Best Small Business Loans for Women of 2022

Best Small Business Loans for Women of 2022

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Women entrepreneurs face a unique set of challenges. On the one hand, an American Express report showed women owning 42% of all U.S. businesses as of 2019, increasing nearly twice as fast on average than all businesses. However, the average annual revenue of women-owned businesses — $142,900 — is considerably low when compared with the $474,900 of privately held businesses overall. Since that can make it difficult to obtain funding, we’ve rounded up the best small business loans for women.

Best small business loans for women

Getting a small business loan is no easy task for anyone, but it can be even tougher for women to pursue them. Women have more credit cards than men and hold roughly 66% of student loan debt, all of which can lead to credit risk and financial struggles — and facing adversity when trying to get loans.

To help women business owners, we’ve provided a list of the best small business loans for women and grants for female business owners, so you can decide what’s right for you and your business.

Best for
Lender
Highlight
Borrowers with bad creditCredibly
  • Minimum credit score of 500 and 6 months in business
  • Offering up to $400,000 for working capital loans, over 6 to 18 months with factor rates starting at 1.15
Secured loansFunding Circle
  • Loan amounts up to $500,000 with terms up to 24 months
  • Interest rates depend on creditworthiness and term
Equipment financingBetter Business Funding
  • Lenient application requirements and large loan amounts for most equipment you’d likely need
  • Loan amounts up to $500,000, to be paid off over 24 to 72 months months with interest rates starting at 3.9%
Commercial real estate loansSBA 504/CDC loans
  • Backed by the government, with some of the lowest interest rates available
  • Up to $5 million with repayment over 10, 20 or 25 years and interest rates from 3.032% to 3.168% (depending on term)
Borrowers with decent creditOnDeck
  • Flexible uses for short-term purposes
  • Between $5,000 - $250,000 with terms up to 24 months and rates starting at 35% APR
Business line of creditWells Fargo
  • No collateral needed for this line of credit and potentially low interest rates depending on your qualifications
  • Between $5,000 - $100,000; revolving line of credit; no scheduled annual review with interest rates starting at Prime +1.75%

Best for borrowers with bad credit: Credibly

Credibly’s working capital loan comes in our top spot for bad credit business business loans for women. It’s an online lender offering multiple types of financing, including working capital loans, SBA loans, long-term business loans and business lines of credit.

The pros of Credibly are that they can offer up to $400,000in funding; you could be approved within one business day, and you may receive funds soon after approval. The required minimum credit score is just 500, though Credibly does require at least $15,000 in monthly revenue.

A con of seeking funding from Credibly is that it’s not available to startups — you’ll need a minimum of six months in business to be approved for financing from Credibly.

  • Loan amounts: Up to $400,000
  • Loan terms: 6 - 18 months months
  • Factor rate: Starting at 1.15
  • Fees: 2.5% origination fee
  • Funding time: Within one business day after approval

Best for secured loans: Funding Circle

Funding Circle is an online platform that has funded more than $15 billion to small businesses, disbursing funds quickly once you’re approved. Its business term loan requires no down payment, although it may require collateral.

Women business owners can access loan amounts of $5,000 - $500,000 for up to 60 months. The interest rates vary depending on your creditworthiness and the term you choose. These loans may not be suitable for start-ups, though: Funding Circle prefers lending to businesses that have been in operation for at least two years (with revenue and performance discerned through available tax documents).

  • Loan amounts: $5,000 - $500,000
  • Loan terms: 6 - 18 months months
  • Interest rate: Varies, depending on creditworthiness and term
  • Fees: May be closing costs
  • Funding time: As little as 3 days

Best for equipment financing: Better Business Funding

Equipment financing with Better Business Funding is a great option for business owners looking to make a large equipment purchase without shelling out the full purchase price at once. Usually, the piece of equipment acts as collateral, so you won’t have to give a personal guarantee.

