With approximately 12 million companies, nine million employees, and $1.7 trillion in annual sales, women-owned businesses are a major economic force in the US. “Small Business Loans for Women”.
The fact that female businesses are developing their businesses more quickly than entrepreneurs from any other category is even more promising. Every day, more than 1,200 new enterprises are founded by women, and eight of the top 13 fastest-growing industries are led by women-owned businesses.
Despite the significant contribution that women-owned businesses make to the overall economy, women have historically been underrepresented in several fields, most notably the allocation of equity capital. The number of applications for small business loans from women has increased recently, while the average funding levels have fallen. Additionally, women frequently have more difficulty obtaining capital; on average, female entrepreneurs received 31% less investment in 2018 than their male counterparts.
This comprehensive reference to small business loans for women includes information on the different kinds of loans as well as how to apply.
Although many women business owners use grants in addition to loans, we have only focused on loans because many grant programs have lengthy application procedures and strict qualifying requirements.
The Small Business Administration (SBA Loans)
The Small business Administration is frequently the first stop for female enterprise owners seeking small-business loans (SBA).
The SBA connects entrepreneurs looking for finance with lenders as a resource. The SBA requests information from borrowers regarding their projects, which it then utilizes to identify the lenders who would be best suitable for that particular enterprise. Ensuring that applicants are submitting loan applications to financial institutions that can satisfy their demands, eventually saves borrowers time and effort. SBA loans often offer advantageous conditions for small businesses, unlike some regular lenders.
While the SBA does let certain commercial lenders decide on loans on its behalf, some loans, like the 7(a) Small Loan, are handled by the SBA directly. Accordingly, even if it isn't always the lender, the SBA may and does make eligibility and credit judgments that have a direct impact on whether or not a loan offer is issued.
Through the 8(a) Business Development program, the SBA directly administers one form of a loan. This program attempts to offer services to populations who are normally underrepresented. Before applying, applicants must certify their businesses, although this program is designed to be more easily accessible to women business owners than other programs. Applicant's businesses must be at least 51% owned by someone who meets the requirements for being considered economically and socially disadvantaged under the Code of Federal Regulations and whose average annual adjusted gross income is $250,000 or less to be eligible for the 8(a) Business Development program.
The SBA’s Office of Women’s Business Ownership (OWBO)
The SBA's Office of Women's Business Ownership can help women looking for loans to start their own businesses locate suitable lenders (OWBO). Women's Business Centers (WBCs), which are specialized regional offices that assist women in getting ready to start their own businesses, are connected to borrowers through this office.
WBCs don't manage loan funds directly, but they do help business owners with every other part of getting ready to launch, from creating a business strategy to getting one-on-one mentoring. A fantastic resource for women-owned small businesses is the SBA's Office of Women's Business Ownership.
What you’ll need to apply
Before contacting the SBA, potential candidates should have the following documentation available:
- The majority of lenders will need to see a thorough business plan.
- A business strategy and additional cash flow estimates could also be required by some lenders.
- Before approving a loan, the majority of lenders won't request to see a copy of a borrower's CV, but a list of their professional and academic accomplishments may give borrowers more credibility.
Business owners should use the SBA’s Lender Match tool to submit some introductory data so that the SBA can match them with potential lenders. Within two business days, borrowers may anticipate hearing from an SBA representative to further explore a prospective business loan.
the SBA’s WBC locator tool also enables potential candidates to get in touch with their local WBC to talk about their possibilities in person or over the phone.
Private lenders specializing in loans for women-owned businesses
Comparatively few internet lenders provide small-business loans to women looking to establish their own businesses, even though there are hundreds of organizations committed to giving women entrepreneurs the assistance and tools they need to start their own companies.
Private lenders often give loans in the vast majority of situations.
Founders may easily obtain investment through Shopify Capital based on their prior experiences with the platform. The merit of a shop determines eligibility, not its gender.
You can be allowed to apply for a loan through Shopify Capital if your Shopify store meets certain criteria. Eligible borrowers are prequalified, so there is no need to worry about completing voluminous documentation; no formal application is necessary.
Funds are normally distributed within two to five business days after potential borrowers have studied and accepted the conditions of their pre-qualified loan. Flexible repayment schedules based on a percentage of net sales are used. Therefore, borrowers won't ever have to worry about making larger fixed repayments during lean times and may make larger repayments during times of more sales.
Small-business lending expert Kabbage provides loans to women-owned businesses through Kabbage Funding. It's wonderful to see Kabbage make such an effort to do so with its tools and teaching surrounding small business loans since a small business loan is something to take seriously.
Since 2011, Kabbage, a business that specializes in business lines of credit, has given approximately 200,000 businesses money totaling over $9 billion. Business lines of credit, in contrast to loans, which are frequently disbursed as lump amounts, can be called upon at any time as long as the borrower doesn't exceed the maximum amount specified in their financial agreement.
Kabbage assesses several factors to establish eligibility. This comprises the amount of time a firm has been operating, its annual sales, and the industry or market it serves. When it comes to credit scores, Kabbage is more lenient than certain lenders. To be eligible, prospective borrowers must have a credit score of at least 560. The annual percentage rate (APR), which can range from 24% to 99% in some situations, can, nevertheless, be high and have a major influence on the length of the repayment period.
