Business Loans for Women: How To Get One

Women face more challenges in business financing than other entrepreneurs. Out of the 42,000 Small Business Administration (SBA) 7(a) loans approved in 2023, only 21.1% of loans were for women-owned businesses. Disparities in funding can also be seen at the venture capital level, with only 1.87% of the 200 venture capital funds allocated to startups being for women-owned businesses.

Understanding the different types of business loans for female entrepreneurs and how to compare them can make it easier for women to get access to funds to start and grow a business. We’ve highlighted the top business loans for women as well as government programs available to help women build their businesses.

Benefits of Business Loans for Women 

A business loan for women can be in the form of a line of credit or lump-sum payment. The money must be paid back over a predetermined term with interest. Loan funds can be used for any type of business expense, such as startup costs, business debt consolidation, expansion, marketing, cash flow, working capital, commercial real estate purchases, equipment purchases, and more.

Teresa Dodson, a leader in the financial world and founder of Greenbacks Consulting, encourages other women to start their own companies. “Women owned business have a lot of great benefits to offer. It may take some extra work and time to set up but it's worth it,” she shares, based on her own experince. 

Here are the major benefits of getting business loans specifically for women:

• These loans provide you with extra finance to fund expansions and purchases for accelerated growth.
• You’ll be able to retain full control of your business, unlike equity financing.
• There are no restrictions on the use of loan funds.
• Many business loans for women offer favorable interest rates, so they’re cost-effective.
• The interest you pay on business loans is tax-deductible.
• Timely payments on the loan can help you increase your business’s creditworthiness.

Types of Business Loans Available for Women

Women entrepreneurs can tap into several types of business loans to secure financing. We’ve listed the most common types of business loans for women below.

SBA Loans

SBA loans are offered by several SBA-backed online lenders, financial institutions, and banks. Available loan amounts range from $30,000 to $5 million, and interest rates vary by lender and loan type. SBA loans are usually designed for startups and minority and women-based businesses.

SBA Microloans

SBA Microloans help entrepreneurs get new businesses off the ground. Compared to SBA loans, the loan amounts are smaller. You’ll only be able to borrow up to $50,000, but these loans are easier to qualify for when your business doesn’t have a credit history or financial records. Interest rates are usually between 8% to 13%.

Term Loans

A term loan is like a personal loan for a business, where you receive a lump sum that you must repay over a fixed period of time. Credit unions, banks, and online lenders offer these business loans for women. It is a flexible borrowing option with typical loan amounts of up to $500,000.

Lines of Credit

Business owners can also get access to money as needed through a line of credit. You can repay a portion of the business line of credit to reuse those funds. You only pay interest on the money you use, not your entire available balance. Borrowing limits vary greatly, and you can get revolving credit up to $250,000.  

Secured Loans

Secured loans, or asset-based lending, allow businesses to borrow funds secured by collateral, such as real estate, inventory, equipment, and accounts receivable. This type of financing may be easier to qualify for since there’s less risk to lenders. However, if you fail to repay the loan, the lender can repossess the collateral.

Startup Business Loans

Startup business loans for women are available through small-business grants, crowdfunding, personal loans, and SBA microloans. Each of these lending options can improve your chances of getting funds that will allow you to finance your new business. The SBA microloan, as we’ve discussed above, is specially designed for early-stage businesses and startups.

Top Business Loans for Women

While there are many options for business loans for women, it’s important to spend some time researching and comparing your options to determine the right type of loan and lender for your needs.

Below are our top picks for business loans for women. We evaluated 20 lenders offering business loans and picked the top five based on minimum and maximum loan amounts, interest rates, and credit score requirements. 

Government Support for Women-Owned Businesses

Other than the business loans for women we’ve discussed above, you can also get free assistance through government and nonprofit organizations. These organizations can help you access different funding options with support for writing a business plan, submitting a loan application, financial management, marketing, and starting a business.

