for loans under this category, review the SBA Contracting Assistance Programs.

These programs offer minority-owned businesses benefits that might include:

  • Business training
  • Funds to help SBA women-owned businesses, minority business owners, or rural business owners
  • Small business grants for women 
  • A portion of all government jobs is reserved for each of the disadvantaged groups. 

This is the primary place to find women’s business loans from the government.

Additional Funding Options for Women-Owned Startups

In addition to small business loans for women, there are a variety of funding options that women should look into, including:

 A white notebook a green pen on a table

  • SBA grants for women: Grants are free money to help achieve goals set by the government. You have to get certified as an SBA woman-owned business to qualify for these. The link to apply is in the business loans for minority women section. 
  • Equity financing: Selling a percentage of ownership for business funds. Primarily used for billion-dollar ideas and offered by venture capitalists.
  • Rollover Business Startups (ROBS): Take a 401K or IRA with more than $50,000, roll it over to a new 401K held by a newly formed corporation, and sell your company stock to your 401K to access business funds.
  • Small business grants from non-profit organizations (NPOs): You can use a site like GrantWatch to filter grants by type and location.

Read our blog on how to fund a business to learn more about ROBS and other funding options.

Other resources for female entrepreneurs

Women entrepreneurs have a ton of resources to help them get ahead. Don’t limit yourself by focusing only on the application process for grants and small business loans for women.

Look for every beneficial opportunity to increase your customer base and cash flow. If you do those two things, you’ll eventually find a financial institution that will provide your startup business loans that apply to you.

Make sure to check out the following resources:

  • National Women’s Business Council (NWBC): The NWBC is primarily focused on creating a fair political environment for women business owners.

These organizations provide various resources, business training, grants, mentorship programs, and more to help female entrepreneurs succeed.

Women’s Business Centers

You’re likely to encounter more than 100 Women’s Business Centers run by the SBA throughout the U.S. Get access to training and resources to help you achieve your goals.

SBA’s Women-Owned Businesses Portal

The SBA Women-Owned Businesses Portal is a fantastic resource for blogs, online training, and other resources to develop your business.

National Women Business Owners Corporation (NWBOC)

The NWBOC is the first organization to certify women-owned businesses. You can apply on their site, and if you do the certification plus program, you’ll have the knowledge and skillsets to procure government contracts successfully.

U.S. Women’s Chamber of Commerce

Women's Chamber of Commerce website

U.S. Women’s Chamber of Commerce is another organization that focuses on certifications and writing more equitable policies for women-driven businesses. It’s an excellent organization to network, stay up-to-date on politics, and help write legislation.

Womensphere

Womensphere is an incubator specifically for women focusing on developing a more humane, sustainable, and equitable world through the advancement of woman-owned STEM businesses.

Grants for Women-Owned Businesses

Women have a ton of opportunities to get business grants. Apply for as many of them as possible, but remember only to borrow what you need. We’ll discuss some of the most famous ones here.

Eileen Fisher Women-Owned Business Grant Program

Eileen Fisher’s Women-Owned Business Grants provide $200,000 divided by up to 10 recipients who manage 501c3 non-profit organizations focused on achieving a more equitable and sustainable future. 

To qualify, your business must have been operating for at least three years with annual revenues under $1 million. Your business must be founded on creating environmental and social change.

WomensNet Amber Grant

WomensNet awards a female entrepreneur a $10,000 grant each month. At the end of the year, one of the winners will receive a $25,000 Amber Grant. Fill out the application and pay the $15 application fee to qualify for all of their grants. 

37 Angels

37 Angels is a team of female angel investors that provide between $50K and $250K of equity funding to women-owned small businesses. Start the application process on Gust.

State-Specific Programs

Some states have grants to encourage female entrepreneurship. Check to see if your state does on GrantWatch.

How to Get a Business Loan With No Money

A man browsing online about good credit standing

  1. Make sure you don’t have bad credit. If you have below a 600 credit score, you probably shouldn’t bother with the loan application process. A score of 650+ will also likely provide a significant difference.
  2. Make sure you have a killer business plan. Read our blog about how to write a business plan.
  3. Be prepared to get a secured loan using a home, equipment, etc., to guarantee the loan.

Slay All Day!

Women entrepreneurs have been killing it lately––regardless of the type of small business loans they’ve had or not had. I love seeing all the inspirational stories of female entrepreneurs who rise against the odds to manifest their dreams.

What women-owned businesses do you find most inspirational?

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