Best Small Business Loans for Women

In today’s changing economy, women are making a name for themselves as entrepreneurs, thanks to small business loans for women. However, the dream to own a business is just the beginning. Small businesses for women are a rapidly growing segment of the economy with increased competition. Being successful requires patience, dedication, and hard work, but most importantly, the financial reserves to set the wheels in motion.

National Women’s Business Council (NWBC) Fact Sheet 

Total Number of Female Only Owned Businesses  9,878,397

Percentage of total Owned Businesses   36.3% Female Owned

Employment totals from Women-Owned Businesses 8,431,614

The full report can be viewed here.

Are There Special or Unique Women-Owned Business Loans?

The SBA (Small Business Administration) has designated different loan programs specifically for women. SBA is not the lender, but the Office of Women’s Business Owners (OWBO) sets out guidelines and rules that are similar to every business loan or grant that is followed by approved lenders of the SBA. To qualify for these programs, female borrowers will have to have good to excellent personal credit and a solid business plan that provides confidence in the approved lender’s ability to lend.

The 12 Best Women-Owned Business Financing Options

1. SBA (Small Business Administration) Term Loans for Women-Owned Businesses

The SBA helps women entrepreneurs launch new businesses and compete in the marketplace. The SBA established the Office SBA Loans are business loans backed by the Small Business Administration and provide guarantees to the issuers (approved lenders by the SBA) of these loans in case of default. The SBA is not a lender but sets the guidelines, qualifications, and requirements of SBA loan products. SBA loans are a great product for larger amounts of capital that require long term financing. SBA guidelines and qualifications are stringent and do require significant paperwork. Unfortunately, SBA loans are more difficult to get approved for, and they are not a quick fix and will require time to process and get an answer. Typical time frames range from a week to as much as a month. The rates and terms are very attractive and highly sought after by small businesses.

How to Choose the Right SBA Loan Program

These three programs are considered to be the most popular for SBA:

The 7(a) Loan Program – The 7(a) loan is the most popular choice for businesses looking to access working capital or startup their business.

The Small Business Microloan Program – With the Microloan, small businesses receive small loans of up to $50,000 to run their company.

The CDC/504 Loan Program– This program provides long-term, fixed-interest rate financing to small businesses that are trying to expand or modernize.

Product Overview

Rates: Interest rates 5.5% or Treasury index plus 1% to 2.50%.

Terms: 2 to 25 years depending on product

Fees: Origination fees range from 0% to 3% 

Payments: Monthly

Credit Standards: Must have good to excellent credit and deep credit history

Processing Time: 1 week up to a month

Benefits and Best Uses of SBA Loans 

SBA loans offer attractive business loan terms because of the length of duration and low rates. The SBA loan terms allow for larger amounts to fund big projects and business expansion. SBA loans lack flexibility as they are not business lines of credit where you can draw money as you go. You receive a lump sum upfront and no ability to draw money with a fixed term and fixed payment.  

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2. Traditional Bank Term Loans for Women-Owned Businesses

Traditional banks offer business terms loans. Many banks will only offer businesses either Business lines of credit or Business Credit cards. Bank rates are competitive. These products do require significant paperwork and are not easy to qualify for. They have a very low approval rate. Less than 20% of all bank business loan applicants receive approval from a bank and fund. Banks do not offer specific loan programs for women-owned businesses.  

Product Overview

Rates: Interest rates Treasury index plus 1% to 2.75%.

Terms: 1 to 5 years can extend to 15 years if highly qualified

Fees: Origination Fees range from 1% to 3% 

Payments: Monthly

Credit Standards: Must have excellent credit and deep credit history

Processing Time: At least one week and can be up to a month depending on bank

Benefits and Best Uses of Traditional Bank Loans 

Women-Owned businesses choose traditional bank financing because banks have great rates, good terms, and low fees. The main use of money is a business expansion or working capital. You will have to prove the use of funds with documentation showing the need for capital.

3. Business Line of Credit for Women-Owned Businesses

A business line of credit, like a personal credit card, is an open revolving line of credit that allows business owners to draw funds when needed on-demand or make purchases up to a certain credit limit. Business lines of credit are not open-ended forever and require renewal either semi-annually or annually to be extended.  

