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.
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.
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
Advantages of Women-Owned Small Business Federal Contracting
Disadvantages of Women-Owned Small Business Federal Contracting
There are also two sub-categories that can qualify for these contracts:
Requirements for the Women-Owned Economically Disadvantaged Business program:
Requirements for the VA Women-Owned Small Business program
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.
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.
There are three main types of SBA small business loans:
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).
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.
As of May 2018, maximum interest rates on SBA loans range from 7% to 9.50%.
Pros of SBA loans
Cons of SBA loans
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.
Unlike loans, business grants don’t have to paid back. Also unlike loans? There are actual government grants for women-owned small businesses.
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:
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.
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.
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.
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.
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.
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.
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.
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.
Mergelane offers VC funding, leadership training, and accelerators to companies with at least one woman founder.
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.
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.
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.
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.
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: