Women-owned businesses face a unique set of challenges when seeking business financing. Luckily, there are resources available to help women entrepreneurs secure funding.
These resources range from loans to grants. Some of the most popular include Women’s Business Centers (WBCs) and account receivable factoring. These options are great alternatives to traditional bank or SBA loans, and they don’t require collateral.
- SBA 7(a) Loans
Women-owned small businesses receive fewer SBA 7(a) loans than their male counterparts, and the value of these loans is lower. However, it is possible for women entrepreneurs to get this type of financing if they have good business prospects and can meet the lender’s minimum credit requirements (which typically range from 620 to 680). Additionally, there are SBA microloans and Community Advantage loans that may be available for those with less-than-perfect scores, though these types of loans tend to offer smaller loan amounts.
Another SBA option for those seeking larger capital is the SBA Express Loan program. This is similar to the 7(a) loan, but it has a faster review process and focuses on funding for growth-related purposes, such as covering equipment or consolidating debt.
- SBA 504 Loans
As women continue to face unique challenges in the business world, there is a growing need for more support. This includes mentoring, networking, grants and equitably accessible credit. The Small Business Administration provides this support through programs like the 504 financing option.
The process of getting an SBA 504 loan involves two lenders: a certified development company (CDC) and a third-party lender, such as a bank. The CDC and third-party lender work together to submit your application to the SBA.
These loans are often available to women with less-than-perfect credit, but borrowers are required to invest a minimum of 10% in the project. The CDC and the third-party lender share the remaining 50% of the financing. Fees are generally deducted from the loan, but can’t exceed 3% of the total loan amount.
- Business Credit Cards
Business credit cards for women are an option that can help you build business credit. But it’s important to note that they typically require a personal guarantee and can hurt your credit score if you make late payments.
Online lenders such as OnDeck and Funding Circle offer business lines of credit, accounts receivable factoring and other financing options. These options tend to have higher interest rates than traditional business loans, but they provide an alternative for women entrepreneurs who don’t qualify for bank or SBA business loans.
Accompany Capital helps New York women launch and grow businesses with low-cost small business loans, classes and one-on-one mentoring. It also provides access to a network of other funding sources such as crowdfunding sites like Kickstarter and GoFundMe and women-only crowdfunding ventures like IFundWomen.
- Personal Loans
Women-owned businesses generate trillions of dollars in revenue and employ millions of people in the United States. However, it can be challenging for female entrepreneurs to obtain financing.
Thankfully, there are several financing options available for women who want to start or expand their business. These include government-backed loans from the Small Business Administration, equipment financing and venture capital.
The SBA offers 7(a) and CDC/504 loans for general business expenses and real estate investments, respectively. These are a good option for women who don’t have enough collateral or a long operating history to qualify for unsecured loans. Other options for women include online lenders like Funding Circle and OnDeck, which offer lower rates and flexible qualifications than credit unions or banks. Alternatively, accounts receivable factoring provides fast cash for businesses that need to pay for expensive equipment. This funding method involves selling outstanding invoices to a factoring company for immediate payment, but it may come with high fees.
- WOSB Certification
Unlike traditional loans, equity financing involves giving investors a share of ownership in your business. It can be an option if you want to grow your business fast and don’t mind giving up some control.
Women-owned businesses that are certified through WBENC or the Small Business Administration can qualify for unique federal contracts set aside for them. This leveling of the playing field is especially helpful for women in traditionally male-dominated industries.
To become a WOSB or EDWOSB, a company must be 51% unconditionally and directly owned by one or more women and meet certain requirements. These include having an economically disadvantaged woman manage the day-to-day operations and make long-term decisions for the business, hold the highest officer position, and work at the business full-time during normal working hours.small business loans for women