The Best Small Business Loans for Women in 2020

Explore 39 financing options and resources for women-owned businesses including SBA loans for women, business lines of credit, and more.
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The Best Small Business Loans for Women Entrepreneurs

Although there aren’t any small business loans open only to women applicants, several lenders and loan programs focus on supporting women entrepreneurs. All in, the best business loans for women—SBA loans, online loans, lines of credit, and microloans—will be the business loans that provide women entrepreneurs with the most ideal repayment terms, whether they’re specifically business loans for women or not.

This being said, beyond small business loans for women, there are other financing options—women-only business grants, mentorship programs, and resources that can mean the difference between success and failure for women-owned small businesses.

Ultimately, finding the best small business loans for women-owned businesses will entail taking a detailed stock of all of your options and determining what will work for you. With this in mind, let’s break down the top 39 funding sources and financial resources for women entrepreneurs.

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Business Loans for Women: The Four Best Options

Women-owned small businesses are starting and growing at record highs. According to data from Kauffman, 40% of new entrepreneurs in the U.S. are now women, and the number of new women-owned businesses is growing at double the rate of male-owned businesses. So, the number of small business loans for women provided should be growing with a corresponding trajectory, right?

Unfortunately, these growth numbers don’t match up with women’s access to small business loans. Based on Fundera’s own in-house research, only 1 in 4 female entrepreneurs apply for business loans, and those who do ask for approximately $35,000 less than male business owners.

Since the 2008 recession, traditional banking institutions haven’t been providing credit easily to small business owners. According to a study by Dun & Bradstreet and Pepperdine University researchers, only 30% of women who applied for a bank loan received approval, compared to half of all business owners.

Some of this may be due to the fact that women-led businesses have lower revenue and profitability figures on average, at least when starting out. Additionally, women tend to be in underfunded industries. Nearly one-third of women-owned businesses faced a loss in 2015, compared to a quarter of male-owned companies. But there’s a lot of potential—women-led businesses ultimately have greater profit potential than businesses with mostly men at the helm.

With all of this in mind, if you run a women-owned business, you’re probably wondering where you can get financing. Luckily, government-guaranteed SBA loans for women and alternative online lending have made it easier to obtain financing. And, by acquiring a small business loan, you can have access to the capital you need to cover payroll, inventory, or even expand your business.

So, this being said, let’s explore the best options for small business loans for women.

1. SBA Loans

Best For: Women who need a long-term business loan and have strong credit.

First, perhaps the best small business loans for women (or any business owner for that matter) are SBA loans. Once again, although there aren’t SBA loans for women exclusively, SBA loans have some of the most competitive payment terms and interest rates on the market—plus, SBA loans can be used for nearly any business purpose.

Moreover, in addition to loans, the Small Business Administration (SBA) has a wide array of resources for female entrepreneurs as well. We’ll get into many of those resources below, but first, let’s discuss SBA loans for women.

As a government entity, the SBA runs loan programs for small businesses; however, the SBA itself does not make these loans. Instead, banks and other direct lenders actually make the loans, and the SBA subsidizes a portion of the loan if the borrower defaults.

This being said, SBA loans for women (and for any business owner) come with a government guarantee, so lenders find them less risky and are more likely to work with you, even if you’re just starting a business. Therefore, SBA loans for women are great financing options for those who can qualify—you’ll get low interest rates (4% to 9.5%) and long-term financing (seven-year terms or longer).

Plus, the SBA offers multiple different programs within their suite of business loans. For example, the SBA microloan program lends small amounts of money—up to $50,000 in capital—for startups and micro-businesses. There is also the SBA 7(a) loan program, which offers general-purpose working capital for businesses that are already a few years old. And, the SBA 504 loan program provides money specifically for the purchase of commercial real estate or equipment.

To qualify for an SBA loan, you’ll need to meet a range of requirements, typically including both a high credit score and a decent annual revenue. Along these lines, the process to apply for an SBA loan for women is also very involved—meaning significant paperwork and a longer time to get approved.

Nevertheless, an SBA loan is going to be one of the best small business loans for women available, particularly, the 7(a) loan program. The loans within the SBA 7(a) loan program are generally big, flexible, and affordable—even for newer business owners. In fact, last year, SBA loans under the agency’s flagship 7(a) loan program were up 22% for women, hitting an overall record of $23.5 billion in lending dollars. Therefore, if you’re looking for financing for your women-owned business, you’ll certainly want to see if you qualify for an SBA loan.

See If You Qualify for an SBA Loan

2. Online Loans

Best For: Women with either strong or poor credit who need money quickly.

If you can’t qualify for any of the SBA loans for women, online lenders are a great place to look. Online lenders offer up almost every type of business financing. There are lenders that provide short-term three- to 18-month loans for working capital, medium-term two- to five-year loans for women who can’t qualify for bank loans, and creative arrangements like invoice financing.

Applying for a loan online is the way to go when you need to jump on an opportunity quickly. Lenders can process these loans within days, sometimes even the very same day you apply. Some alternative lenders—like Funding Circle and Lending Club—offer low-rate, long-term financing to borrowers with good credit. Others—like OnDeck and Kabbage—work with lower credit borrowers and charge higher interest rates.

Ultimately, although working with an online lender may not offer the same benefits as an SBA loan, there are a variety of loan types and borrowers available in this category. Therefore, you’ll likely be able to explore a range of different options to find a solution that will fit your needs.

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3. Business Lines of Credit

Best For: Women business owners with strong or poor credit, who want more flexibility in how they use the funds.

Next, one of the best small business loans for women isn’t technically a “loan” per se, but instead, a business line of credit. With a business line of credit, you receive a line of credit that gives you access to a specific amount of money, but you don’t need to use all of it. Similar to a business credit card, you only pay interest on the funds you use, and once you’ve paid back what you draw, your credit line goes back up to its original amount.

Therefore, a business line of credit is one of the most flexible small business loans for women—which is helpful for women in industries with cyclical revenue cycles, such as retail and food services.

Moreover, business lines of credit can be acquired from many different sources, including online lenders. For example, lenders like Lending Club or Fundation offer low-rate lines of credit but are harder to qualify for. Medium-term business lines of credit like the ones these lenders offer will be ideal for women entrepreneurs with solid credit and a few years in business.

On the other hand, if you have less-than-stellar credit or have been in business for a short amount of time, you can try lenders like Kabbage or BlueVine. The short-term business lines of credit they offer are better loans for women who are just starting their businesses. Whereas many business lenders will require several years in business in order to qualify, these two will only require six months in business.

Check Your Loan Options

4. Microloans

Best For: Women-owned businesses with smaller capital needs, or those who can’t qualify for larger business loans.

If you need just a small amount of capital to jumpstart your business, then a microloan might be one of the best small business loans for your women-owned business. Even a few thousand dollars can help you purchase essential supplies and inventory, for instance.

This being said, microloans are great options because they’re typically easier to qualify for, especially if you have little-to-no revenue history or a short amount of time in business. In this way, microloans can be particularly useful small business loans for women who run sole proprietorships or home businesses, or work as freelancers or consultants—as securing traditional bank funding or SBA funding can be difficult for these types of businesses. Therefore, microloans can be the perfect alternative solution.

With this in mind, if you think a microloan might be the right financing option for you—especially if you’ve just started your business, you might consider the following small business loans for women:

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Microlenders

SBA Microloan Program:  As we mentioned briefly above, the SBA offers a microloan program where they partner with nonprofit lenders to offer loans up to $50,000. These small business loans for women, provided by the government and community nonprofits, can be immensely helpful for startups or businesses with smaller capital needs (like food trucks or home businesses, for instance).

Accion: Accion is a nonprofit lender that makes microloans, including business loans for women, up to $50,000. To qualify for a microloan through Accion, you must be able to demonstrate good character, sufficient cash flow, and no recent bankruptcies or liens.

Opportunity Fund: The Opportunity Fund is an organization that offers microloans of up to $50,000 for businesses that have been operating for at least one year. They also take disadvantages, business, and personal lives into consideration with their applications—in addition to general business loan criteria.

Grameen America: Grameen America is an unconventional microlender for women that requires borrowers to form groups of four and participate in a week-long training. At the end, each participant receives a $1,500 microloan. The goal of Grameen America is to use their unique lending model to accommodate low-income women entrepreneurs looking to start or expand a small business.

