Business Loans for Women: What You Need to Know

A comprehensive guide to business loan options available specifically for women including government and private sector financing options to help female entrepreneurs get their company off the ground.

July 18th, 2022   |    By: The Startups Team    |    Tags: Culture, Accelerators, Equity & Stocks, Funding

Women are starting businesses at impressive rates — but they’re still not getting as much money to fund those new businesses and startups as men are.

According to research from Kaufman, 40 percent of first time entrepreneurs in the United States are women. Even more impressive? The number of women-run businesses in the US is growing at twice the rate of man-owned businesses.

But women aren’t getting nearly as much money for those businesses as men are. In the startup world, women founders got only 2 percent of VC funding in 2017.

That means women are forced to look to other money sources when they’re looking to launch a startup or small business. And many are looking specifically for business loans for women.

Business loans for women

However, there aren’t actually any small business loans for women. But in addition to the small business loans that are open to all applicants, there are a few financing options that are specifically for women.

We’re going to highlight loans that are particularly friendly to women entrepreneurs, as well as a few other financing options that are women-only.

1. Women-Owned Small Business Federal Contracting program

The Women-Owned Small Business Federal Contracting program awards 5 percent of federal contracting dollars to women-owned small businesses.

In 2014, the US government awarded 267,168 contracts to woman-owned businesses, for a total of about two billion dollars.

The top industries represented were professional services, medical and surgical supplies, and administrative support.

To be clear, these are not loans but instead are contracts for work.

Requirements for Women-Owned Small Business Federal Contracting

  1. Must meet the Small Business Association (SBA) size requirements.
  2. Be at least 51 percent owned and controlled by women who are US citizens.
  3. Include women managing day-to-day operations and making long-term decisions.

Advantages of Women-Owned Small Business Federal Contracting

  1. Can be a steady source of income for a small business or startup.

Disadvantages of Women-Owned Small Business Federal Contracting

  1. Only designated industries qualify — and the list is narrow.
  2. There are limitations on contract amounts: $4 million for service contracts and $6.5 million for manufacturing contracts.
  3. Companies must self-certify as a woman-owned small business via the Central Contractor Registration website or certify through a third-party. The SBA does not certify women-owned small businesses.

There are also two sub-categories that can qualify for these contracts:

  1. Veterans
  2. Economically disadvantaged businesses

Requirements for the Women-Owned Economically Disadvantaged Business program:

  1. Meet all the requirements of the women’s contracting program.
  2. Be owned and controlled by one or more women, each with a personal net worth less than $750,000.
  3. Be owned and controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years.
  4. Be owned and controlled by one or more women, each $6 million or less in personal assets.

Requirements for the VA Women-Owned Small Business program

  1. Be a veteran of an American war.
  2. Meet all the requirements of the women’s contracting program.

2. Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE)

While not part of the federal contracting program, Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) is an SBA-funded program provided by the Institute for Veterans and Military Families.

V-WISE includes online training, a conference, and mentorship to female veterans.

3. SBA loans

An SBA small business loan is a loan that is backed by the Small Business Administration (SBA).

Founded in 1953, the SBA is a federal government program that provides support to small business owners in the form of mentorship, workshops, counseling, and small business loans.

SBA loans are potentially a great option for entrepreneurs in general, but the Association offers extra help to women.

While the SBA doesn’t list any business loans for women on their site, they do direct interested women entrepreneurs to find an Office of Women’s Business Ownership at their local SBA district office for more information and help with launching a business.

While the loans are backed by the SBA, they don’t come directly from the SBA. You’ll have to find a local lender who provides SBA loans in order to access to the funding.

Who qualifies?

There are three main types of SBA small business loans:

  1. 7(a) Loan Program
  2. 504 Loan Program
  3. 7(m) Microloan Program.

Each type of SBA small business loan has slightly different requirements, but generally you have to qualify as a small business according to the SBA size requirements, be a for-profit business, operate within the United States, have good personal and business credit, and not have other financing options (like your own wealth).

Loan amounts

SBA loans have an upper limit of $5 million. Therefore, they’re a better option for small businesses and startups who need smaller amounts of capital, versus those who might need many millions of dollars.

Time to funds

The process for applying for a SBA loan can take up to six weeks, with some taking only a couple weeks. If you qualify for a SBA loan, you can expect your funds as soon as one week after qualifying.

Interest rates

As of May 2018, maximum interest rates on SBA loans range from 7% to 9.50%.

Pros of SBA loans

  1. The loan is backed by the federal government. That means banks are more likely to loan to riskier companies — like startups — than they might otherwise.
  2. The equity requirement is relatively low compared to other loans.
  3. SBA loans have a floating interest rate that’s tied to the Prime Rate. The maximum interest rate for these loans is Prime Rate plus 2.25 percent for loans maturing in 10 years or less, and Prime Rate plus 2.75 percent for loans maturing in 25 years.
  4. People and companies who don’t have access to other forms of capital might find it easier to qualify for a microloan than for a larger or more traditional loan type.

