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What are the best business loans for women entrepreneurs?

It has never been a better time for women entrepreneurs to launch their dream business than right now!

Times are changing, and the traditional view of a woman’s role as a homemaker and caregiver is dramatically shifting.

Women entrepreneurs are starting businesses at records high with more than 11.3 million women-owned businesses in the U.S. producing over $1.6 trillion in revenue.

Globally, the number of female entrepreneurs has increased by 13% in 2016 compared to the rate of males at 5%, and female business ownership continues to rise.

The reality of female entrepreneurship is the new norm in society, and with women-owned businesses employing a staggering 9 million people, it should come as no surprise that women-owned firms are not only on the rise but have proven to be very successful.

Being a female entrepreneur is tough on many fronts but obtaining a small business loan is quite possible these days, and not as challenging as it may have been in the past.

In fact, there have already been great strides thus far.

Due to a stable economy and low-interest rates, the amount of women entrepreneurs applying for business funding necessary for business growth continues to rise.

Revenue among companies generating more than $1 million annually have grown 104% in the past decade and 57% of women business owners anticipate continued revenue growth in 2018.

These are significant numbers and they are only growing, proving that female entrepreneurs are willing to take on more risk by borrowing money for their business and doing big things as a result.

Data indicates that women-owned businesses are equally as successful as male-owned businesses.

This measurement encompasses all aspects such as revenue growth, job creation and the number of operating years.

Women also tend to be much more detail oriented than men and have a slew of other skills that they can use to their advantage, including conducting comprehensive research in small business funding options and comparisons.

From traditional bank loans to online lenders to crowdfunding, women have a plethora of options at their disposal.

When doing your research, always consider what you’ll need to qualify for each type of business funding, the limits on the monetary amount, and the differences between the various forms of financing.

No matter which small business loan option you choose, it’s important to always do your due diligence and remember that the first solution may not be the best solution.

Below you’ll find a comprehensive guide to everything you need to know about small business loans for women so you can take advantage of opportunities available to you and be able to secure working capital at low rates, and take your business to new heights.

We’re going to dig deep into everything there is to know about business financing options for women, but feel free to jump to any section that interests you:

 

  • Traditional Bank Loans
  • SBA Loans
  • What are some other popular financing options for women business owners?
  • How do women obtain a small business loan with bad credit?
  • What other business loans are available to women?
  • What small business grants are available for women?
  • Angel Investors and Venture Capital
  • CrowdFunding & Peer-to-Peer Lending
  • 5 Tips for Getting a Small Business Loan

 

Traditional Bank Loans

 

A traditional business loan from a bank is an excellent option if you need a significant amount of cash upfront.

The downside is it can be very challenging to qualify for them.

According to the Charlotte Business Journal, only 20% of small business loan applications get approved by banks today.

They have a lot stricter guidelines and typically require a high level of revenue, a specified number of operating years, strong credit history and/or high credit score.

Additionally, the amount of paperwork that’s involved makes it longer to get approved (or denied).

For aspiring female entrepreneurs, going down this route may not be advisable.

Large banks can’t accommodate many types of small businesses.

 

SBA Loans

 

For women with strong credit who need a long term business loan, The Small Business Administration also known as SBA offers several small business loan programs you could apply for.

The SBA doesn’t fund the investments itself but instead partners with nonprofit lenders, banks and other financial institutions.

Should the borrower default, the SBA subsidizes a large portion of the loan, thus mitigating the risk for lending partners.

There are two primary loans the SBA offers - the SBA 7(a) and 504 loans.

For businesses that have been operating for a few years and need general purpose working capital, the SBA 7(a) loan is a great option where the loan term that can go up to 25 years.

For this type of long-term financing SBA guarantees between 50-85% of the lending partner’s loan up to a maximum guaranty amount of $3,750,000.

Alternatively, the SBA 504 loan provides business funding to purchase commercial real estate or equipment.