One major pro of Better Business Funding is that you can get up to $150,000 in financing by filling out a one-page application and providing a price quote from your vendor. They’ll also let you use your funding for new or used equipment.

For loan amounts over $150,000, however, you’ll need to fill out a more in-depth application. Plus, another con to note is that while Better Business Funding can offer quick financing, their equipment financing rate might be a bit higher than one from a traditional bank.

  • Loan amounts: Up to $500,000
  • Loan terms: 24 to 84 months
  • Interest rate: Starting at 3.9%
  • Funding time: Two days after approval

Best for commercial real estate: SBA 504/CDC loan

When it comes to buying commercial real estate, one of your best funding options will be an SBA 504/CDC loan. They’re designed to be used for purchasing fixed assets, such as land or buildings — plus, these loans are backed by the SBA, which makes the terms more flexible.

A big pro of these loans is that they’re partially backed by Certified Development Companies (CDCs), which are community-based partners of the SBA — the loans are certified and regulated by the SBA. They come with some of the best interest rates on the market and fairly long repayment terms.

Some cons, though, are that your business has to have some specific traits to qualify for these loans — for instance, your business’s net worth must not exceed $15 million. You must also be able to prove a need for the loan and the money must be for an approved use.

  • Loan amounts: Up to $5 million
  • Loan terms: 10, 20 or 25 years
  • Interest rate: 3.032% to 3.168%, depending on the loan term
  • Fees: May vary depending on the lender
  • Funding time: Varies depending on lender

Best for borrowers with decent credit: OnDeck

If you’ve got decent credit, OnDeck — an online lender that’s lent billions to small businesses over the years — could be a solid option for a short-term loan.

The loan’s main advantage is that OnDeck looks at your business as a whole to make a decision on your loan application; it doesn’t limit its decision to just your credit score and revenue. This can also be great for businesses that have only been operating a limited time but have strong cash flow.

One drawback with OnDeck is that the terms of the loans are quite short — only up to 24 months for the term loan and 12 months for the line of credit — which means that you’ll need to be prepared to pay back your loan relatively quickly. In general, OnDeck looks for a personal FICO Score of at least 600, a year in business and $50,000 in annual revenue in annual revenue.

  • Loan amounts: $5,000 - $250,000
  • Loan terms: Up to 24 months
  • Interest rate: Starting at 35% APR
  • Fees: Not disclosed
  • Funding time: As soon as same day for some loans in some states

Best for business line of credit: Wells Fargo

Wells Fargo’s BusinessLine line of credit offers amounts of $5,000 - $100,000. This line of credit has rates as low as Prime plus $5,000 and doesn’t require any collateral.

If you already use Wells Fargo for business financing, this could be a great option for you. But because Wells Fargo requires that your business be operating for two years, it wouldn't be suitable for startups.

  • Loan amounts: $5,000 - $100,000
  • Loan terms: Revolving line of credit
  • Interest rate: Starts at Prime rate + 1.75%-9.75%
  • Fees: $95 to $175 annual fee (depending on the loan amount), 3% ATM fee for certain transactions
  • Funding time: Not disclosed

Small business grants for women

In some cases, grants for female business owners might be a better option than small business loans for women. Grants can come from public or private institutions, and they won’t typically need to be paid back.

Not having to repay grants is a huge benefit. One of the cons, though, is that women-owned business grants are in high demand. There’s a lot of competition for any type of business grant out there, which could make it difficult to secure funding.

