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Intro To Small Business Loans For Women
Women-owned businesses have traditionally had a challenging time obtaining business loans. This is mostly because they tend to start their companies with fewer advantages than their male counterparts. These advantages include an excellent credit score, a high net worth, and financial support from other people.
According to the National Association of Women Business Owners, some 11.6 million women-owned businesses in the United States alone generate 1.7 trillion dollars in annual revenues and employ over 9 million people. At this rate, the business financing industry’s bias against women business owners could endanger the economy.
Thankfully, companies like United Capital Source level the playing field because we have access to many online lenders with different types of small business loans for women. No longer do the aforementioned disadvantages have to prevent women entrepreneurs from getting the small business financing they need to reach their true potential.
In this guide, we’ll answer the following questions and more:
What Are Small Business Loans For Women?
Small business loans for women are not a single kind of loan made specifically for women entrepreneurs. Instead, our dedication to fighting against the discriminatory policies typical in lending gives women entrepreneurs an equal chance at the best small business loans. At United Capital Source, we understand the statistics: women entrepreneurs have a harder time getting business loans than males.
When it comes to accessing business credit, women-owned businesses face challenges. Study after study shows that women struggle to get the financing they need for their businesses – more than their male peers do.
How Do Small Business Loans For Women Work?
One of this concept’s central purposes is to give women business owners access to various small business financing products. In the past, female entrepreneurs with a subpar personal credit score or lower operating capital could not access the most appropriate products for their goals. It didn’t matter how well their small businesses were doing.
But that’s not how we do things at UCS. Instead, our network of online lenders is willing to overlook some conventional limitations to help level the playing field. For example, women entrepreneurs often start their small businesses with less working capital than men. They have less personal and outside funding at their disposal. This can easily hamper their credit score or capacity for growth. The financing options geared toward women dive into the root of these issues, rather than just looking at numbers. Thus, our network of online lenders assigns borrowing amounts, interest rates, and terms that female small business owners might not be able to access on the strength of their personal credit score, bank balance, or annual revenue alone.
Small business loans for women can take the form of the following financing options:
- Bad Credit Business Loans
- Business Line of Credit
- Business Term Loan
- Equipment Financing
- Invoice Receivables Factoring
- Merchant Cash Advance
- Revenue-Based Business Loan
- SBA Loan
- Working Capital Loan
Borrowers could potentially access loan funding as high as $10 million for terms of up to ten years.
Recent Facts, Figures & Reports on Women-Owned Businesses
Access to capital is still one of the biggest barriers for women trying to launch, grow, and scale a business. Source: National Women’s Business Council
Women start businesses with an average capital amount of $75,000. That is just about half the average capital amount for businesses owned by men. Source: National Women’s Business Council
Women-owned businesses account for 21% of U.S. small-employer firms. Source: Small Business Credit Survey
From 2014 to 2019, women-owned businesses grew by 21%. Businesses owned by women of color grew at 43% – twice as fast. Source: American Express 2019 State of Women-Owned Businesses Report
What Are The Advantages of Small Business Loans For Women?
Small business loans for women are most advantageous for women small business owners who have had trouble accessing financing for the following reasons:
Little or Poor Credit History
Historically, the credit system hasn’t favored women. Did you know that women couldn’t even apply for their own personal credit score until 1974? While we’ve come a long way since then, the system is still catching up. That’s why women’s credit scores tend to fall about 20 points below their male counterparts’ minimum credit scores these days. Some banks have near-perfect minimum credit score requirements for their loans, which ultimately hurts female entrepreneurs.
Low Working Capital/No Collateral
On average, women don’t put a lot of their own personal dollars into their small businesses. Men, on the other hand, tend to use their own funds when starting their businesses. Bank owners often reason that more personal funding = more commitment to the business, so they’re more likely to give business loans to those who have invested more of their own money. They don’t consider the reasons – such as financial discrimination, family care, etc. – that a woman may have to spend her money elsewhere.
The last item on this list stems from the fact that women are more likely to start businesses in industries that are stereotyped as “low-growth” or “risky.” Examples of such industries include hospitality and retail. At UCS, however, our lenders do not adhere to industry stereotypes or deny applications solely because the industry isn’t as “trendy” or “safe” as others.
