An estimated 13 million small businesses or franchises in the US are women owned. That’s 31%, an impressive statistic considering that the census only even began acknowledging female owned businesses in 1972; so it seems that sisters are well and truly doing it for themselves.

Nevertheless, according to the federal reserve, women-led businesses are less likely to be approved for a loan than businesses led by men. In order to try and address this disparity and close the gender-credit gap, there are now a number of initiatives in existence designed to help women access borrowing.

In this post, we are going to take a look at 5 of the best business loans for women, SBA loans for women and woman grants for business.

Who is Eligible For a Woman’s Business Loan?

A Woman-Owned Business Enterprise (WBE) is currently defined as a business that is 51% or more owned, operated and controlled on a daily basis by one or more female Americans. In terms of partnerships or public limited companies, this means that a female must hold the controlling share.

Types of Small-Business Loans For Women

Before we get down looking at individual loan providers, let’s firstly run through the different types of business loans that are available for women.

Bank business loans

The vast majority of business loans in the US are issued by banks and the bank is the first port of call for most enterprises seeking finance. Banks often offer the most attractive interest rates but apply the toughest eligibility criteria. Large banks (or “high street banks”) approve an estimated 50% of all women-business loan applications and small banks a healthy 67%.

Bank business loans generally come in 2 forms – secured (where the loan is secured by some form of collateral) and unsecured loans (where the loan is not secured by collateral!).

Online loans

Online loan providers tend to specialise in serving customers with lower credit scores or trading histories of under 2 years. Typically, the sums available to borrow are lower than with banks, and the interest rates notably higher. Whilst some still think of online loan providers as latter day ‘backstreet lenders’ this is not really fair and they are still subject to the same regulations as the banks.

Like with bank business loans, online loans are available in both secured and unsecured form although the most common option is unsecured. However, some online lenders also offer other lines of credit such as invoice financing

SBA Loans For Women

The small business authority (SBA) currently operates a number of different schemes under which small and medium businesses can obtain loans. Whilst the loans are used by banks, the SBA guarantees the loan which can help businesses who would otherwise be unable to access lending.

There is no specific women-only SBA loan scheme available although the SBA does prioritise under-serviced and disadvantaged sectors – often the sectors in which women led businesses operate. Furthermore, help in applying can be obtained under the 8(a) business development programme.

In the fiscal year 2021, the SBA awarded $5.01 billion in loans to women led businesses.

Private Loans

Whilst less common, it is possible to obtain a private business loan. Private loans can be issued by wealthy individuals or groups looking to help businesses not served by other credit providers.

Finding a private lender can prove very difficult so this is a non-starter for many businesses. However examples of private lenders are successful businesses, looking to stimulate non-competitor business in their locality.  Private loans are not regulated by financial derives watch dogs but are still bound by State and Federal contract laws.

Microloans

Micro loans are basically small business loans intended to help start ups, or business servicing neglected markets. Typically limited to $50k, microloans are often issued by mission based non-profit, non-governmental organisations.

The 5 Best Women Business Loans

Firstly, remember that defining what the “best” loan for your business is is kind of subjective. In identifying the right loan for your business you need to work out how much you need to borrow, how much you can afford to repay and over what term you wish to borrow the money.

Best Overall Business Loan For Women – SBA Loan 7(a)

Loan Amounts –  Up to $5 million

Time in Business – 2 years

Typical Interest Rate – 7.00% – 9.5%

Minimum Revenue – NA

Minimum Credit Score – NA

Best Fast Business Loan For Women – On Deck

Loan Amounts – $5k – $250k

Time in Business – 1 year

Typical Interest Rate – 29.9% – 97.3%

Minimum Revenue – $100k

Minimum Credit Score – 600

Founded back in 2006, On Deck offers a variety of different business oriented lending products and can also offer same day funding. Their rates are on the higher side because they do offer fast cash to businesses with low credit scores.

You can find out more in this detailed On Deck Loan Business Loan Review.

Best Stop Gap Business Loan For Women – FundBox

Loan Amounts – Up to $150

Time in Business – 6 months

Typical Interest Rate – 10.10% – 79.9%

Minimum Revenue – $100k

Minimum Credit Score – 600

Excellent for plugging short to medium term cash flow issues, Fundbox can issue very short term loans with weekly repayments. Our FundBox review provides more information.

Best Business Loan For Women For Established Businesses – Funding Circle

Loan Amounts – $25k – $50k

Time in Business – 2 years

Typical Interest Rate – From 4.5%

Minimum Revenue – NA

Minimum Credit Score – 660

Funding Circle offers very good rates and a relatively fast application process that can see funding approved within 2 days. The max loan amounts may be too small for some applicants and there is also an upfront funding fee of 3.9%.

We have created a full Funding Circle review which provides further details.

Best Micro Business Loan For Women – SBA Microloan

Loan Amounts – $500 – $50k

Time in Business – NA

Typical Interest Rate – 8% – 13%

Minimum Revenue –

Minimum Credit Score – 620

Any business seeking a microloan will find the SBA’s scheme an excellent option. The application criteria is a bit lighter than with their 7(a) loan and the maximum loan amount of $50k is actually pretty large for a microloan.

Business Woman Grants

In some cases, a women led business may even be eligible for a grant; a loan that does not have to be repaid. Grants may be available through governmental agencies and nonprofit organisations.

Usually, small business grants are only offered to businesses that need start-up assistance and tend to be aimed at helping specific types of businesses – such as those serving a neglected community or those owned by women.

Grants are however, very hard to come by and the amounts awarded tend to be rather humble.

Final Thoughts on Finding a Business Loan For Women

Remember, whilst we have set out some strong starting points to help you find the best women business loans, there are plenty of other lenders out there. Ultimately the right loan for a business depends on its individual needs whether its loan from a high street bank, one of the the SBA loans for women, or one of the available woman grants for business.