The exact percentage depends on a variety of factors, but because they are government-guaranteed, lenders face less risk, making it more likely to be approved.

In order to qualify for financing through the loan program with the SBA, business owners need to operate a for-profit business and have a personal credit score of 640 and above.

All SBA loans also require a personal guarantee.

You can find out what does the personal guarantee mean and what happens if you default on an SBA loan here.

 

SBA MicroLoans

For those seeking less than $50,000 in funding, the SBA also offers a microloan program operated by 3rd party intermediary providers.

A high 90% of minority-owned businesses rely on this type of funding and between 2009 to 2014, a 66% increase in capital was made available to women.

Although the average loan size is $13,000, it may be worthwhile for a small business or a startup.

Their low rate of 6-8% and long-term options ranging from 7 to 25 years makes this loan especially attractive for a budding entrepreneur.

Even if you’re just starting out, lenders will still be open to the thought of working with you.

Though these loans are less risky and easier to get approved, the involvement of the government also makes it a lot longer of a process with much more paperwork.

 

Additional Resources

The SBA is committed to helping small businesses thrive by increasing the flow of capital.

Not only do they provide various loan programs women-owned firms can apply for, but they also offer a Woman-Owner Business Program that provides education and resources particularly in 83 industries women are underrepresented in.

Even more, the agency has a national network of over 100 Women’s Business Centers (WBCs) that provides advice, mentoring opportunities, training, certifications, and networking.

Whether or not you’re seeking funding, looking into the SBA Microloan program alone can prove to be valuable.

 

What are some other popular financing options for women business owners?

 

Many women operate their business from home and may not require a significant amount of money that typical capital investors provide.

If you only need a small amount of capital to kick-start your business, a microloan might be the perfect solution for you to cover your financial needs.

Unlike traditional bank loans, microloans are smaller and hyper-targeted.

Microloans are also an excellent option for those who don’t have a strong business credit.

By paying these loans off quickly, a female business owner can better position herself for securing a less costly form of business funding in the future.

There are a variety of options from both the SBA and private enterprises to choose from.

 

Key4Women

Since 2005, KeyBank has lent more than $6 billion to women-owned businesses. They are committed to providing women entrepreneurs the capital and financial assistance they need to start, grow and run their business.

 

Women’s Economic Ventures Loan Program

Established in 1995, this program works with women who do not qualify for traditional bank financing. They offer a variety of funding options with a fixed rate of 10-15%.

 

Operation HOPE

Operation HOPE empowers women business owners through various training opportunities and resources including their partnerships with 25 direct lenders.

They are available to all business owners who need help in accessing capital.

 

Opportunity Fund

Specifically focused on small businesses in California that have been operating for at least one year, this organization offers many loans ranging from $20,000 to $100,000.

 

Wisconsin Women’s Business Initiative

Specifically for businesses in Wisconsin, this program offers loans of up to $100,000.

 

Economic Opportunities Fund (EOF)

Assisting those in the Philadelphia Metro, this fund not only helps small businesses in obtaining loans and advising but also invests in various products and services.

 

Elizabeth Street Capital

In partnership with Bank of America, The Tory Burch Foundation helps female entrepreneurs by educating women and providing access to affordable loan options through community lenders.

Initially launched to help small businesses like herself, this fellowship provides the funding and mentoring female entrepreneurs across the country need.

Individual loan amounts range from $500-$50,000 with the opportunity to pitch to industry leaders for up to a $100,000 grant.

 

Minority and Women Revolving Loan Trust Fund

For female-founded businesses in New York, this fund allocates $3.5 million across 13 different community based organizations.

It allows lenders to loan up to $35,000 for working capital and $50,000 for fixed assets.

 

Grameen America

Muhammad Yunus, a Nobel Peace Prize winner, founded this program to provide microloans and other initiatives to support impoverished women entrepreneurs.