Product Overview

Rates: Interest Rates start at treasury index plus 1% to 2.5%

Terms: Open revolving line of credit. 

Fees: Origination Fees range from 0% to 3% 

Payments: Monthly, Bi-Weekly or Weekly payments

Credit Standards: All credit considered. Good to Excellent credit preferred.

Documentation: Standard Documentation. 1-page application and 3 months bank statements, sometime financial will be required depending on credit limit.

Processing Time: Same day to up to a week depending on the lender 

Benefits and Best Uses of Business Line of Credit 

Flexibility is the #1 reason why women-owned businesses choose business lines of credit. The ability to draw funds on demand at any time up to the credit limit is invaluable. This function allows business owners to respond to cash flow, access working capital, or solve emergencies in real-time on-demand.

4. Long Term Business Loans for Women-Owned Businesses

Long term business loan offerings have become more prevalent with the emergence of Fintech Online Business Lenders. The new types of lenders use data and algorithms to access credit to women-owned businesses. Long Term is defined as terms over two years in duration. Rates vary greatly and typically start at Treasury index plus 1% to 2.5% (6.50% currently) and go up to as much as 28% based on creditworthiness and financial condition of the business. Documentation requirements will be lengthy and need to be detailed to qualify and get approved as the rates and terms are attractive. Application approval rates with these programs are in the range of 15% to 25%, so only really healthy and profitable businesses get approved. Credit standards are more stringent than short term business loans. 

Product Overview

Rates: Interest rates starting at Treasury index plus 1% to 2.5% 

Terms: 2 to 5 years, in rare cases up to 10 years

Fees: Origination Fees range from 1% to 3%

Payments: Monthly, Bi-monthly

Credit Standards: Must have excellent credit and deep credit history

Benefits and Best Uses of Long Term Business Loans 

Long term business financing has great rates, good terms, and low fees. The use of the money can be used for a variety of different purposes, such as business expansion or working capital.

5. Short Term Business Loans for Women-Owned Businesses

Short term business loans are defined as business loans that have a fixed lump sum (a specified amount) offered upfront, with a fixed payback amount over a fixed term of time typically 6 to 18 months. When you cannot qualify for more traditional business loan products, short term business financing can be a great alternative. Rates are based on factor costs and not principal & interest and cost more than traditional business loans. The good news is these products require very little paperwork and credit requirements are much more forgiving than traditional business loans.

Product Overview

Rates: Factor Rates starting at 1.10% up to 1.45% of the funding amount

Terms: Typically 6 to 18 months

Fees: 1% to 5% Origination Fees

Payments: Weekly, Bi-Weekly, Monthly, and in some cases daily Monday-Friday ACH payments

Credit Standards: All credit considered from Poor to Excellent

Special Features: Fast Process. Approval to funding can be same day to 24 hours 

Benefits and Best Uses of Short Term Business Loans 

Short term business financing can come to the rescue for businesses that need the money now and can’t get approved for more traditional business loan products. You DO NOT need to prove the uses of funds.

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6. Business Credit Cards for Women-Owned Businesses

Business credit cards operate just like personal credit cards in that they are open lines of revolving credit that offer principal & interest rate with a set credit limit. A card is issued that can be used for making payments or purchases. It is not uncommon for business owners to utilize business credit cards as well as other business financings as an overall toolbox of options approach to funding a business.

Product Overview

Rates: Introductory rates starting at introductory rates of 0% up to 28.99% 

Terms: Open revolving line of credit with a set credit limit 

Fees: Annual fees range from $0 to $500

Payments: Flexible monthly payments

Credit Standards: Must have good to excellent credit and deep credit history

Documentation: No Documentation for smaller amounts $3,000 up to $15,000. Larger credit limits may require documentation 

Processing Time: Instant approval to same day available

Benefits and Best Uses of Business Credit Cards 

This business financing product is an open revolving line of credit that has the ability to draw money, make payments, and make purchases using a card.