If your business is doing well, we will most likely overlook these disadvantages and give you the borrowing amount, rate, and terms that make the most sense for your business. Your cash flow and performance will also be the chief criteria for the product you receive, not how much business training or background you might have.
In summary, small business loans for women work best for small business owners who suffer from conventional disadvantages but have thriving businesses.
What Are The Disadvantages of Small Business Loans For Women?
We wish we could distribute the very best small business loans for every hard-working business owner. Unfortunately, this is not the way business financing works. The most advantageous products will always go to borrowers with excellent credit, strong cash flow, and several years in business. Until you can meet these criteria, your interest rates and payments may be on the higher side.
In other words, though we may be able to offer higher borrowing amounts, lower interest rates, and longer terms than banks, it’s impossible to give everyone everything they want. A business loan probably won’t solve all of your problems, but it may be able to clear the biggest obstacles to growth at this moment. Paying back your first business loan will also bring you significantly closer to obtaining another loan with better terms.
- Get access to funds quickly
- The application process is easy
- Less than perfect credit accepted
- Use for a variety of business purposes
- Higher rates & fees than with traditional loans
- Might require collateral
- It gets more expensive with a lower credit score
- Some loan options require one year in business
Business Loans For Women Product Comparison
|Loan types||Max Amounts||Rates||Speed|
|Merchant Cash Advance||$5k – $1m||Starting at 1.09||1-2 business days|
|SBA Loan||$50k-$10m||Starting at 3.75%||3-5 weeks|
|Business Term Loans||$10k to $5m||Starting at 5%||1-3 business days|
|Business Line of Credit||$1k to $450k||Starting at 1% p/mo||1-3 business days|
|Receivables/Invoice Factoring||$10k-$10m||Starting at 1% p/mo||1-2 weeks|
|Equipment Financing||Up to $5m per piece||Starting at 3.5%||3-10 business days|
|Revenue Based Business Loans||$10K – $5m||Starting at 1% p/mo||1-3 business days|
Who Qualifies For Women-Owned Business Loans?
Approved businesses generally met the following criteria:
How To Apply For Women-Owned Business Loans:
If you have the required documentation on hand, our application can be completed in a matter of minutes. And depending on your desired product, funds can appear in your bank account in as little as 24-48 hours. Here’s how to apply:
Step 1: Consider Your Needs
With the help of UCS, women entrepreneurs can access a variety of products. Since no one knows your business better than you, we recommend researching each product to decide which one works best for your cash flow. Is your business highly seasonal? Is your industry particularly prone to occasional dips in revenue? Answering these questions before applying will help us determine the smoothest possible repayment structure.
Step 2: Gather Your Documents
Depending on your desired financing option, you may need the following documents and information:
- Voided business check
- Bank statements (3 Months)
- Credit card processing statements (3 Months)
- Accounts receivable aging report
- Accounts payable report
- Drivers license
Step 3: Complete Application
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from Step 2 above, along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
Step 5: Receive Approval
The process generally takes a few business days, depending on which product you choose. Once the file is approved and closed, funds should reach your bank account in 1-2 business days.
Your Business Loan Gets Set Up – Now What?
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
What If I’m Declined For Women-Owned Business Loans?
If your application gets declined, it might be due to the conclusion that your business cannot afford to take on more debt at this time. In this case, we might recommend alternative tools for financing your business, like a business credit card or even a personal loan. Credit cards and personal loans are usually easier to qualify for than business loans. At UCS, we can help you explore your options and point you in the direction of the most sensible choices.
Business Grants for Women: An Alternative To Borrowing Money
Business loans aren’t the only option when it comes to financing a woman-owned business. Non-profits and other organizations offer small business grants for women.
Like a term loan, a business grant gives you a lump sum of cash. However, grants don’t usually require repayment. Use a grant in addition to business credit to grow your business faster.
Additional Resources for Women
Interested in small business grants for women? Here are five resources to get you started.
People Also Ask:
Does the Small Business Administration (SBA) Offer Assistance Specifically for Women?
The Small Business Administration Office of Women’s Business Ownership does offer several resources for women. But as we mentioned in the previous section, the requirements for grants are much steeper than business loans. However, this is far from the only type of business assistance offered by the SBA. For resources and workshops on business growth, consult your nearest Women’s Business Center. The SBA has nearly 100 of these centers set up around the country. You can also seek private advice from successful female entrepreneurs through the SBA’s SCORE program.