Borrowers are required to form groups of four and participate in a week-long training in order to receive a $1,500 microloan.

 

How do women obtain a small business loan with bad credit?

 

Small business loans from online lenders vary but can be a great option for women entrepreneurs that are still relatively new, have less-than-perfect credit and don’t qualify for a bank loan but need working capital to grow their business or to handle a cash flow crunch.

Some lenders offer short-term 3-18 month loans as well as medium and long-term loans and even more unique alternatives like invoice financing.

Other lenders provide low-rate, long-term financing to borrowers with good credit.

Certain lenders offer funding for those with lower credit score but charge higher interest rates.

The good thing about these online small business loans is that lenders can process them within days, and sometimes hours.

The application process is quick and once approved, you can get the money in your checking account much faster than from traditional lending financial institutions.

Because there are so many online business lenders that offer a varied interest rate, sometimes it’s hard to choose the best deal.

Orumfy is a unique online business growth platform, creating synergy between capital and your business.

Simply create a free account and our platform will match you with a lender best suited for your business financing needs.

The application process is quick and easy, and you can see what types of small business loans for women you prequalify for in seconds.

 

What other business loans are available to women?

 

Business Line of Credit

You can think of this type of financing as a credit card for your business.

Just like your personal credit card, you take money out and pay it back in installment payments.

The interest rates tend to be much lower, and the best part is you won’t have to pay any interest on money you’re not using.

It’s particularly useful for women-owned businesses that require more flexibility in the utilization of their funds.

For instance, the retail and food industry has cyclical revenue cycles, and for those in such industries, flexibility in funding is not only essential but could be the only way to survive.

Whether you are having long-term cash flow issues or simply prefer to use this on “as needed” basis, a business line of credit could be of tremendous value.

 

Short Term Business Loans

Short Term Business Loans also known as Accounts Receivables Loans or Revenue Based Loans are often the ideal type of small business loans for women whose income or cash flow has been delayed but who still need working capital to keep their business moving.

You sell your future receivables to a lender at a discounted price.

This type of financing gives you the cash you need to maintain daily operations or invest in growing your business.

They are unique from traditional business loans as none of your assets are at risk as collateral.

 

Merchant cash advance

Merchant Cash Advance is another option for obtaining working capital for your business.

It’s based on your credit and debit card transaction volume.

Such type of funding offers businesses flexibility, as the payments are an agreed specified percentage of daily your credit and debit card processing volume.

 

Invoice factoring

Invoice Factoring is another type of a small business funding if you need working capital.

You can sell your invoices at a discount, and receive funding right away, way before the due date on your invoices.

Orumfy and it’s innovative online platform will connect you with the right lender and the best option for factoring your invoices as well as all other types of small business loans.

 

Credit Union Loans

Credit union loans are very similar to that of traditional bank loans.

You borrow money for a determined period of time with the expectation you pay back through monthly installments.

The only difference is that you need to be a member of a credit union.

Within each credit union, there could be various additional requirements such as location and industry type.

Because credit unions are intended to serve their members, they are not in the business of profit which means they typically don’t charge a high-interest rate.

The downside is because you have to be a member of the credit union to apply, not everyone is qualified.

Even those that do qualify, it could take longer than you might think to get your loan.

Depending on your business and situation specifically, it may make sense to apply for such an investment.

Make sure you shop around to ensure you’re getting a good deal and obviously, make sure you qualify for membership before you apply.

 

What small business grants are available for women?

 

Women owned business grants are a fantastic lending option for myriad reasons.

They don’t require any loan payments or dividends to investors and the abundant amount of different types of grants in nearly every industry, gives you many options to choose from.

They come in all shapes and sizes, in various locations and industries.

By that same token, however, the competition can be fierce.

Further, the process of applying can be complicated and tedious to complete.

If you are overwhelmed at the process, you may want to consider hiring a professional grant writer with experience in writing proposals.

