The impact women have on the U.S. economy is growing every year. In fact, female entrepreneurs are one of the fastest-growing segments of small businesses in the country. Female small business owners own 12 million businesses in the U.S., and started more than half of American businesses in 2021, according to information released by the White House.
Despite the gains women are making in the economy, there’s room for improvement. Women entrepreneurs have a harder time getting small business loans and a paltry 2.1% of venture capital went to women-owned businesses in 2022.
In early 2023, the White House announced resources to help women owners, including the most expensive expansion of Women Business Centers (WBC) in history, grants through the Community Navigator program and making the Minority office of Business Development permanent.
While these resources can be valuable, many don’t make loans. If you’re hoping to find loans specifically designated for businesses owned for women, you’re likely to be frustrated. Instead, you’ll want to use these resources to help you grow your business so you can qualify for the funding you need.
Business Funding for Women
Funding for many types of businesses run by women comes in all shapes and sizes. A new business might consider crowdfunding. An existing business may qualify for a small business loan. A startup might bring on investors. Or a business might find a small business grant or microloan.
Let’s explore those funding and loan options in more detail.
Types of Small Business Loans for Women
Here are some business funding options women-owned businesses can start looking into now, so you’re ready to go when it’s time to fund the next stage of business growth.
1. U.S. Small Business Administration Small Business Loans
The SBA offers a number of loan programs, including 7(a) loans (the most popular SBA loan program), CDC 504 loans, and SBA microloans. Most SBA loans aren’t made by the SBA, but are instead made by participating lenders and guaranteed by the SBA.
The good news: women-owned businesses secured more than $10 billion in capital in 2021 and 2022 through the SBA 7 a and 504 loan programs.
Eligibility requirements for SBA loans include the requirement that you own a U.S.-based, for-profit business of a certain size, and that the owner is materially invested in the business.
SBA loans require acceptable personal credit scores, and for some loans you may need to meet a minimum credit score requirement for a FICO SBSS score which takes into account both business credit and personal credit. You must be able to demonstrate the ability to repay the loan through cash flow or projected cash flow. (Startups may qualify for some SBA loans.)
SBA loan programs can be used for a number of business expenses, including hiring staff, real estate, and equipment, and can be a good option for a working capital loan. Repayment terms are good, and interest rates are competitive.
2. Business Lines of Credit
Sometimes you don’t need all your capital at once. Maybe your business needs smaller amounts of money to smooth out cash flow or to take advantage of opportunities as they arise. A business line of credit can be perfect for situations where your business needs short-term financing.
Once you’re approved for a business line of credit, you can access funds when you need them. You’ll get approved for a certain amount (your credit limit), borrow the amount you need, and only pay interest on the amount you borrow.
Business lines of credit are one of the most popular types of financing for small businesses according to Fed research, and that flexibility is probably the reason why.
Banks, credit unions and online lenders offer lines of credit, and costs and eligibility requirements vary.
3. Crowdfunding
Crowdfunding is the bright spot when it comes to financing for women and other minority-owned businesses. Female entrepreneurs are 32% more likely to reach their crowdfunding goals than campaigns led by male entrepreneurs.
There are several types of crowdfunding that may work for your business, ranging from small 0% interest microloans from Kiva to million-dollar-plus rewards or investment crowdfunding campaigns on platforms like Kickstarter or Wefunder.
While crowdfunding often takes work to be successful, you generally don’t have to have good credit scores to qualify. (There’s rarely a credit check so bad credit isn’t a hurdle.) And this type of funding is often available to startups as well as established businesses.
4. Small Business Loans
Traditional banks, credit unions and online lenders all make loans to female entrepreneurs even if they don’t advertise them as such. Small business loans in all sizes, with loan amounts ranging from a few thousand dollars to a million dollars or more.
Term loans offer a fixed amount of money for a fixed period of time while lines of credit (mentioned earlier) offer access to a credit line when needed.
When evaluating small business loan applications, most lenders look at these top factors:
- Credit: Personal and/or business credit scores
- Time in business: 1—2 years in business may be required.
- Revenues: Minimum monthly or annual revenues may be required, and cash flow must be sufficient to repay the loan.
- Collateral: Secured loans require you to pledge business and/or personal assets. Personal guarantees may be required. (Not all business loans require collateral.)
Where do you find these small business loans for women? You can start with the banks and financial institutions you already do business with, such as your mortgage holder or auto lender. These traditional lenders have much of your information on file and already know you as a customer. They may sometimes offer you a lower interest rate as a reward for your loyalty.
Many business owners find that qualifying for traditional bank loans is out of reach, though, so another way to search for a business loan is through online lenders, much like you would a credit card.