Tory Burch Foundation Capital Program: This program, powered by Bank of America, connects women entrepreneurs with local microlenders. You must have a sustainable business, satisfactory credit rating, and at least two years in business to participate in the Tory Burch Foundation Capital Program—although eligibility is ultimately determined by participating local lenders.

Kiva: Unlike a traditional lender, Kiva is a microfinance crowdfunding platform that provides loans of up to $10,000 at 0% interest to qualified small business owners.

Ultimately, in addition to these microlenders that offer small business loans for women, states and cities usually have their own network of microlenders, so you’ll want to check with your local business development agency or business groups for more information on microloans.


Best Small Business Grants for Women

Although the best small business loans for women will likely be the options we’ve discussed—SBA loans, online loans, business lines of credit, and microloans—this doesn’t mean that those are your only financing options.

In fact, if you’re a female entrepreneur—or if you know one—then you should certainly consider small business grants for women.

A business grant is “free money” since you won’t have to pay back the cash you receive as you would a loan. However, most grants are much more restrictive than small business loans in terms of qualification requirements and what you can use the funds for. Along these lines, they’ll also require grant writing expertise and a lot of time and energy to apply for. Therefore, business loans are often a more convenient option than grants for most women entrepreneurs.

This being said, depending on your financing needs, you may still decide to explore the grants that are out there—especially since there are grants designed specifically for women-owned businesses. With this in mind, you’ll want to look into the following types of grants:

Federal Grants

Federal government grants are hyper-specific and limited usually to particular industries, such as medical research, agriculture, and technology. Although these grants are typically not specific to women-owned businesses, resources like Grants.gov and Challenge.gov can help you explore the full range of federal grant opportunities.

To start, however, you might look into these programs:

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Federal Government Grants for Women Small Business Owners

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) Programs: These programs provide grants for businesses that contribute to science and technological development. The SBA runs the overall program, and several government agencies, such as NASA and the U.S. Department of Energy, run their own SBIR and SBTT programs.

Rural Business Investment Program: The U.S. Department of Agriculture (USDA) offers this grant program to help businesses that will have an impact on rural communities.

State and Local Grants

On the whole, states and local governments provide more grant options than the federal government. Therefore, if you’re looking for a state or local grant for your women-owned business, you’ll want to reference the respective government websites for the most up-to-date information.

This being said, however, here are a few examples of the types of grants local governments offer to small business owners:

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Local Government Grants for Women Small Business Owners

North Carolina IDEA: One of the largest state grant programs for tech companies, the North Carolina IDEA program offers microgrants, seed funding, and more—including programming and development specifically designed to support female entrepreneurs.

Tennessee Department of Economic and Community Development: This program offers grants to Tennessee companies that are working on public infrastructure or that make a community impact.

Nebraska Child Care Grants: This program offers small grants to child daycare and home care centers in Nebraska with the goal of improving the quality of child care.

Maryland Economic Development Grant: Among the many financial incentive programs Maryland offers business owners, the Economic Development Grant benefits small businesses that create employment opportunities as well as significant capital investments.

Kansas Job Creation Fund: The Kansas Job Creation Fund program awards grants for businesses looking to launch or relocate in Kansas.

Private Grants

Private grants are more widely available than government grants, but unfortunately, there’s also more turnover and competition for this type of grant. Nevertheless, there are companies that offer grants designed specifically for women-owned businesses, making these grants a particularly noteworthy alternative to small business loans for women.

Here are some examples to consider:

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Grants for Women Entrepreneurs

Eileen Fisher Environmental Justice Grant: This program offers $200,000 annually, in amounts ranging from $5,000 to $30,000, to women-owned businesses that focus on sustainability, climate change mitigation, and positive environmental outcomes.

NASE Growth Grants: The National Association for the Self-Employed awards grants of up to $4,000 for small business owners who are members of their organization.

FedEx Small Business Grant: This FedEx program awards grants of up to $25,000 to small business owners that have been operating for at least six months.

Girlboss Foundation Grant: The Girlboss Foundation awards $15,000 in grant money to women entrepreneurs with creative businesses twice per year.

The Amber Grant: Each month, judges award a $2,000 Amber Grant to a woman-owned business, and they choose one $25,000 winner at the end of the year.

Open Meadows Foundation: The Open Meadows Foundation provides microgrants of $2,000 to women-led ventures that promote gender, racial, or economic justice.

