Types of small-business loans for women
The right loan for your business is typically the one that costs you the least while fitting your funding needs. Women-owned companies may be able to tap into multiple types of business loans, including:
There are several SBA loans that female entrepreneurs can use for financing, including the flagship SBA 7(a) loan program. Banks, online lenders and other financial institutions offer these loans, which are backed by the U.S. Small Business Administration. The SBA 7(a) loan program offers low interest rates and long repayment terms — making it a good option for a variety of use cases. Small businesses that are more than 50% female-owned received more than $4.45 billion in SBA 7(a) funding in fiscal year 2023, according to the SBA.
To qualify, however, you’ll need an established business, good credit and solid finances.
SBA 7(a) loans are traditionally slow to fund, but if you need access to capital more quickly, the SBA Express loan provides a faster timeline. The SBA strives to return decisions on Express loans within 36 hours.
These SBA loans have smaller maximum funding amounts of $500,000, but still offer competitive interest rates and repayment terms for those who qualify.
🤓 Nerdy TipUtilizing the free resources offered by the SBA-affiliated agencies and nonprofit organizations, many of which are specifically designed for women business owners, can help you prepare a business plan, navigate the loan application process and secure funding.
Bank business loans
Large banks approved 50% of women-owned business applications and small banks approved 67% — the highest among all funding sources — in 2016, according to the most recent data from the Federal Reserve.
However, overall bank approvals have shrunk greatly since then, with Biz2Credit’s October 2023 data finding 13.0% and 19.5% approval rates at large and small banks, respectively.
If you have a lower credit score (a score between 300 and 689) or have been in business for less than two years, an alternative online lender could be a good choice. These lenders offer multiple products (including term loans, lines of credit, equipment financing and invoice factoring), specialize in speedy funding and have looser qualification requirements than banks. The trade-off for those conveniences, however, is borrowing costs may be higher than other options.
Many mission-based nonprofit organizations offer microloans to local businesses, often focusing on businesses owned by women, people of color and veterans. For example, Grameen America provides loans ranging from $500 to $2,000 to entrepreneurial women who live in poverty. Microloans can be a good option if you can’t qualify with a bank or online lender or have a small financing gap.
Small-business loans for minority women
Female business owners in historically underserved communities can access funding from SBA lenders, nonprofit organizations and specialty programs — and may have more success with these options than applying for traditional business loans.
Nonprofit lenders and community development companies who applied for the new Community Advantage Small Business Lending Company license (previously Community Advantage lenders) can offer funding through the 7(a) loan program.
These new CA SBLCs will continue to prioritize small-business loans for women and other borrowers in underserved markets.
Many nonprofit lenders also offer microloans and other forms of business financing for women- and minority-owned businesses in their communities outside of the SBA loan program. For example, Accion Opportunity Fund says nearly 90% of its clients are women, people of color or low-to-moderate income borrowers.
Some banks, like U.S. Bank, distribute minority business loans through specialty lending programs. U.S. Bank’s program offers loans and lines of credit to women-, veteran- and minority-owned businesses with more flexible qualifications than its standard business loans.
Small-business loans for women with bad credit
If you’re a female entrepreneur with bad credit, it may be more difficult to get a loan for your business. There are a few options for bad credit business loans, but keep in mind interest rates may be higher than alternatives. Some online lenders are willing to work with businesses with bad credit, especially if they have strong finances. Fora Financial, for example, only requires a minimum credit score of
500 for its business term loan. Similarly, you may be able to access a business line of credit from Fundbox with a minimum credit score of
Nonprofit lenders and community financial development institutions, or CDFIs, may also offer small-business loans for women with bad credit. These lenders often provide funding to traditionally underserved business owners, which can include those with poor or limited credit. For instance, TruFund is a CDFI that operates in New York, New Jersey, Alabama, Louisiana, Texas and Georgia. The organization issues a variety of types of business loans, including term loans that only require a minimum credit score of 600 to qualify.
Startup business loans for women
Startup funding is elusive, but targeting the right lenders and programs can improve your chances of securing a startup business loan for your women-owned business.