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7. Business Acquisition Term Loans for Women-Owned Businesses

Whether it is to start a new business or acquire an existing business, there are banks that will help you finance the purchase if you have collateral or down payment to offer. Acquisition loan rates are competitive and are typically start at 4.5% up to Treasury plus 1% to 2%. Rates can be in the teens, the more challenging the file either due to credit, financials, down payment, or collateral. These products do require significant paperwork and are not easy to qualify for. We recommend SBA loans for women-owned businesses when it comes to acquisition loans due to the special programs they offer.

Product Overview

Rates: Interest rates starting Treasury plus 1% to 2. 5%. Rates can be in the teens for challenged borrowers.

Terms: 5 to 15 years

Fees: Origination Fees ranging from 1% to 3%

Payments: Monthly

Down Payments: 0% up to 25% down payment requirements

Credit Standards: Must have good to excellent credit and deep credit history   

Benefits and Best Uses of Business Term Acquisition Loans 

This type of business funding is to acquire an existing or new business.

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8. Business Cash Advance for Women-Owned Businesses

Business cash advances (BCA), aka a Purchase of Future Sales Agreement, can advance future sales at a discount to a business. The business is responsible for paying back a fixed payback amount (also known as the specified amount) the difference between the advance amount and the specified amount is called the “Factor Rate or cost.” This is not principal & interest costs and is a fixed cost. A fixed percentage of future overall sales deposits called the specified percentage are the method used for repayment. The payments are collected by an ACH fixed daily or weekly payment deducted from a business bank account based on the specified percentage of future sales. Reconciliation can occur at the end of every month. If the fixed payments are taken are more than the set future percentage of sales, a business owner can request a refund back to the business for overpayment so that the set specified percentage of sales collected for the business matches the sales volumes. There is no term limit with advances because the specified percentage of payback never changes, yet future sales can change and/or fluctuate.

Product Overview

Rates: Factor rates from 1.09% up to 1.45% 

Terms: No term limits. Payments continue until paid in full based on specified percentage collection method and are dependent on future sales

Fees: Origination Fees that range 0% to 5% 

Payments: Weekly or daily Monday-Friday Fixed ACH payments 

Credit Standards: Poor to Excellent credit accepted. All credit considered.

Documentation: Reduced Documentation. 1-page Application and 3 months bank statements are all that is required.

Processing Time: Same Day to 24 to 48 hours

Benefits and Best Uses of Business Cash Advance 

A business cash advance is a great alternative when more traditional business funding options are not available. Working capital to improve cash flow is the primary use of funds.

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9. Merchant Cash Advance for Women-Owned Businesses

A Merchant Cash Advance (MCA) is also known as a Purchase of Future Sales Agreement that operates very similarly to BCA’s, but the biggest difference is the repayment process, which is connected to the future credit card sales instead of overall sales. 

Product Overview

Rates: 1.09% up to 1.45% Factor rates

Terms: No term limits (payoff depends on future credit card sales)

Fees: Origination Fees range from 0% to 3%

Payments: Fixed Percentage of future credit card sales as payment

Credit Standards: All credit considered from poor, fair, good or excellent.

Documentation: Reduced Documentation. 1-page Application, 3 months processing statements and 3 months bank statements are all that is required.

Processing Time: Same Day to 24 to 48 hours

Benefits and Best Uses of Merchant Cash Advance 

The versatility of the repayment process allows for business with predominantly credit card sales to better control cash flow and profit margins versus a fixed payment, which has no flexibility. Working capital and cash flow are the most popular uses of a merchant cash advance.

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10. Equipment Financing for Women-Owned Businesses

Equipment financing is used for the purchase of equipment, securing the equipment as collateral. Business owners need to have very good to excellent credit to acquire equipment financing. 

Product Overview

Rates: Factor Rates 1.09% up to 1.45%, Interest Rates 7%-28%

Terms: 2 to 10 years 

Fees: Origination Fees range from 0% to 3% 

Payments: Monthly fixed payments 

Credit Standards: Good to excellent required.

Documentation: Low Documentation. 1-page Application and invoice for equipment

Time Frame: Instant funding, Same Day up to 3 days depending on the lender

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11. Invoice Financing for Women-Owned Businesses

Invoice financing allows business owners to receive payment on their invoices quicker than waiting for terms to be paid by their clients. Invoice finance companies advance the outstanding balance to a business owner in exchange for a nominal fee to the delay in payment from clients who don’t affect the cash flow of the business. 