The Idea Cafe Grant: Previous winners of this $1,000 microgrant include a bakery, clothing shop, and art gallery owner. Although any business owner can apply, most former winners are women.

Halstead Grant: The Halstead grant awards $7,500 in funding and $1,000 in merchandise, plus recognition in the jewelry industry. Once again, although this grant is open to anyone, the majority of winners have been women.

If you’re interested in exploring more federal, state, local, and private grants to fund your women-owned business, check out our list of 107 small business grant opportunities.

Best VC Firms and Angel Investors for Female Entrepreneurs

Like grants, working with venture capital firms or angel investors is not the same as finding the right small business loan for your woman-owned business. This being said, however, just as grants are a viable financing option, equity financing also might be worth considering.

Ultimately, debt financing and equity financing are two very different ways to achieve the same goal: raising money for your business. Debt financing is when a company borrows money from a lender and pays the lender back over time with interest added on—this type of financing would cover any of the small business loans for women that we discussed above. On the other hand, equity financing is when a business owner raises money from venture capital (VC) firms and investors. In return for capital, investors get a portion of ownership (or equity) in your business.

Working with an investor can be a great option if you need a large amount of capital to start a new business or scale your business—and could use some solid business wisdom from investors along the way. But, it can be challenging to find interested investors unless your business is on the verge of rapid, exponential growth. Investors prefer to work with businesses that can give them a huge return on their investment.

Unfortunately, it’s typically more difficult for women-owned businesses to find VC firms to invest—only about 12% of VC dollars went to all-women or mixed-gender teams in 2018. Nevertheless, there are still options out there if you’re interested in equity financing, including those offered by women who have started their own VC firms, focused on funding other women-led businesses. Here are a few to consider:

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Angel Investors and VC Firms for Women Business Owners

Female Founders Fund: The Female Founders Fund provides early-stage fund investing in ecommerce, web-enabled products and services, marketplaces, and platforms led by women.

Merian Ventures: This VC fund focuses on women-led innovation in cyber, artificial intelligence, machine learning, and consumer-facing technologies.

Astia: Astia is a network of over 5,000 investors funding high-growth startups at any stage beyond concept—designed specifically to level the playing field for women entrepreneurs.

Golden Seeds: The Golden Seeds early-stage investment firm provides funding for women-led companies in the B2B and B2C technology, health care, and consumer products or services industries.

Women’s Capital Connection (WCC): The WCC firm provides investor funding for companies with a female founder or woman in a C-level position.

37 Angels: Angel investors invest $50,000 to $150,000 in high-growth startups. You’ll receive an investment decision within four weeks after pitching your business to 37 Angels. This investment firm accepts pitches from men and women-led businesses, but about one-third of funded companies are owned by women.

Belle Capital: This is an early-stage angel fund that targets digital, technology-enabled products and services, life sciences, medical devices, health IT, and cleantech market sectors. Additionally, businesses applying for funding with Belle Capital must have at least one female founder or C-level executive.

Springboard Enterprises: Springboard supports high-growth, women-led companies seeking equity financing for expansion. Since 2000, 800 companies within Springboard’s portfolio have raised $1o billion, including 20 IPOs.

Once again, although inherently different from small business loans for women, VC platforms can be a great way to raise capital, particularly if you have a rapidly growing company and need significant investment to take your business to the next level. It’s important to remember, however, that when you raise venture capital, you’re required to give up some ownership in your business to the investors you find—thereby giving these influencers more control over your business.


Best Business Resources for Women Entrepreneurs

There’s no doubt that financing is essential for starting and growing a business, but it’s not all you need. In addition to reviewing your business funding options—including everything from small business loans for women to grants to VC firms—it can also make a huge difference if you have access to resources you can use to support your business as it grows.

These resources may come in the form of a strong mentor, access to business legal help, someone to consult with, and more.

Therefore, although the following organizations don’t provide funding specifically, they can nevertheless be invaluable resources for women-led small businesses and startups looking for guidance.

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Business Resources for Female Entrepreneurs

The SBA’s Women Business Centers (WBCs): The SBA presides over more than 100 WBCs all across the country, which help you with training, advice, mentoring, certifications, and networking. Although these skills aren’t directly related to funding, they’re one step on the path to better financing equality.