Online alternative lenders usually offer a very fast application process, and if you qualify, funds may be available in just a day or two. Costs may be higher.
5. Business Credit Cards
You might also consider business credit cards. In addition to perks, business credit cards often offer business financing through a line of credit. Pay on time and you’ll build business credit as well. Most business credit cards are available to startups as well as established businesses. Good to excellent credit will likely be required.
Tip: Business credit cards with 0% intro APRs may be perfect for short-term financing needs.
6. Microloans
Microloans are smaller loans often made by non-profit community development financial institutions (CDFIs) and other economic development or nonprofit organizations that target underserved borrowers, including female business owners. The SBA microloan program offers loans up to $50,000.
The loan amounts may be small (from a few thousand to several thousand dollars) but they often come with “technical assistance” which can include mentoring and networking.
If you need a small amount of money, Kiva offers one of the best small business loans with 0% interest and no fees. The maximum loan amount in the US is $15,000.
7. Equipment Financing
If your business uses equipment, an equipment loan or equipment leasing can help you get equipment without a lot of money out of pocket. This type of financing may be flexible for borrowers with fair credit.
8. Cash Advances
If your credit isn’t great and you don’t qualify for any of the options we’ve already discussed, you may consider a business cash advance. This type of financing offers you an advance against future sales. It can be expensive, though, so make sure you understand how the cost will affect business profitability.
9. Small Business Grants
Small business grants offer money that doesn’t have to be repaid. There are a few business grants (like the Amber Grant) aimed specifically at women business owners, while other small business grants may be more broadly available.
Grants.gov is the website for federal small business grants, while OpenGrants.io and GrantWatch provide information about private, state and federal grants.
10. USDA (Farm Services Administration–FSA) Women Farmers and Ranchers
The FSA has a renewed focus on giving even more money to underserved farmers and ranchers, through several programs. These are open to most small farmers, but they do put a focus on providing funds to the underserved—including women. These long-term financing programs include:
- Operating and Farm Ownership Microloan program
- Youth Loan
- Guaranteed Loans
- Direct Operating Loans
- Direct Farm Ownership Loans
The best way to know which program best suits your farm or agricultural business is to partner with your local FSA office. It can point you in the right direction for your business size, goals, and method of farming (organic, for example.)
Valuable Resources for Women-Owned Businesses
The following organizations can help you create a small business plan, learn skills needed for successful entrepreneurship and prepare for the loan application process.
Women’s Business Centers
There are now over 160 Women’s Business Centers around the U.S., and you can get free and low-cost advice and training to start or grow your business. The Office of Women’s Business Ownership (OWBO), a federal government agency, oversees WBCs.
The Community Navigators Pilot Program
This initiative is designed to help organizations in all 50 states and Puerto Rico who are already working in their communities, to help them improve resources for socially and economically disadvantaged small businesses, rural communities, and small businesses owned by women and veterans.
Connect to Community Navigators here.
SCORE
Score.org provides free mentorship through volunteer business mentors, as well as a variety of educational programs. (The webinar, How to Get a Small Business Grant, presented by Nav is available at Score.org.)
These are just a drop in the bucket of the financing options you have. Get started here.
Small Business Development Centers
SBDCs provide counseling and training to small business owners, and improving access to capital is one of their top priorities. They provide one-on-one mentoring as well as educational programs.
Women-Owned Small Business Federal Contract Program
The federal government’s goal is to award 5% of contracts to women-owned businesses each year and this program is designed to level the playing field for women business owners by limiting competition for certain contracts to businesses that participate in the WOSB Program. If you want to compete for set-aside contracts, you’ll need to get certified as a Woman Owned Small Business (WOSB).
Learn about WOSB certification here.
Frequently Asked Questions About Business Loans for Women
How Hard Is It for a Woman To Get a Business Loan?
Women business owners may find it harder to get a small business loan for a variety of reasons, including the size and revenues of their business, type of business (industry) or other lack of collateral. Past research has found that only $1 out of $3 in conventional small business loans is made to women-owned businesses.
How Can A Small-Business Owner Get A Loan?
Finding and qualifying for small business loans can feel overwhelming. There are many different options out there! One way to find a business loan is with Nav. Connect your data to see lending options based on your data. Get started now.
This article was originally written on September 23, 2019 and updated on August 23, 2023.
I am a business owner and have struggled for years to keep and maintain a good credit score. For this reason, I have had no success obtaining a loan. Do you have any advice for me?
Sure Lorrie – start with a free Nav account. We offer a variety of educational tools that you are likely to find useful. In addition there are some types of loans that don’t require good credit– but you’ll need sufficient business revenue to qualify.