And yes, these programs are free.
Make sure to get a Women-Owned Small Business (WOSB) Certification if your business ownership is majority female. Benefits include being first in line for government contracts as they become available.
Where Can I Find Support And Resources As a Woman-Owned Business?
Your closest SBA-supported Women’s Business Center is a good place to start. Additionally, you’ll find online and in-person resources at
- The National Women’s Business Council
- The National Association of Women’s Business Owners
- The Office of Women’s Business Ownership
What is the Opportunity Fund, and Who’s Eligible?
The Opportunity Fund awards grants to organizations with a 501 (c)(3) tax-exempt status. This includes certain government entities as well. The fund caters to small and mid-size arts organizations that have a focus on social and economic justice. They also heavily cater to those that live in the Pittsburg, PA area, with some exceptions.
Organizations that fit the above criteria can check out this list of FAQs on the Opportunity Fund website to see if they qualify.
Can I Get a Small Business Loan For Women with Bad Credit?
Yes, small business loans for women are available to borrowers with credit scores as low as 550. We can even recommend certain products that will raise your personal credit score in the quickest time frame. Payments for only some products are reported to credit bureaus.
If poor credit is preventing you from obtaining funding, you should consider our credit repair services. We can help you identify the issues that keep your score down and create a plan for eliminating them.
Have You Helped Women in My Industry Get Funded Before?
More than likely, the answer is yes. We work with men and women in hundreds of industries, including statistically female-led small businesses. From retail to recycling, we’ve helped to facilitate small business loans to all sorts of industries.
Do I Need a Business Plan For Women’s Business Loans?
For most small business loans facilitated by UCS, you do not need a business plan to apply. For most products, you don’t even need to disclose your intended purpose of the funds. However, you should never apply for a business loan without knowing exactly which investments or expenses the funds will cover. Disclosing this information will also help us determine the right borrowing amount, terms, and repayment structure for your needs. Failing to develop a plan before applying often causes borrowers to ask for too much funding or too little.
Why Do Women Have Unequal Access To Business Loans?
The business financing industry’s bias against women stems from a multitude of circumstances. First is the discrepancy in working capital between female and male business owners. Women start their small businesses with less working capital and use more of their own money to finance their companies. In traditional business lenders’ eyes, this suggests that the business owner will have less money to make payments should the business fail.
Additionally, research has shown that the average woman’s credit score is about 25 points lower than the average man. For traditional business lenders, the credit score is the most critical factor when approving loans. If you do not have excellent credit, they won’t even look at the rest of your data.
Traditional business lenders also favor older, wealthier businesses. Research has shown that women tend to apply for funding at earlier stages in their business’s development. This is merely because their male counterparts had plenty of funding to start their companies and had no reason to look for more.
If this wasn’t frustrating enough, scholars at several Ivy League colleges conducted another study even found that investors and bankers prefer to lend money to handsome men. Simply put, people like to work with other people who look like them.
What Are Other Ways For Women To Access Business Funding?
Female business owners have other funding options, but they are much harder to obtain than business loans. For example, business grants are only available to specific industries, and the application requires substantial paperwork. Applicants for many private grants must be located in low-income areas or be involved in a female-dominated industry (i.e., retail, jewelry). You might have to write a compelling essay and prove that you are promoting gender equality.
For more information on grants for female business owners, check out the web-based membership organization WomanOwned. This database has information on thousands of grants as well as state-specific business development assistance.
Another option is venture capital. However, female business owners received just 2.2% of all venture capital dollars in 2018. This is probably because venture capital firms prefer to work with growing industries or industries they’ve worked with before.
Our Full Suite of Business Loans For Women
At UCS, we have access to a wide variety of business credit for women in all stages of entrepreneurship.
Bad Credit Business Loans For Female Entrepreneurs
If you’re a woman entrepreneur trying to finance a new business and you have bad credit to boot, you might feel pretty frustrated. It might even seem like you hit a brick wall when trying to get a loan through your bank or other financial institution.
We get it. Life happens, and sometimes keeping your money issues organized challenges busy women, especially if you’re running a business as well as a busy household.