Tory Burch Foundation Capital Program
Through their collaboration, Bank of America and the Tory Burch Foundation have aided more than 2,500 women entrepreneurs in the establishment of their businesses throughout 17 states. The Tory Burch Foundation Capital Program committed $100 million in 2019 alone to assist women-owned businesses in obtaining the funding they require.
The Tory Burch Foundation Capital Program works similarly to the SBA in that it links potential borrowers with community development financial institutions (CDFIs), a network of private lenders that specializes in loans intended for underserved communities. Currently, there are CDFIs in 13 states.
The COVID-19 epidemic has temporarily stopped the Tory Burch Foundation Capital Program, and many of its participating CDFIs are now providing emergency short-term loans to businesses as a result. For regular updates on the foundation's various projects and useful tools for women-owned businesses, follow the Tory Burch Foundation on Twitter.
Union Bank Business Diversity Lending Program
One of the few lenders in the US that provides financing by the Equal Credit Opportunity Act is Union Bank.
With far more lenient qualifying requirements, Union's Business Diversity Lending Program offers financing comparable to its standard lending programs, making loans more accessible to women and other underrepresented groups.
Businesses that meet the requirements can choose from a variety of financing alternatives from Union, including fixed-rate, secured, and unsecured loans as well as financing for commercial real estate. Businesses must have been in existence for at least two years and be at least 51% owned by a woman, a member of a minority group, or a veteran to be eligible for funding via Union's Business Diversity Lending Program. Only citizens of the United States are permitted to apply, and borrowers are not permitted to have yearly sales of more than $20 million.
OnDeck Online Term Loans
Online lender OnDeck focuses on providing short-term loans.
This kind of funding is best suited for achieving certain short-term objectives, such as making an investment in new machinery or hardware, starting a new marketing initiative, or opening a second physical location.
The quickness with which borrowers may be authorized for term loans with OnDeck is one of its main benefits. Unlike traditional bank loans or other internet lenders, OnDeck can provide cash to qualified borrowers as soon as 24 hours after their agreement is finalized, or even the same business day in some situations. Thus, online term loans from OnDeck might serve as a temporary fix for unforeseen and abrupt financial problems.
For term loans, borrowers may submit applications worth up to $500,000 or as low as $5,000. The range of APRs is from 9% at the low end to 99% at the high end. Daily or weekly payments can be made for up to 36 months.
Borrowers must be in business for at least three years, have a credit score of at least 600, and generate at least $250,000 in yearly sales to be approved; in many cases, a personal guarantee is needed.
Another online lender that provides small businesses with short-term loans is Funding Circle. Loans from Financing Circle, like those from OnDeck, are frequently handled considerably more quickly than conventional loans, and borrowers can have funding in one business day.
The Funding Circle loans' comparably reduced interest rates are one of its benefits. APRs for Funding Circle loans range from 12.18% to 36%, making them quite competitive with those from other comparable private lenders.
A few minutes are all it takes to apply for Funding Circle. A Funding Circle representative will get in touch with potential borrowers within an hour, and loan approvals are frequently completed in a day or less. If borrowers are accepted, money is usually released by the next working day. With no prepayment fees, loans with amounts ranging from $25,000 to $500,000 can be repaid over terms of up to six years.
Find a loan that’s right for your business
Before filing an application for financing or accepting a substantial financial responsibility, small business owners may wish to utilize a loan calculator, shop about, and compare loan conditions. The good news is that applying for potential loans or learning more about private financing won't harm your credit score, and credit reporting agencies won't punish you for comparison shopping.
Before making any financial decisions, it may be beneficial to speak with a lending specialist at a nearby community bank, get advice from an SBA representative, or get in touch with an SBA Women's Business Center to find a consultant who can suggest financing options that are suitable for you and your company.
FAQ on small-business loans for women
It's critical to be aware of the sorts of businesses that can receive a small business loan before applying. Here are some of the most frequent queries regarding small business loans for women.
The SBA Express lending program is one of the quickest and most straightforward ways for female business owners to get a small business loan. The SBA Express lending program normally responds to applicants in 36 hours and offers loans up to $350,000. For loans up to $25,000, collateral is not necessary, and interest rates are subject to change. SBA lenders that are competent to do so make credit choices.
To be considered a woman-owned small business (WOSB) in the United States, your company must be:
* According to the North American Industry Classification System (NAICS) designation, this is a “small” business.
* A woman/women who are US citizens hold at least 51% of the company.
* A woman must manage and oversee your organization, and a woman must occupy the highest position/role in your company.
Women business owners with bad credit might get assistance from Shopify Capital. Through Shopify Capital, loans are pre-approved based on merit rather than creditworthiness. Your Shopify store may be encouraged to apply for business finance through Shopify Capital if it meets certain criteria. Because repayments are computed as a percentage of net sales, you repay more when sales are high and less when they are down.
Yes. Numerous financial support initiatives have been established to aid business owners in reducing the effects of COVID-19. Federal, state, and local financial resources are all included in this Shopify guide to government assistance programs for business owners in both the United States and Canada.