Getting funding for your business shouldn’t be hard, especially as a woman entrepreneur. From long-term term loans for purchasing equipment, to short-term working capital financing, there are many options available.
However, women-owned businesses are still denied funding at a disproportionate rate by traditional lenders. Lendio is dedicated to closing the gap by providing equal access to financing through our online application.
It’s no secret that all businesses need funding to operate, but securing the funds can be challenging for women entrepreneurs. Many lenders set strict requirements, like a high credit score and established business history. Some also require years of profitability or a minimum of $250,000 in annual revenues.
To help bridge the gap, some lenders offer specialized loans and programs for female entrepreneurs. These include working capital loans designed to provide the cash your business needs for short-term expenses, and equity financing options that don’t require collateral or a personal guarantee.
These options can be a great alternative to traditional banking. You can find these lenders through your current bank or other financial institutions, which already have your information and may have lower interest rates because of their familiarity with you as a customer. You can also look for them through resources, such as government websites, or ask your network for recommendations.
Accounts receivable factoring, for example, involves selling your invoices to a factoring company for immediate cash, although you’ll pay a fee to the factoring company. This type of financing option is useful for women-owned businesses in need of quick cash, and it can help them avoid long repayment terms that might deter them from seeking other types of business financing. If your business is certified as a woman-owned business (WOSB), you could also apply for government “set aside” contracts that earmark some work for this category of small businesses.
Small Business Grants
Even the best business ideas can fail without adequate financial backing. Often, women entrepreneurs are less likely than men to receive funding from banks or traditional lenders, and the funds they do secure may be smaller. That’s why it’s so important for women-owned businesses to know what financing options are available to them.
One option is to seek grant funds. There are a number of websites that help business owners find grants, including IFundWomen, which offers multiple grant opportunities for different funding amounts and criteria. It also matches business owners with the right funding partners. You can also search for local and national grant opportunities at the Small Business Development Center (SBDC) website. SBDCs have advisors that can provide expert knowledge of the grants and programs in your area.
Other options include equity financing, where investors fund your business in exchange for a portion of ownership in your company. Alternatively, you can try to qualify for a business loan from a nonprofit lender or community financial development institution (CDFI), which specialize in providing funding to traditionally underserved populations like women entrepreneurs with poor credit. Backd is a CDFI with stricter borrowing requirements than most other lenders on this list, but it also offers lines of credit and working capital. The lender has a maximum borrowing amount of $250,000 with terms that last up to 24 months and APRs of 29.9%.
Business loans for women are available at banks and other traditional lending institutions. These loans typically have strict requirements, such as a good credit score and substantial equity ownership. However, some lenders offer more flexible qualification standards for women-owned businesses. Other options include community banks and credit unions that focus on small business lending, as well as specialized financing programs for women-owned businesses.
Many women entrepreneurs may be hesitant to apply for a bank loan because they face significant hurdles to accessing capital, such as a long application process and rigorous eligibility requirements. In addition, banks typically require a large amount of security in order to minimize the risk of loan default. This could include mortgage-free real estate or paid-off vehicles. This can be difficult for female business owners who have not built up assets, and can put their ventures at risk.
Banks that provide business loans for women may include those who focus on small-business lending or those that are part of the Small Business Administration’s Women Business Center program. Others may have more lenient qualifications or offer a different type of financing, such as invoice financing. Some online lenders, such as Funding Circle and Credibility Capital, also offer short-term loans for working capital or longer-term two- to five-year term loans with a range of borrowing limits.
If you’re a woman with bad credit, it can feel like there are very few options for financing your business. But the truth is that there are many choices available to you.
Getting financing is often a numbers game, and the number that matters most to lenders is your personal credit score. Credit scoring models typically consider scores below 630 to be bad. Women tend to have lower credit scores than men, and a shorter business track record, so they might be more likely to be rejected by traditional lenders like banks and the Small Business Administration (SBA).
But even with a rocky financial history, there are many lending options available to you. You can seek out lenders that specialize in working with women entrepreneurs with bad credit, and they may offer better rates than other lenders or have more flexible terms for debt payment.
Another option is to look into equipment financing. These loans let you get funds quickly by using the equipment you buy as collateral. The lender will take possession of the equipment if you fail to make your payments as agreed on in your loan agreement. This is a good choice for businesses that need fast access to capital and want to avoid paying interest upfront. You can find these lenders by researching lenders on sites like LendingTree and Backd.