Especially if you have bad credit, hiring a professional can significantly improve your chances of approval.

 

Federal Grants for Women

 

These are typically limited to particular industries such as medical research, agriculture, and technology.

Depending on your business, applying for a federal grant may be a viable option.

Begin by looking through Grants.gov and Challenge.gov

These are excellent databases of various federal grants you can search through.

Given the sheer quantity of grants, make sure to filter the results to avoid looking at non-related grants.

 

SBA InnovateHER Challenge

Hosted every year by the SBA, this challenge provides up to $40,000 for the first place winner, $20,000 for second place winner and $10,000 for third place.

They are for businesses that offer a product or service that impacts the lives of women and their families.

You must first participate and win at a local challenge before moving onto the national semifinal round.

 

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) Programs

The SBA, in conjunction with SBIR and STTR offer these grants for businesses that contribute to science and technological development.

There are a variety of opportunities provided as well by NASA and the US Department of Energy through their own SBIR and SBTT programs.

Bear in mind these grants are highly competitive.

 

Rural Business Investment Program

This program is run by the US Department of Agriculture and geared for businesses that impact rural communities.

 

Private Grants for Women

 

There are many more options when it comes to private small business grants for women than federal grants, but that also makes them much more competitive.

 

Eileen Fisher Women-Owned Business Grant

Eileen Fisher is an environmentally friendly and sustainable clothing brand whose mission goes beyond social and environmental responsibility.

For businesses that are majority (at least 51%) women owned, have been operating for at least 3 years, have revenue under $1 million and focus on finding sustainable solutions, this grant may be an option.

It awards 10 recipients a year at $10,000 each for up to $100,000 annually.

 

Chase Mission Main Street Grant

To apply for a grant for up to $250,000, entrepreneurs will have to write an essay explaining why they deserve the grant and how it can help achieve their goals.

 

FedEx Small Business Grant

This is not limited to women-owned businesses only.

If you have been operating for at least 6 months, you can be one of the 10 that is awarded grant money each year.  

First prize winner gets $25,000.

To enter, they ask businesses to share how they got started, their philosophy and goals, and what a grant could help them accomplish via a video.

Though there are a variety of steps and requirements to apply, it is well worth it.

 

Zions Bank Smart Women’s Grants

These are only available for businesses in Utah and Idaho.  

Each year, Zions Bank awards one $3,000 Smart Women Grant in 6 different categories:

  • Business.
  • Community development.
  • Continuing education and teacher support.
  • Child and elder care.
  • Health and human services.
  • Arts and culture.

Their main goal is to strengthen the community by supporting women owned businesses, especially from low-income communities in Utah or Idaho.  

 

The Amber Grant

This grant began in 1998 by WomansNet.net in honor of a 19 year old woman who sadly passed away before she can launch her dream business.

Since then, they’ve been dedicated to help women achieve their entrepreneurial ambitions.

The monthly awards are small, ranging from $500-$2,500 but the it’s a simple loan application and makes it a good option for first-time women business owners or those that need a little boost of confidence to get started.

 

Open Meadows Foundation

This foundation focuses on combating gender, racial and economic injustices many small business owners face by offering small grants of $2,000 to women-owned businesses that fight for the same cause.

 

The Idea Cafe Grant

This grant is open to any business but most applicants and winners have been women in the baking, clothing, and art gallery types of businesses.

In addition to a prize sum of $1,000, the winner will also get free advertising and publicity.

With an easy registration process and no entry fee, every female entrepreneur should take advantage of it.

 

Halstead Grant

This grant is specific for those making and selling jewelry.

Winners get $7,500 cash, a $1,000 Halstead gift certificate and a variety of business connections.

 

Mission Main Street Grants

Backed by Chase Bank, 20 small businesses that win the highest amount of votes via Facebook have the ability to compete for awards that are worth $2 million in total.

