When you need funding for your small business, you have more options than you think.
Not everyone has the chops to manage their own business. But your business plan is solid, you’ve lined up your suppliers — and now all you need is the financial backing. Getting financing for a startup or to grow an existing business can be difficult.
According to a joint report of Womenable and American Express, the number of women-owned businesses has increased by 45% in the past 9 years. Despite this growth, women face unique hurdles when it comes to obtaining financing.
But through banks and nontraditional lenders alike, you can now find business loans geared toward women-owned businesses. If you’ve had trouble finding financing, it may be time to look down these specific paths. You could end up funding your business much faster than you thought possible.
What types of small business loans for women are available?
All types of business loans are available, regardless of your gender. However, you may be able to benefit from specialized loan programs that aim to get more women in business leadership roles and support you as your business grows.
The Small Business Administration (SBA) is a good place to start. The SBA backs certain loans offered through lenders by providing a guarantee that if the borrower defaults, the SBA will pay the lender a portion of the loan amount. These loans are referred to as SBA loans.
SBA 7(a) general small business loans are the most common loan backed by the SBA. Funding for these loans come not from the SBA but from lenders who meet the SBA’s standards. Lenders are encouraged to offer these loans because the SBA guarantees up to 85% of the loan’s value against default. Guaranteeing a portion of it reduces some of the risk for the lender, which opens up better rates and terms for you.
The SBA also provides resources and services for small business owners. Its Office of Women’s Business Ownership provides women-owned small businesses with the tools they need to be successful.
Outside of government-guaranteed loans are programs available through banks and credit unions. When searching for a business loan, ask whether the provider offers a special program for business owners who are women. If so, you may be able to qualify for a simpler application process or easier-to-meet eligibility requirements.
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What eligibility criteria do I need to meet for a woman-owned business loan?
The requirements you’ll need to meet in order to qualify are going to vary based on the lender. But you’ll see a few typical minimum criteria.
Aside from being a woman and a business owner, it’s often required that your business be for profit. Other main qualifications include:
- having a small business under a certain revenue or employee limit
- the ability to demonstrate a need for the financing you’re requesting
- showing that the need is for legitimate business purposes
Your business may need to meet minimum age and annual revenue requirements as well. If you’re unable to meet those eligibility criteria, it may be worth looking into alternative or startup financing.
Are you a member of a social minority? Find grant and business loan options for you
What small business grants are available for women?
When you’re checking out grants, you have several different types to investigate. Each comes with its own features and limitations.
- Government grants. A comprehensive and reputable source for small business grants is Grants.gov. You’ll find a list of all available federal grants online as well as resources on how to apply for grants, what they can be used for and general support information.
- State and local programs. The availability will vary based on your location. A good way to research what’s around is to check with your local women’s business center. These centers aren’t limited to helping you find a grant — training and counseling are typically available as well.
- Private grants. You can also find a wide array of grants outside the public sector. The Amber Grant gives $1,500 to select women to fulfill their entrepreneurial dreams, and the Eileen Fisher Women-Owned Business Grant supports innovative, women-owned companies that are beyond the startup phase. General small business grants are available through FedEx and Idea Café.
How to apply for a business loan or grant
After you’ve compiled your resources and run comparisons on your options, you’re ready to apply.
An important part of many traditional business loan applications (especially through banks) is the presentation. You’ll likely have an interview, during which you’ll give a presentation that demonstrates both the security of your business plan and your financial need. This process can be nerve-wracking if public speaking isn’t your strong suit. You could benefit from a dry run or two in front of your family, friends or even just your pets to ease your nerves.
Before you go in, you’ll also want to have your credit score in hand. Not just your business credit — but your personal score. In most cases the lender will check both. If your personal credit score is weak, it may limit the options you have or restrict how low an APR you can get.
Once you’ve ironed out the details, submitted your application and given your interview, be prepared to wait. Decisions can take a week or more, so you could be in limbo for a bit. The process is further delayed if your paperwork isn’t in order, so be doubly sure to dot your Is and cross your Ts.
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Different lenders will require different documentation, but you’ll typically need a basic level of information to apply across the board. Here’s a breakdown of what you might need when applying:
- Business tax returns.
- Bank statements for your business for the past three years.
- Lease agreements if you operate out of a storefront.
- Proof of business ownership.
- Business asset transactions.
- State filings.
- A detailed long-term business plan.
- A prepared presentation that goes over your business plan and statement of need.
- Social Security number.
- Contact information and mailing address.
- Proof of residency.
- Personal credit score.