Product Overview

Rates: None

Terms: No term limits 

Fees: 1% to 2.5% fee based off Invoice. Monthly Service fees may apply depending on volume of invoices factored

Credit Standards: Credit of the Clients need to be favorable NOT the business owner advancing off invoices

Documentation: Reduced Documentation. 1-page Application and roster of clients and current accounts receivable aging report

Processing Time: It takes 1 to 2 weeks to set up a new relationship to have the ability to fund invoices on a daily basis. Invoices are funded on a daily basis.

Benefits and Best Uses of Invoice Factoring

This business funding product supplements cash flow in real-time without waiting for 30, 60 up to 90 days or more for invoices to be paid by clients. 

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12. Purchase Order Financing for Women-Owned Businesses

 

Purchase Order financing offers businesses the ability to raise capital to pay suppliers upfront for verified purchase orders. Purchase order loans will finance an entire order or a portion of it, depending on the purchase order funder. When the supplier is ready to ship the order, the purchase order financing company collects payment directly from the customer. The purchase order funder will subtract their fees and then sends the balance of the invoice to your business. 

Product Overview

Rates: None 

Terms: No term limits 

Fees: 1% to 3% fee for each Purchase Order.

Credit Standards: All parties need favorable business credit history but all credit considered

Documentation: Purchase Order samples and owner information for all parties involved in the transaction.

Processing Time: 1 to 2 weeks to set up then ability to fund Purchase Orders daily

Benefits and Best Uses of Purchase Order Financing

They are used to support the entire distribution chain with capital, so business owners don’t have to tap into existing cash flow. 

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The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.

Reasons for Getting a Women-Owned Business Loan

How business loans can help you:

  • Working Capital
  • Equipment
  • Business Expansion
  • Cash Flow shortages
  • Emergencies
  • Advertising

Frequently Asked Questions

Are Women-Owned Business Loans difficult to obtain?

The short answer is no. There are many different business financing products available to business owners. The good news is that there are not that many advantages or disadvantages of being a man over women when it comes to business owner’s access to credit.

Can I qualify for Women-Owned Business Loan if I have bad credit?

You can get approved for Short term business loans if you have bad credit. There are limits to how bad your credit can be, so there is no guarantee of approval. Traditional bank loans, Long term business term loans, and SBA loans will not be an option if you have bad credit.  

Is there a Special Women-Owned Business Loan if I am a startup business?

The short answer is yes! The SBA has loans, and Acquisition loans focus on women-owned businesses. Keep in mind, SBA loan qualifications are difficult to get approved for and will require a lot of effort to get approved. 

What resources are available for women-owned businesses?

Office of Women’s Business Ownership (OWBO)

The OWBO oversees Women’s Business Centers (WBCs). These centers seek to level the playing field for all women entrepreneurs, who still face unique obstacles in the business world.

The 8(a) Business Development Program helps small — disadvantaged businesses compete in the marketplace

Women-Owned Small Businesses (WOSB) Federal contracting program

The National Women’s Business Council

Women-Owned Small Business Resource Organizations

Advice and Tips about Women-Owned Business Loans

Women entrepreneurs have more opportunities than in years past to access the American Dream of self-employment and business ownership. Setting aside gender for a moment, when searching for a business funding product, it always should start with asking the question, why and what are you using the money for? Are you looking to work on a large project that requires long term repayment? Did you use a cost versus benefit analysis? Have you looked at all other business financing options and determined what the best options are?

In many cases, the answer to these questions may dictate what business loan product you will choose and drive what the best business financing product is. Your choice should not be just based on rates. You need to balance the costs, terms, payment frequency, and product flexibility when making the best choice for your women-owned business.

How to Apply for Women-Owned Business Loans

AdvancePoint Capital offers an easy business loan experience that can help answer any questions you may have. Our customers love the fast, streamlined process and high approval rates that come from working with us.

Applying for a loan with AdvancePoint Capital is as simple as a 1, 2, 3, 4 process. Start with this online form, then fill out the short application page, wait a few hours for your approval, and then get your money!

 

* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.