 

Huggies Brand - Mom Inspired Grants

For women who launched businesses inspired by motherhood, this $15,000 grant provides a starting base for further developing and innovating their product.

 

Career Development Grants

These grants are for those that have a bachelor's degree and looking to advance or change career.

It also helps minority women pursuing their first advanced degree or credentials in their field.

 

The Cartier Women’s Initiative Awards

18 early stage a startup owned by women will not only receive significant funding but will benefit from coaching, workshops and media exposure.

The six first finalists will receive $100,000 and the remaining will receive $30,000.

 

Things to keep in mind when looking for grants:

  • Highly Competitive - qualifying and applying for a grant is a competitive process.
  • Eligibility Guidelines - make sure you meet all eligibility requirements before you begin the process, take the time to follow directions, be creative where possible and highlight your unique selling proposition.
  • Research Thoroughly - be aware of any fake grants that may ask for your bank account info or processing fees.
  • Keep Organized - organize all the documents and items you need and keep them updated accordingly.
  • Seek Assistance - grant applications can be technical so get help if you need it. Organizations like the SBA and SCORE provide coaching for grant applications.
  • Review Diligently -  have a few people look over your application to ensure that you’re including all the appropriate documents

 

Angel Investors and Venture Capital

 

Going down the venture capital route is best for those businesses that need a significant amount of capital, from $100,000 and more.

This is especially ideal for those that have poor credit as investors don’t use that as a factor.

Instead, they rely on your business plan, experience, team members and other various factors.

They retain control of a certain percentage of your company and profits.

This makes the tech sector one of the most popular areas for investment firms and VC, who have the potential for big gains.

Venture capital is ideal for young, innovative startup with enterprise level business growth potential.

If you’re a small, one-woman operation with limited growth trajectories and profit margins, you may want to seek alternative methods of business funding.  

Venture capitalists and angel investors offer the broadest range of options, but it isn’t for everyone.

 

Astia

Once approved through the eligibility screening, women-owned businesses can pitch their business to Astia’s network of investment firms and individuals.

Their main goal is to promote angel investment opportunities, so to be selected you have to have the necessary business capital, valuable advice, and connections available from veteran angel investment gurus.

 

Golden Seeds

One of the largest and most active early-stage investment firms for women focusing on B2B and B2C startups in tech, healthcare, consumer products and service industries.

Since 2005, they have invested over $70 million in more than 65 women-led companies.

In addition to capital, they offer coaching, business advice and connection opportunities making it a good option for those who have only been in business for a short time.

 

37 Angels

This network of women angel investors was created with the mission to not only increase the number of funds available to women but also increase the number of women in angel investing.

They mentor female entrepreneurs in all facets of business as well as how to invest.

 

Women’s Venture Fund

This is an excellent resource for first-time business owners who need assistance in understanding the complexities of loans.

 

Springboard

This tech-driven firm offers a variety of expert network innovators, investment gurus and influencers any small female-owned businesses need.

 

BELLE Capital USA

This group focuses on underserved capital markets such as IT, Digital Health, Cleantech, Life Sciences and other sectors. They require at least 1 female founder or C-Suite level executive.

 

Crowdfunding & Peer-to-Peer Lending

 

Crowdfunding platforms are newer methods of raising business capital that cuts out the extensive amount of time that would usually go into all other documentation typically associated with conventional methods of financing.

Peer-to-peer lending is an excellent way to solicit the help of friends and family, but it goes a level further by expanding your reach to those that may not know you.

It’s an ideal option for those who may need a small amount of money to get started.

Make sure to conduct research thoroughly as each platform has its own requirements, fees and project types allowed.

 

Donation Based Crowdfunding

Campaigns that don’t require a financial return to investors or contributors, such as those from charities, nonprofits, and medical situations.

Indiegogo is a popular donation-based crowdfunding platform.

Through donation based crowdfunding you can raise funds for nearly any project.