That’s why UCS’s network offers bad credit business loans. We work with business owners dealing with credit that might be less-than-perfect credit every day.
The good thing about bad credit business loans for women is that you get access to credit quickly. And you can use the money for a variety of purposes.
We have access to unsecured or secured credit, and your credit score doesn’t need to be great. Sure, you’ll pay a slightly higher rate, and you might need to set up automatic withdrawals for repayments. But you’ll be able to move on with growing your business now instead of waiting until later. Learn more about the minimum requirements for bad credit business loans for women, as well as what you need to apply today.
Business Line of Credit For Women
A business loan might not be the right financing choice for your business right now if you need flexibility. Instead, consider a business credit line for your business.
A business line of credit could give you the financial tool you need to meet the expenses of growing your business. Credit lines are revolving credit, with a set borrowing limit. So as you pay down your balance, you can then borrow again as long as you remain within your limit. It operates very similarly to a credit card. So you can borrow a lot or a little. And you only get charged interest on what you borrow.
Business credit lines offered by traditional lenders often require stellar credit, collateral, and established business history. At United Capital Source, we have access to unsecured business credit lines to female-owned businesses of all sizes and with a wide range of business experience.
Business Term Loans To Assist Women Entrepreneurs
Do you need a lump sum of cash right now? Do you prefer the predictability of a fixed interest rate and regular repayment amount that stays the same for the loan’s length? If so, a business term loan might be just what you need.
Term loans get repaid over a set term ranging from 3 months to as long as 10 years. With our lender network, business term loans for women start at 5% with access to funds within 1 to 3 days. Use the funding for whatever business-related purpose you choose, but keep in mind the payment remains the same regardless of whether your business is booming or has hit a slow period.
Equipment Financing For Women-Owned Businesses
Do you have your eye on a new piece of business equipment? Maybe it’s just what you need to get your product out faster. Or perhaps it would let you take on that more significant contract. If so, consider equipment financing for women-owned businesses.
Equipment financing involves getting a loan to buy a piece of equipment. The equipment is collateral or security for the loan. That means that if the borrower doesn’t make payments as agreed to in the loan terms, the lender gets the equipment. Equipment financing offers fast approvals, quick access to funds, and a good solution for female entrepreneurs with poor credit.
Merchant Cash Advance For Women
If your business has strong daily credit card or debit card sales, a merchant cash advance could help you get the money you need now. You get cash right away based on your future credit card sales.
Yes, the interest rates are higher than some other forms of business credit. And you will need to show at least three months’ worth of official sales documents. Yet a merchant cash advance for a women-owned business could be the answer if you have little collateral, a low credit score or if you’re running a newer company.
Invoice/Receivables Factoring For Women
Did you know it’s possible to get an advance against your accounts receivables? With invoice or receivables factoring for women-owned businesses, your accounts receivables get treated as an asset. So you sell your accounts receivables at a discount to a third-party factoring company. And instead of waiting to get paid as you normally would with your typical accounts receivables cycle, you get the money you need right now.
Small businesses use invoice factoring for a variety of reasons. However, remember that invoice financing may be more expensive than some other business credit options such as a secured term loan or business credit line. The cost or factor rate depends on the credit strength of your customer or client list.
Revenue-Based Financing For Women
If your business has strong revenue and needs a lump sum of cash now, consider a revenue-based business loan.
Revenue-based business loans for women get you access to the cash you need today. However, unlike a traditional term business loan, your repayments get calculated as a percentage of your future monthly revenue.
Revenue-based business loans can be used for many different purposes. You could even use one of these loans to make a purchase that will increase your future stream – a win/win!
SBA Loans For Women
While the SBA does not loan money directly to women, it does guarantee the SBA loans offered by qualified lenders, including banks, financial institutions, and other national lending partners.
With low interest rates, flexible payment terms, and four current programs, an SBA loan could be right for you if you need between $50K and $1M and meet the minimum requirements for SBA Loans.
Working Capital Loans For Women
Do your current expenses keep you up at night? A working capital loan for women could help you meet your short-term expenses and keep your doors open. Use it to pay for rent or to help you meet payroll.
Like other business credit options, you’ll get access to your funds quickly. You don’t need collateral or perfect credit. We offer secured and unsecured working capital loans for women with all kinds of businesses.