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 tap 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 nearly $7.3 billion in SBA 7(a) funding in fiscal year 2022, 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, but still offer competitive interest rates and repayment terms for those who qualify.
Bank business loans
In 2016, large banks approved 50% of women-owned business applications and small banks approved 67% — the highest among all funding sources — according to the most recent data from the Federal Reserve.
However, overall bank approvals have shrunk greatly since then, with Biz2Credit’s February 2023 data finding 14.2% and 21.3% 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.
Through the SBA Community Advantage loan program, nonprofit lenders and community development companies offer funding to minority- and female-run businesses in low-income and rural communities. 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 Union Bank, distribute minority business loans through specialty lending programs. Union 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, however, 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 40% of all SBA microloans in fiscal year 2021). And SBA Community Advantage loans typically go to businesses that have been in operation for fewer than three years.
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 who are starting out or looking for 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.
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.
NerdWallet reviewed both traditional and online lenders in order to create our list of the best small-business loans for women.
Our list includes a variety of loan options to meet the diverse funding needs of small-business owners, with an emphasis on lenders that offer a streamlined underwriting and approval process.
Each small-business loan option on our list meets the following criteria:
- Maximum loan amount of at least $100,000.
- Transparent rates and repayment terms.
- Funding available within two weeks of applying.
- Personal credit score requirements of 650 or below.
- No more than two years in business required.