 

Rewards Based Crowdfunding

Through these types of platforms, people contribute to a business venture in exchange for some reward, usually whatever product or service the company offers.

It’s similar to donation-based crowdfunding as it doesn’t require a financial return to investors.

Kickstarter is the most popular and largest rewards-based crowdfunding platform with over 13 million visitors each month.

MoolaHoop is another popular one.

 

Equity Based Crowdfunding

This type of crowdfunding campaign allows contributors and investors to become part owners of a company by trading capital for equity shares.

Fundable is one of the biggest business crowdfunding platforms that offers either rewards based or equity-based crowdfunding.

 

5 Tips for Getting a Small Business Loan

 

With so many options and resources at your disposal, getting a small business loan doesn’t have to be a difficult process.

 

Tip #1: Do Your Research

Make sure to research all your lending options.

This includes everything from your friends and family to alternative lenders to traditional banks.

There are many options for financial assistance - you just need to figure out what works best for your business and situation and create a plan.  

Find lenders that have a history of granting loans specifically to women.

Orumfy helps small business owners navigate their way through the various choices they face when looking for a small business loan or a line of credit.

Sign up for our platform here and start taking advantage of this unique lending platform designed specifically to help you grow your business.

Best part - it’s absolutely FREE.

 

Tip #2: Build Your Credit

Once you review your credit score, take the necessary steps in fixing any errors that could be present and then work on building your business credit score as well as your personal.  

Make sure you make payments on time, keep your debt-to-income ratio low and develop healthy financial habits.  

You should also keep your business and personal credit separate.

A lot of business owners, regardless of gender, mix the two.  

Unfortunately, this can affect your attempts at building business credit so take every step necessary to keep them separate.  

If your credit is good, you may be approved for a larger loan than you actually need but it’s best to only take what you need.  

Determine the amount you need and only seek that amount.  

Don’t borrow excessive amounts just for the sake of having it available.  

 

Tip #3: Have Your Paperwork Ready

Many low cost small business loans, such as SBA loans, require certain level of paperwork to be filed, when applying.

Having the necessary statements and reports organized and ready for lenders, shows you are on top of your business.  

Every lender has different requirements but you can be prepared by having your tax returns, P&L statements and other business documents organized and available.

You would also benefit from having a solid business plan that highlights where your business is currently, where you want it to go and how you’re planning on getting there.  

Being able to explain to a lender why you are are seeking needed amount of capital and what you plan to spend it on, is sometimes a major determining factor, depending on the type of financing applied for.

Vague loan requests and business plans suggest you are not fully capable of understanding your own business needs.

 

Tip #4: Build Relationships in Your Business Community

There are many benefits of being an active business owner in your community.  

In addition to the endless networking benefits, being an active member in the community positions you as a leader in your industry or your region, which suggests to lenders you have the smarts and abilities for success.

You can begin by looking at small business support groups in your area or business development centers.  

 

Tip 5: Don’t Take Rejection Personally

A “No” is almost inevitable from time to time but it shouldn’t discourage you from applying again.

You should be ready to make your case at any moment and try again if you’ve been rejected from one lender.

A rejection does not mean you aren’t cut out for success.

Some lenders have stricter requirements and they may not fit you or your business needs.  

As entrepreneurs, you have to get comfortable with rejection and keep moving forward until you get your “yes”, which will happen if you keep working hard in pursuing your goals.

 

Conclusion

 

Women entrepreneurs today are pursuing their dreams of building something from the ground up and launching businesses that solve critical problems, provides massive value on either the local or global level, and continuously innovate and produce products or services the market demands.

Without a doubt, women not only significantly impact the economy on various frontiers but are shifting societal norms.

Women business owners should consider obtaining additional capital to launch, or build and expand their business to new heights.  

With so many alternative lending options and resources available, finding the right lending source not only possible, but likely.

Orumfy is here to help.

Simply sign up in a few simple steps and take advantage of everything our platform has to offer, absolutely free.

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