Best small business loans for women in December 2024

Requirements for women’s business loans

Each lending institution has their own set of qualification requirements for applying for one of their loans. Most set minimum requirements around your personal credit score, time in business and annual revenue, among other factors.

 Women may face challenges in meeting some of these requirements. Typically, women have a lower income than men do. According to the U.S. Census Bureau, women earn 82 cents for every dollar a man earns. 

Among the top industries for women-owned businesses are retail establishments, restaurants, business services and health and beauty. These are often industries with thin margins and high risk of failure, which could make securing funding challenging.

Lenders often request documentation on the following:

• Your name, address, phone number, date of birth and Social Security number
• Annual revenue
• Recent bank statements
• Previous tax returns
• Business plan
• Business licenses and registration 
• Most recent and projected balance sheet, income statement and cash flow statements
• List of other debts and obligations

How to apply for a business loan for women

As with loan requirements, there is no set standard for loan applications among lending institutions. But here are the basic steps for women applying for a business loan:

1. Choose the type of loan you need — for example, real estate, equipment, working capital, etc.
2. Decide how much money you want to borrow.
3. Determine your eligibility.
4. Compare lenders. Make sure to consider online lenders alongside banks and credit unions.
5. Gather the documentation your lending institution requires.
6. Submit your application.

Types of women’s business loans

Your choice on the type of business loan to use depends on the reason you need the funds. There are several types to choose from.

Term loans

Term loans are one of the most common types of business loans for women. They can be used for a variety of purposes and are often available both to established businesses and startups. 

Pros

• High maximum amounts
• Multiple uses

Cons

• May require a personal guarantee
• May have high interest rates

Equipment financing

Whether you need to buy heavy duty construction equipment or computers for the office, you may want to pay for it through equipment financing. This type of financing is typically secured using the equipment as collateral.

Pros

• Lower interest rates
• Widely available

Cons

• Equipment could be seized if you default on the payments
• May have high monthly payments

Commercial real estate

If you want to establish a physical location, expand in your current location or add a second location, you may want a commercial real estate loan. Like a personal mortgage, this type of loan is backed by the property.

Pros

• Lower interest rates
• Longer repayment terms

Cons

• More involved application process
• Typically not available for startups

SBA loan

The Small Business Administration offers several types of loans that can be used for a variety of purposes. Backed by the government, SBA loans offer competitive rates.

Pros

• Lower interest rates
• Limited fees
• Large maximum amounts

Cons

• Strict eligibility requirements
• Funding process is slow

Microloan

Designed for new businesses, microloans provide funding at lower amounts, typically up to $50,000. They are available through the SBA, nonprofits and online lenders.

Pros

• Available for new businesses
• Generous eligibility requirements

Cons

• Lower funding amounts
• Higher interest rates

Where to get women’s business loans

When searching for small business loans for women, some people may limit their applications to traditional banks and credit unions. While they are a major source of loans, there are other lending institutions to consider. These include online lenders and nonprofits.

Traditional banks, like Bank of America or U.S. Bank, and credit unions are a good choice if you have good credit, have been in business for a couple of years and have strong annual revenue figures. They typically offer a variety of loan products and lower interest rates. However, they may have strict eligibility and extensive documentation requirements.

Online lenders include online banks, such as Ally, and financial services lenders like Fora Financial. They often have a simpler application process and quick approval and funding times. But they may have higher interest rates and limited customer support.

Some nonprofits offer microloan programs, which may target underserved communities like women, people of color and veterans. They may require a lower credit score. But they typically offer smaller loan amounts and slower approval times.

How to choose a lender

Securing your business loan starts by choosing your lender. The following steps will help you through that journey.

1. Consider the different types of lending institutions. Evaluate the options provided by banks, credit unions, online lenders and nonprofits.
2. Decide on the purpose of the loan. Identifying how you’ll use the funds will help you choose a loan type.
3. Evaluate your business’s qualifications. Knowing in advance where you stand with the common requirements will help direct you to the right lending institution.
4. Compile a list of lending options. If, for example, you decided in step 1 that you want to borrow from a credit union, make a list of credit unions that offer the type of loan you’re seeking.
5. Compare details. For each lending institution listed, compare interest rates, term lengths, fees and other details such as credit score and revenue requirements. Select the one that best fits your business.

Alternatives to business loans for women

If you don’t qualify for a business loan from any of these lending institutions or if you decided taking out a business loan is not the best way to fund your business, there are several other options available to you.

Grants

Grants available to women are offered through the federal government and private entities. The benefit of securing a grant is these funds do not need to be paid back. Grants typically have a competitive application process and low acceptance rate. Plus, funds may only be issued at set times throughout the year — grants aren’t great for quick cash.

Crowdfunding

Crowdfunding involves a time-limited, fundraising campaign typically executed on online funding platforms like Kickstarter or Indiegogo. Businesses publicize their campaign and seek out backers who will donate money. 

Crowdfunding can be a good avenue for launch new products. The funds will come from many investors, helping you build a customer base for your product. However, many crowdfunding campaigns do not reach their goal. Some platforms don’t disburse funds unless you meet your goal. Additionally, the fees to use the funding platform can be steep.

Business credit cards

Business credit cards operate like personal credit cards but often have a higher credit limit. Some have extended interest-free periods and provide rewards based on your spending. However, interest rates may be steep.

Angel investors

Angel investors can either be a single individual or a group of people that invest in businesses. They typically invest in startups in exchange for equity in the business. Additionally, since angel investors often take a small ownership stake, they serve as mentors to help owners grow the business.

Venture capital

Venture capital is funding provided to businesses from private equity groups in exchange for an ownership stake in the business. These private equity groups receive a return on their investment when the business is sold. Venture capital is typically available to more established companies.

However, this is a difficult avenue of funding for female business owners. In 2022, female-only founded companies received only 2 percent of funding from venture capital, the lowest amount since 2017.

Other resources for women entrepreneurs

Beyond funding, there are a wealth of resources for women business owners.

Women’s Business Centers: Operated through the SBA, Women’s Business Centers provide counseling and training to women who want to start, grow and expand their business. There are centers located throughout the country.

National Association of Women Business Owners: Founded in 1975, NAWBO has local chapters throughout the country and represents more than 10 million women-owned businesses. It provides advocacy, certification and resources.

Women’s Business Enterprise National Council: Founded in 1997, WBENC provides advocacy, certification, networking and resources for women business owners.

International Association of Women: This organization provides female executives with networking events, professional development opportunities and business development and promotional services.