Women-Owned Small Businesses (WOSB) Federal Contracting Program: This SBA program helps women-owned small businesses apply and compete for federal contracts. Within the WOSB program, the SBA also works with federal agencies to increase contracting opportunities for women-led businesses.

DreamBuilder: DreamBuilder is an online training program that the SBA offers to women interested in business ownership. At the conclusion of the program, participants will have a plan to start their own business or develop an existing one.

OneKC for Women: This alliance brings together several organizations under one umbrella that help women find the resources, connections, and opportunities needed to start a business.

National Women’s Business Council (NWBC): The NWBC hosts accelerators, business competitions, conferences, and training programs across the country and online to support women in business.

National Association of Women Business Owners (NAWBO): The NAWBO offers virtual networking, best practice sharing, and training resources for female business owners.

In addition to the resources above, we’d also recommend going to local meetups, women’s chamber of commerce meetings, and Lean In circles. Meeting like-minded female business owners and people who want to support you can only lead to good things for your business. For even more information, you can check out our list of the 15 best business resources for women entrepreneurs.

Funding Challenges for Women-Owned Businesses

As you can see, there are dozens of small business loans for women, grants, and other resources for female entrepreneurs. Ultimately, like any business owner, you’ll want to spend a significant amount of time exploring the options that you’re eligible for and that are a good fit for your business’s needs and goals.

This being said, however, taking the time and effort to find the right funding will help your business get off to a good start financially—meaning a much higher likelihood of success after several years.

With this in mind, you may still be wondering: Why is access to capital for female entrepreneurs a problem in the first place?

For one thing, the data that you see and hear in the media can be misleading. It’s true that nine million employees work for women-owned businesses, and women-led businesses contribute $1.7 trillion of revenue to the U.S. economy—however, those figures only represent 8% of the workforce and 4% of total business revenue, respectively.

It’s also true that the numbers have improved for women-owned businesses over the past several years, and female entrepreneurship is now growing at double the pace of male entrepreneurship, and yet, access to capital is lagging behind growth.

Why? There are a few different explanations to consider:

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Industry

Some people hypothesize that on the whole, female entrepreneurs choose low-growth industries like retail, with about 10% of women-owned businesses fitting into the retail category—and making up 30% of all retail businesses. And—because retail is considered a low-growth industry, lenders and other investors are less likely to provide capital.

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Underestimating Capital Needs

Some surveys show that women entrepreneurs are hesitant to ask for as much capital as their male counterparts, both for small business loans and equity financing. Generally, these business owners are more conservative about their company’s prospects of success, so they don’t ask for as much money.

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Societal Factors

Most investors are white men—and only 9.65% of “decision-makers” at VC firms are women. Therefore, cultural differences and problems of harassment can make it harder for women to successfully pitch their ideas to male investors.

Plus, not only is it harder for women-owned businesses to secure financing, but they also tend to pay higher interest rates on the loans they’re able to secure. According to Fundera’s own study, women pay 5.4 percentage points more on short-term business loans than men do.

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What can we do about this problem?

Calling attention to the problem with guides like this one is a start. The more awareness there is of the problem, the more other women and supporters of this cause are likely to start lending platforms, VC firms, grants, and other resources for women entrepreneurs.

But eventually, it comes to changes in public policy at the local, state, and federal levels. Campaigns like #MeToo have helped shed light on the challenges women face in business environments, and hopefully, the government will follow suit with policies that help women entrepreneurs achieve their goals.

For right now, the best you can do is everything you can to propel your business to success. You can talk to people in your network, approach VCs, and compare loan offers from the best small business lenders working with female entrepreneurs.


Small Business Loans for Women: The Bottom Line

At the end of the day, despite the inequality that still exists between male and female entrepreneurs, there are more financing options for women-led businesses now than ever.

Ultimately, the right financing for your business will depend on a variety of factors—including your specific needs, qualifications, and more. This being said, as you explore your options for different small business loans for women, as well as other types of financing, you’ll want to think carefully about what you can afford, what you can qualify for, and what will work best for your business.

Generally, although small business grants and equity financing may be worth considering, small business loans are the most accessible solution for female entrepreneurs. Therefore, if you’re looking for the best business loan—you’ll want to start with the four options we’ve listed here: SBA loans for women, online business loans, business lines of credit, and microloans—and see if any of these products can finance your business and help it grow.

 

See What Financing You Qualify For