Here are some grants for female business owners to explore if they’re looking for funding:

  • Amber Grant: This grant is for female business owners, and was set up by WomensNet in remembrance of Amber Wigdahl, a young woman who died before she could fulfill her passion for business. The application requires that you share your own interest in business in your own words. The organization awards one $10,000 grant a month and, at the end of the year, one of those 12 winners is awarded a grant of $25,000; grant winners are announced by the 23rd of each month. You can apply online, though you will have to pay a $15 application fee.
  • Tory Burch Fellows program: This year-long fellowship program includes a $5,000 grant for female entrepreneurs with early stage companies. There are 50 winners chosen each year — plus, in addition to the money, the winners get access to workshops, business guidance and an opportunity to visit the Tory Burch offices.
  • FedEx small business grant: This grant is open to a wider pool than just women entrepreneurs, but FedEx has been open about their commitment to supporting the growth of women-owned businesses. The grand prize for this grant is $50,000, second place gets $30,000 and third-place winners get $15,000. Each winner also gets FedEx office supplies, too.
  • American Association of University Women (AAUW): This isn’t one specific grant; rather, it’s a series of grants targeted toward different types of applicants, with varying deadlines and grant amounts. You can see all of the open grants through the AAUW website. These grants are open to women worldwide, so the competition might be tough — but it could be worth trying for if there’s a grant that’s a good fit for your business.

Unique challenges women face in small business financing

When it comes to female-owned small businesses, there are some positive trends. In 2019, women-owned businesses accounted for 42% of all businesses and grew at a faster pace than businesses overall. In addition, women have near-parity with men on FICO Scores, at an average score of 704 versus 705 for men, according to Experian.

However, women also have more open credit cards than men and hold roughly two-thirds of all student loan debt, which can make it hard to save for business funding. When women do run businesses, the revenue on average is low at $149,900 versus the $474,900 for privately held firms and $1.4 million for all firms overall. These factors impact whether female business owners are approved for a loan and, if they are approved, how much in financing they’re actually offered.

Limited industries

In addition, roughly half of all women-owned businesses are in industries that generate lower revenue than other industries, which may make it harder to get financing from lenders that use business revenue as an approval factor. Those industries include health care and social assistance; professional, scientific and technical services; and "other services" (industries such as beauty and pet care), according to the Amex report.

How to choose the best small business loan

A huge part of choosing the right loan for your company is understanding a few aspects of your business.

First, consider how your personal credit score and time in business match up with a lender’s requirements. Both of these aspects will help you determine which lenders are the right ones for you to explore. Once you determine that, you can move on to considering the type of financing your business needs.

If you’re looking for a lump sum of money to help your business expand, that’s very different from looking for invoice factoring that can cover operating costs. The reason you’re looking for loans or grants for female business owners will be a huge factor in choosing the best small business loan for you.

Considerations include:

  • The type of loan and what you’ll use the funding
  • Repayment terms, timing and frequency
  • Interest rate
  • Early repayment penalties, origination fees and annual fees
  • Minimum and maximum loan amount offered and needed

FAQs about small business loans for women

What types of small business loans for women are there?

Women business owners are eligible for most small business loans, provided they meet the loan’s eligibility requirements. Short-term and long-term loans, business lines of credit, invoice factoring, equipment financing and business credit cards are all possible avenues for funding.

How are grants for women-owned businesses different from loans?

Women-owned business grants typically will not need to be paid back like business loans do but they often provide far less in funding than a loan might. Plus, they also tend to be incredibly competitive and the application process can be long.

How do I apply for a loan for a female-owned business?

To apply for small business loans for women, you should gather the financial documents lenders typically require, such as tax returns, business bank statements and any other information about your business’s financials; you’ll likely need this information to fill out a grant application as well. In addition, you may be asked for a business plan and proposal for what you’d do with the grant money if you win.

How do I find a good lender?

What makes a good lender will be different from one business to the next. Still, a good rule of thumb is to find a lender that’s clear about its terms and fees. Try to find one that has lower interest rates, won’t take advantage of your business’s vulnerabilities and, ultimately, has loans that match your business’s needs.

Methodology

To make choosing the best small business loans easier, we examined over two dozen loans available today. We chose the lenders in the table below based on their time-to-funding, flexible borrower requirements, interest rates and repayment terms. The best lenders offer a solid mix of favorable rates and terms, loan options and quick funding. In some cases, top lenders may have longer funding times but offer excellent rates and terms that balance out slower loan-disbursement times.

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