• You may be able to get free funding through business grants for women, such as the Amber grant, Atomic grant, and FoundHer program.
• You can enroll in free education programs online from DreamBuilder to learn how to start your business and finance it.
• The Women-Owned Small Businesses Federal Contracting Program helps women-based businesses apply for government contracts.
• The Women’s Business Centers offer workshops and seminars on many topics, such as raising capital.
• If you’re a female rancher or farmer, the Direct Farm Ownership Down Payment Loan can provide you with funding for operations.
• The National Association of Women Business Owners offers business certification and help with government contracting, access to capital, and more.

Tips To Apply for the Best Business Loans for Women

The process of applying for business loans for women varies by lender, but the lender will typically check your business and personal credit scores. You may be able to prequalify for the loan with some lenders to estimate the loan amount and rate. Here are a few tips to keep in mind when you apply for a loan.

Do Your Research

Read the online reviews of different lenders to identify issues and red flags before you start the application process. If you know other small business owners, check with them to evaluate your options. Evaluate the customer service options offered by each lender to ensure you’ll be able to get in touch with them easily when you need them.

Compare Interest Rates and Terms

Loan amounts, repayment terms, and rates vary by lender to evaluate your needs before you choose a lender. Creditworthy applicants tend to receive the most competitive rates. Prequalify with a few different lenders to compare loan offers and only borrow as much as you need to avoid taking on a lot of unaffordable business debt.

Get Expert Advice

You may be able to get expert advice and support in finding the best business loans for women through organizations like the National Association of Women Business Owners and Women’s Business Centers. Seek their advice to see what type of loan would be best for your needs and how to apply for it.

Build a Strong Business Plan

Most lenders require you to submit a business plan to secure a business loan. The key to getting approval is creating a business plan communicating to lenders that your business is sustainable and viable.

Some common sections to include in your business plan are a company overview, summary, annual revenue, market analysis, sales and marketing plan, operational plan, financial analysis, and funding request.  

Start With Good Credit and Financial History

Lenders will also evaluate your business’s financial history as well as your business and personal credit score to determine loan eligibility. However, you may be able to qualify for a loan without an established financial or credit history in some cases, such as SBA microloans.

Before you apply for a loan, get a copy of your credit reports and compare them against the lender’s minimum credit score requirements to see whether or not you qualify. If you have bad credit, you can improve your business credit score by updating your information. Make sure all information on file is correct with the three commercial credit bureaus- Experian, Equifax, and Dun & Bradstreet.

You can also streamline your business’s bill payment process, lower your credit utilization ratio, and practice smart credit utilization with a line of credit or business credit card to improve your credit score.

Show Your Experience and Expertise

When you apply for business loans for women, lenders want to ensure you have the experience, skills, and knowledge required to start and grow your business. A well-crafted business plan can help you demonstrate your experience and expertise.

You can build credibility as an entrepreneur when your business plan includes data and information about market trends, operations plan, and SWOT analysis with reference to the current economic environment to back up your claims.

How To Get Certified as a Woman-Owned Business

You can get certified as a woman-owned business through several agencies, each with its own requirements. Usually, your business will need to have at least 51% ownership by a woman, it must be a for-profit business, daily operations must be managed by a woman, and it must meet the SBA’s small business size standards to qualify.

You can get certified through the Women-Owned Small Business Federal Contract Program by the SBA or through local or state business administrations. Organizations like the Women’s Business Enterprise National Council can also help you get certified.

Identify the right agency to get certified with and prepare documents, such as:

• Business financial documents
• Business registration and certification
• Business licenses
• Proof of citizenship
• Business history
• Owner resumes
• Proof of good standing with the secretary of state

Fill out the application and provide the required documents listed above to request certification.

How Does Getting Certified Help

We recommend getting certified as a woman-owned business because it can boost your reputation and help your business grow. It can also make it easier for your business to access various lending opportunities and government programs.

Where to Get a Business Loan as a Woman

The best business loans for women provide you with ideal terms and the lowest rates. However, it’s essential to consider other factors, such as eligibility requirements and time to fund.

You can get loans from traditional banks, credit unions, online lenders, and alternative lenders. Compare your loan options, determine your eligibility, and prequalify with a few lenders to find the right fit.