Getting funding for your startup is a challenge for any new entrepreneur, but it can even more difficult for women-owned businesses. According to Fundera, there is a disparity in funding available for male-led and female-led ventures. Luckily, they also outline some of the best business loans for women. Their findings are summarized below.
Option #1: SBA Loans
The Small Business Administration may be a good place to start when looking for financing options for your business. While the SBA doesn’t have any women-specific programs, SBA payment terms and interest rates are among the best you can find. The SBA doesn’t lend directly, but does guarantee the loans for small businesses borrowing from banks and other direct lenders and will subsidize a portion of unpaid loans if you default. This encourages lenders to work with small businesses seeking this type of funding. Make sure to ask about long-term financing (7 or more years) for the best interest rates.
If you are a startup and only require a small amount of funding (up to $50,000) you can also look into an SBA microloan. To get started, contact an SBA lender such as Wells Fargo, Celtic Bank, or First Home Bank to discuss your eligibility, as there are a few requirements for this type of funding, including a good credit score and proof of a good annual revenue.
Option #2: Online Lenders
If SBA loan requirements are too strict for you, you may want to look into online lenders. One of the best, according to Fundera, is Funding Circle. FundingCircle offers small business loans ranging from $25,000-$500,000 to women entrepreneurs. While you don’t have to meet an annual revenue requirement, you must have a credit score of at least 620 and have been in business for at least 2 years.
OnDeck is another online lending option with more flexible requirements. You must have a minimum revenue of $100,000, a credit score of 600 or higher, and at least 1 year in business. OnDeck specializes in short-term loans and lends up to $300,000 from 3 to 36 months. OnDeck APR rates are as low at 9.99% for well-qualified borrowers.
Fundnation has a similar business model with only slightly different terms. You can apply for a Fundnation loan of up to $500,000 with terms of 1-4 years. APR ranges from 8-30% and you must have a credit score of 600+, 2 years in business, and an annual revenue of $100,000+ to qualify. They also offer an option for a line of credit up to $150,000 for 18 months if your credit score is 660 or above.
If your business is under 1 year old, you may want to check out BlueVine. BlueVine funds companies that have been in business for as little at 6 months. They, too, offer short term loans with terms of 6 to 12 months. They lend up to $250,000 to businesses with an annual revenue of $100,000+ and a credit score of 600 or higher. Interest rates on this platform range from 4.8-51%.
If you’re interested in a microloan, OpportunityFund might be a good option. You can obtain financing with a 12 to 60 month term in an amount ranging anywhere from $2,600 to $250,000. The application process takes 3-5 business days and can be a great option for women entrepreneurs, as OpportunityFund focuses on funding for underserved business owners.
The last online lender recommended by Fundera is Kabbage. Kabbage does not have women-specific business financing, but offers loans of $2,000-$250,000 to borrowers with interest rates of 1.5%-15% per month. Kabbage does not have a credit score requirement, but you do need to have at least $50,000 in annual revenue and 1 year in business to apply. This platform is best for those who need very quick funding, as the online application processes and can fund within a day.
Option #3: Grants, Angel Lenders, and VC Firms
You can also look into equity financing for your female-owned small business. One option is to raise money from venture capitalists and investors. If you are very well qualified, you might wish to apply for a grant. You can read Fundera’s Article “Small Business Grants for Women: 14 Incredible Opportunities”s for more information on how to start looking for grants.
Be sure to review all of the terms of the loan so you know the cost up front. I generally don’t like to recommend short-term loan companies as the fees are often quite high. But if you are strapped for cash and don’t have other options available, one may be a temporary solution.