Women-owned businesses generate $1.8 trillion a year and are growing at an accelerated rate. But they struggle to obtain the necessary financing for growth.
To help alleviate this problem, there are numerous business loan options available to female entrepreneurs. These range from traditional banks to small business grants and credit unions.
Traditional Bank Loans
Traditional business loans are available from banks, credit unions and online lenders. Many of these loan options are not specifically categorized as “women owned business loans” or “business loans for women.” However, many have gender-neutral underwriting processes and do not discriminate based on the sex of the applicant or the industry of the company.
Typically, these financing products require a long application process and vetting that may take weeks or months before the loan is approved. This can make it challenging for female entrepreneurs who want to secure a business loan quickly.
Other lending options include business lines of credit and merchant cash advances. Business lines of credit work much like a credit card, giving you access to funds up to a predetermined limit and paying only interest on the money you use. These can be useful for smoothing out cash flow or preparing for a busy season.
Additionally, there are a number of smaller organizations that offer business financing for women and other minority businesses. These microlenders, including the Opportunity Finance Network community financial development institutions and some local government agencies, are more flexible with loan size, loan terms and collateral requirements than traditional lenders. They also often have lower minimum credit scores. Some of these groups also connect small-business owners with mentors. Ultimately, it is important to research the best business loan for women options for your unique business.
Small Business Grants
There are numerous grants available for small business owners, including grants specifically for women. These programs may not provide the funding your business needs, but they can help you build a stronger case for additional financing options.
The Cartier Women’s Initiative Grant is a business grants program for early-stage, women-owned businesses. To qualify, your business must be less than five years old and focused on creating social impact aligned with one of the UN’s Sustainable Development Goals. The program offers a total of $200,000 divided among up to 10 recipients.
You can find many other small business grants for women through state and local organizations. Reach out to your local chamber of commerce or business development center for information on available grants in your area. Additionally, consult with female professionals in your industry who may be aware of grant opportunities in their field. You can also take advantage of networking events to learn about new financing opportunities for your business.
If you want to increase your chances of securing a business loan for women, look for programs that are open to women only. This will immediately reduce the pool of applicants and improve your chances of securing funding. Additionally, consider applying for grants that are targeted to economically and socially disadvantaged communities. This is because financial providers are legally prohibited from discriminating against borrowers based on their sex or race.
Angel Investors
Female entrepreneurs are growing at twice the rate of male-owned businesses, but funding is still a challenge. Getting business loans for women can help them overcome hurdles like a slowdown in the economy, rising raw materials and inventory costs, or cash flow emergencies. Fortunately, there are financing options to fit every need, including those for low- or no-credit businesses and startups.
One option is to look for angel investors who specialize in investing in female-led companies. You can also find groups that connect women with potential investors through networking events and online resources. Another way to find angel investors is to work with your local Small Business Development Center, which typically partners with local universities to offer small business training and consulting services.
Financing from these sources can be especially helpful for small business owners who are struggling to get approved for a bank loan because of credit issues or lack of a startup business history. For instance, the Tory Burch Foundation works with community development financial institutions to provide business loans for women to grow their business without putting personal assets at risk.
Other financing options to consider for women-led businesses include short-term business lines of credit and invoice finance. The former is a great solution for small business needs that can be fulfilled quickly, such as an emergency equipment purchase or filling in gaps in cash flow due to seasonal growth or a sudden increase in inventory.
Bad Credit Business Loans
When you have a low credit score, it can be challenging to get financing from traditional sources like banks or the SBA. However, that doesn’t mean you don’t have options for funding your business. There are alternative lenders who focus on the unique circumstances of women-owned businesses and have a more flexible approval process.
Whether you need a short-term working capital loan to pay rent, inventory or staffing expenses or a longer-term equipment loan to upgrade your manufacturing capability, these loans for women with bad credit can be the answer. These loans may have higher interest rates than traditional financing and can require a personal guarantee, but you may also see an increase in your credit score as you make payments on time.
You can even find small business loans for women with bad credit from non-profit lenders and community financial development institutions (CDFIs). These providers have a specific focus on supporting underserved communities, including those led by women. In addition to providing financing, these companies can provide expert insight into how to maximize your business’s potential and grow revenue. They often have fast turnaround times and a simple online application process. Typically, you can receive an instant decision and funds within 24 hours.