When you need funding for your small business, you have more options than you think.
The number of women-owned businesses has increased by 45% in the past nine years, according to a joint report of Womenable and American Express. Despite this growth, women face unique hurdles when it comes to getting 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 to business owners, 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.
- Best for financing a large expense
The Small Business Administration (SBA) is a common place to start when looking for business loans for women. The SBA backs certain loans by providing a guarantee that if the borrower defaults, the SBA will pay the lender a portion of the loan amount. The SBA 7(a) general small business loan program is the the most popular program for any business owner. However, The SBA also provides resources and services for small business owners.
The SBA doesn’t fund the loans itself but sets limits on rates, fees, how much you can borrow and eligibility. They’re highly competitive but also take a lot of work — expect to spend around 30 days on your application.
Community Development Financial Institution (CDFI) loans
- Best for funding community-building projects
CDFIs are nonprofit, mission-driven lenders that work to serve their local communities. One of the main goals of a CDFI is to provide affordable financing to underrepresented business owners — including women. CDFIs are typically small banks or credit unions, though there are some online lenders and even venture capital firms that qualify as a CDFI.
Many CDFI’s have programs especially for promoting women-owned businesses. These typically have highly competitive rates and terms, plus more forgiving eligibility requirements compared to other types of financing. However, CDFIs are small institutions and might not have the resources to fund large projects. They can also have a long turnaround time.
- Best for covering small startup costs
A microloan is what it sounds like — a short-term loan designed to help small businesses and startups cover small expenses. Like CDFIs, many microlenders are nonprofits and often have special financing programs for women. Unlike other types of short-term funding, microloans tend to come with relatively competitive rates — though not as low as an SBA loan.
Need funding fast? Consider an online lender
One of the drawbacks lenders that offer financing for women-owned businesses is that they can be slow. If you need money tomorrow or don’t have much time to spend on an application, an online loan could be your best bet.
Online lenders typically have a turnaround time of one day or less and filling out the application rarely takes more than an hour. It’s also a more friendly option to new businesses that don’t have strong revenue or business owners with less-than-perfect credit.
Compare online business loan options
How do I qualify for a business loan for women?
The requirements you need to meet in order to qualify vary based on the lender. But there are some basic criteria that most lenders require applicants to meet. They or their business must
- Be forprofit
- Be at least 51% owned by a woman
- Meet certain revenue or employee limits
- Have a demonstrated a need for the financing
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.
Find financing options for business owners from underrepresented communities
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 might 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.
Compare online lenders and save when you finance your business
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.
There are several financing options out there specifically for women-owned businesses. They’re often easier to qualify for and can be less expensive than your standard business loan. But most come from nonprofit lenders or organizations that tend to have a lengthy application process. Be prepared to invest time and resources into preparing your application.
Want to learn more about business loans in general? Check out our guide.