Cons of SBA loans

  1. SBA small business loans are relatively small. They have an upper limit of $5 million.
  2. These loans may require more paperwork than a traditional loan.
  3. Startups or founders with poor credit are unlike to qualify.

How to apply

If you’re interested in applying for a SBA loan, you can check out the SBA website to find a financial institution in your area that provides SBA loans. You can also learn more about SBA loans in our full guide.

4. Business grants for women

Unlike loans, business grants don’t have to paid back. Also unlike loans? There are actual government grants for women-owned small businesses.

Business loans for women

The competition is pretty fierce, of course, but if you qualify for one, it can be a great source of equity- and payment-free money.

Here are some federal, state, local, and private small business grants for women:

a. InnovateHER Challenge

The InnovateHER Challenge is actually run by the SBA as well. It’s a money that goes to woman-owned businesses that create a marketable product or service that helps women or families.

Interested founders can enter a local InnovateHER Challenge and, if you win, you’ll advance to the nationals levels. First prize is $40k; second is $20k; and third is $10k.

b. SBA Women’s Business Centers

In addition to helping with loans, the SBA Women’s Business Centers also help women entrepreneurs get access to funding. Some lend money or award grants directly, while others help connect women entrepreneurs with financial institutions.

c. Eileen Fisher Women-Owned Business Grant

The clothing brand Eileen Fisher hands out $100,000 per year to 10 woman-owned businesses. In order to qualify, your company must be at least 51 percent woman-owned and led, be in operation for at least three years, bring in less than $1 million per year in revenue, and have an environmental or social change focus.

d. Amber Grant

The Amber Grant awards $500 to $1,000 per month to a woman-owned business. At the end of the year, one of the recipients also receives an additional $10,000 grant. Applicants just need to tell their story and submit a $15 application fee.

e. #GIRLBOSS Foundation Grant

Specifically for woman-owned businesses in fashion, music, and art, the #GIRLBOSS small business grant awards $15,000 plus exposure via the Girlboss website and social media channels. Applicants are judged based on creativity, innovation in the field, business savvy, forward planning, financial need, and proposed work place.

f. Cartier Women’s Initiative Award

The Cartier Women’s Initiative Award is $100,000 or $30,000, depending on first or second prize, that is awarded to 18 women entrepreneurs form around the world, annually.

Women business owners who are just getting started may qualify — you can find the complete application information for this small business grant.

All of the finalists get to attend the INSEAD Social Entrepreneurship 6-Day Executive Program (ISEP). They also get the opportunity to participate in entrepreneurship workshops, business coaching seminars, and networking opportunities via the network.

5. Women-only incubators and accelerators

Another women-only financing option for people look for startup business loans for women is women-only incubators and accelerators. Incubators and accelerators both offer varying combinations of funding, workspace, mentorship, and community.

However, incubators usually focus on very early stage startups that need help even getting launched, while accelerators are generally for startups that are further on their way, but need help with growth.

While many women-only incubators and accelerators are based in bigger metropolitan areas, it’s worth doing search for women-only incubators and accelerators in your region, as this is an area that has seen a lot of growth in recent years.

a. Monarq

Location: New York City

Monarq is a woman-only startup incubator in New York City that offers a $25k investment, mentorship, and access to investors who are interested specifically in woman-owned businesses.

b. Mergelane

Mergelane offers VC funding, leadership training, and accelerators to companies with at least one woman founder.

c. X Squared Angels

X Squared Angels in an investment group that focuses on women-led startups, which they define as at least one woman in a C-level position. They are based in Ohio and have a fairly rigorous process for qualifying for funds.

6. Women-only crowdfunding sites and equity financing platforms

Unlike other financing options, women are generally more successful than men in crowdfunding. That means mixed-gender sites aren’t going to provide an obstacle the way other mixed-gender funding source might.

However, founders looking for woman-only options can look to crowdfunding sites and equity financing platforms that focus specifically on woman-owned companies.

a. iFundwomen

iFundWomen is a crowdfunding site for companies with at least one woman founder. They also offer a pay-it-forward model, expert startup coaching, professional video production, access to pitch competitions with investors, and a private community for our entrepreneurs to collaborate.

b. SheEO

SheEO loans out $5,500 per year to five woman-run companies, equity free. Every applicant also gets feedback on their application, regardless of whether or not they’re accepted.

Other funding options

Of course, there are also mixed-gender funding options that are absolutely available to women entrepreneurs. You can learn more about different options available by checking out our full-length articles on the following topics:

  1. Venture CapitalSeries Seed Funding: A, B, C, D, E
  2. Crowdfunding
  3. Small Business Loans
  4. Small Business Grants
  5. Private Investors
  6. Angel Investors
  7. Stay tuned for future guides!

About the Author

The Startups Team

Startups is the world's largest startup platform, helping over 1 million startup companies find customers, funding, mentors, and world-class education.

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