The SBA microloan program is designed specifically for startups and early-stage businesses (startups received nearly 25% of all SBA microloans in fiscal year 2023).
Additional startup funding options include small-business grants and crowdfunding. If you have good personal credit, you may qualify for a personal loan for business. Most personal loans are unsecured, and some loan amounts go as high as $100,000. Business credit cards also offer financing for women-owned small businesses that are starting out or need working capital
Other resources for female entrepreneurs
Government and nonprofit organizations offer free assistance to women entrepreneurs. These programs may provide women with help completing steps to getting a small-business loan, like writing a business plan, and guidance on topics like starting a business, financial management and marketing.
Women-owned businesses can get free funding through grants from government agencies and nonprofit organizations. Here are places to look for small-business grants for women.
Women’s Business Centers
The Women’s Business Centers are a network of more than 100 educational centers around the United States that help women start and grow their businesses. These SBA-funded centers typically offer seminars and workshops on a range of topics, including how to start a business and raise capital.
Federal contracting programs
Ascent online learning platform
Ascent is a free digital tool launched in 2021 as part of a joint initiative between the White House, SBA, the U.S. Department of Labor’s Women’s Bureau and the U.S. Department of the Treasury. This online platform offers tools, quizzes and other learning resources designed to help women entrepreneurs who are looking to grow their businesses.
Created by the Freeport-McMoran Foundation, DreamBuilder is an online education program for female business owners. The program offers two course options — one course is designed to help entrepreneurs start their business, while the other focuses on how to finance your operations. It’s free to enroll in the DreamBuilder courses, and they’re available in both English and Spanish.
National Association of Women Business Owners
The National Association of Women Business Owners, based in Washington, D.C., has 5,000 members and nearly 60 chapters across the country. It offers training and information on topics such as access to capital, government contracting and business certification.
National Women’s Business Council
The National Women’s Business Council works with the Office of the President, Congress and the SBA on issues related to women business owners. Resources include help for startups, alternative lender programs, conferences and mentor groups.
As a nonprofit organization and resource partner of the SBA, SCORE offers free services to women in all U.S. states and territories. In addition to business advice from mentors — many of them successful women business owners — SCORE also offers tools and resources designed specifically for women, including online workshops, events and recorded webinars.
How to get certified as a women-owned business
Getting certified as a women-owned business can help your business grow by boosting your reputation and helping you find and be recognized for various programs and lending opportunities. Since there is no universal certification, how you get certified will depend on your type of business and where you are located. Follow these steps to start your certification process.
Make sure you qualify
Even though different agencies might have different qualifications, some common requirements are as follows:
Your business is at least 51% owned by a woman who is a U.S. citizen.
In addition to ownership, your daily business operations are managed by a woman.
Your business is a for-profit business.
Different agencies may verify this information using different methods, like sworn affidavits or site visits to your business.
Find a certification agency
You can become certified through the federal government or a private agency, depending on your type of business.
The SBA certifies women-owned contractors through its Women-Owned Small Business Federal Contract Program (WOSB Program). If you become WOSB certified, you are given special access to federal contracts that are set aside for members of the program. You can apply to become certified through the SBA website. In addition to the federal government, local business administrations may provide special certifications for their state, and the qualifications may be more lenient than national initiatives. For example, the Texas SBA certifies businesses that are 51% or more women-owned that are registered in the state of Texas. These certifications are open to U.S. citizens as well as those who possess a U.S. Immigration Visa.
National organizations like the Women’s Business Enterprise National Council (WBENC) act as networks that utilize local organizations all over the country to help you get certified as a women-owned business. Once you apply, your application is processed and approved by a local partner. With private agencies, however, you may be charged a processing fee that’s either flat or based on your business’s revenue.
Organize your documents
Although it varies, most agencies have similar requirements, so it’s prudent to be organized going into the process. These documents may include:
Business certification and registration paperwork.
Proof of good standing with your secretary of state.
Brief history of business.
Proof of citizenship of owners.
Business financial documents.
Find the right business loan
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.