The Ultimate Guide to Small Business Loans for Women

Starting a business is an exciting venture. However, running a successful one can be daunting! Filling the cash flow gap is the key to business success. So, you want to make sure you have enough working capital to sustain your production costs, including buying inventory and paying your staff if you have any. Read on as FamilyMoney explains what small business loans for women are available.


Taking short-term loans and long-term loans is one way to finance your business operations. However, there are only so many business loans for women to consider when you have bad credit. So, if you’re wondering how to get a business loan with bad credit, we have your back.

This article will share the options you have when looking for startup business loans for female entrepreneurs. So, let’s get to it!

Best Small Business Loans for Women-Owned Businesses

Women-owned businesses have been rapidly rising since 2000 despite many hurdles including gender inequality. According to the United States Census Bureau report, women entrepreneurs-owned enterprises constituted 19.9% of businesses that employed people in the United States in 2018.

Recent studies by Small Business Trends Survey posit 31% of small business owners are women entrepreneurs. Additionally, 51% of these female entrepreneurs are Gen X, 31% are Baby Boomers, 17% are millennials, while Gen Z constitutes 1%. This is a clear indication female business owners excel in business regardless of their age.

Women-owned small businesses experience challenges like marketing, lack of capital, administrative work, and managing employee benefits. 17% of women business owners have confirmed lack of capital is a major business hurdle.

The setback is worsened by bad credit scores, making it hard for female business owners to thrive. However, the good news is, business startup loans come to the rescue. So, you don’t need to give up on your business dreams because of a bad credit score or lack of working capital.

Small business loans are better than giving away equity to investors or borrowing from a direct lender like a friend.

There are 114% more women entrepreneurs than there were 20 years ago.  - Family Money

How to Get a Business Loan With Bad Credit

Small business lending sounds like a far-fetched idea, especially when you have a bad credit score. However, a less than perfect credit score shouldn’t spell the end of your business or kill your dream of starting one. So what is a bad credit score?

The base FICO score ranges between 300 and 850. A 300-669 is considered bad credit, while 670 and above is regarded as a good score. Below is a detailed overview of FICO credit score.

  • 300-579: Poor
  • 580-669: Fair
  • 670-739: Good
  • 740-799: Very Good
  • 800-850: Exceptional

Despite having a bad credit score, you shouldn’t throw in the towel. Below are a few alternative ways to get a small business loan to your business bank account.

  • Pledge collateral like machinery or personal assets.
  • Accept smaller loan amounts.
  • Try personal loan alternative lenders.
  • Peer-to-peer lending.
  • Try friendlier and accommodating loan options for women business owners.

Best Small Business Loan Options for Women-Owned Businesses

Securing a small business loan for your business is an excellent opportunity to take your business to the next level. In the past, gender inequality stood in the way and hindered women-owned enterprises from securing small business loans.

Today, the business landscape has changed, and there are many women-owned business loans online to help women in business get started. Online lenders offer better small business financing options than traditional lenders, making them the better choice. Below we walk you through the small business loans for women, especially if you’re a business owner.

Female business entrepreneurs ask for approximately $35,000 less in business financing than men.

  1. SBA Loans and Micro Loans
  2. U.S Small Business Administration Loans (SBA) are incredible loan options for business startups and marginalized individuals, including women minority business owners. The Small Business Administration also offer a many other financial resources to help business owners thrive.

    In the United States, an SBA loan is a type of government small-business loan that is backed by the federal government but is issued by private lenders.

    Only a few banks, online lenders, and financial organizations offer SBA backed loans, and the amount varies between $5,000 and $5 million.

    You’ll want to assess different business lenders before settling on an SBA loan. SBA Community Advantage loans and the flagship SBA 7(a) loan program are perfect examples of SBA loans.

    Sadly, qualifying for SBA small business loans for women can be a hassle for some women-owned enterprises. However, all isn’t lost because you still have the SBA Microloan program as a backup. SBA microloans have a limit of $50,000, and securing one can be easier than other SBA loan types.

    Their interest rate is between 8% and 13% and varies from lender to lender. Typically, SBA microloans are repaid over six years. They suffice for the best online lender for brand new businesses with no financial or credit history.

  3. Merchant Cash Advances (MCA)
  4. Merchant cash advance small business loans are ideal for established businesses with high volume sales. MCA loan programs are huge sums of money issued by merchant service companies to businesses in exchange for future sales receipts.

    That’s why you only want to go for this small business loan option when your business is doing significant daily or monthly sales volumes.

  5. Asset Based Financing
  6. Asset-based financing is one of the best loan options for a female business owner. It comes to the rescue for an established female entrepreneur with business assets to give as collateral in exchange for a loan. Financial institution lenders prefer asset-based financing because it’s less risky.

    They’ll probably pay more attention to the collateral value than your credit score or credit history report. Therefore, asset-based financing qualifies as one of the best business loans you can get with bad credit.

  7. Term Loan
  8. Term loans are lump sum cash given to a borrower typically with a 3-72 month repayment period. They constitute part of traditional loans and can be obtained from financial institutions like banks, nonprofit organizations like credit unions, peer-to-peer lenders, and online lenders.

    Term loans are one of the best options when you need large amounts of cash to purchase business inventory and other assets. Lastly, they attract an annual interest rates starting at 9% and usually have a maximum borrowing limit of $500,000.

  9. Business Line of Credit
  10. The business line of credit loan option is a remarkable way to meet your working capital needs or purchase necessary business equipment. The loans are flexible and payable immediately or after some time, usually between one and five years.

    A line of credit for your business has a maximum amount you can borrow during the drawing period. This amount varies from one provider to another and is often in the range of $2,000 and $250,000. In addition, this loan option attracts an annual interest rate of between 10% and 99% depending on the provider.

    The rates are usually lower than business credit cards and other loan options, making the line of credit the go-to source of financing for many businesses. This is especially true when the company needs money for recurring business needs.

Just 25% of women business owners seek business financing. - FamilyMoney

Apart from loans, women-led businesses can also benefit from small business grants like the Amber grant, the FedEx small business grant, the National Association for the self-employed, The Girlboss Foundation grant, and the Eileen Fisher Woman-Owned Business grant.

The grant amounts range between $4,000 and $100,000 per month. So, if you’re pushed to the wall and looking for a way out, applying for women-owned business grants can be a great idea. The application process is straightforward for many options and doesn’t involve a lot of paperwork.

What to Consider When Choosing the Best Small Business Loan for Your Business

The decision to select one business loan provider should not be a rushed decision. Get it wrong, and it can lead to one business regret after another. That’s why you want to consider the following before choosing to work with any lender.

  • Reviews and testimonials: It’s always better to be safe than sorry because what you see on the promos may not be the accurate picture. Some lenders can mess you up when you least expect it. This is why you want to check online reviews from past customers before deciding to work with a loan provider. You can also inquire from friends and family members who’ve already borrowed small business loans for women-run businesses to learn about their experience.
  • Needed Qualifications: Loan application requirements vary from one lender to another, so you want to compare many lenders to find a more favorable one. The best lender should be friendlier and accommodating, especially when you have a low credit score and poor credit history.
  • Limits and Rates: Loan limits and interest rates vary from one lender to another. First, assess your business’s financial needs, then find a lender to finance you at a lower interest rate.
  • Extra costs: Some lenders charge additional fees for loan processing and repayment delay penalties. These are the kind of lenders to stay away from, especially when there are better alternatives.
  • Funding Timeline: You know how urgent you need the loan for your business. You, therefore, should work with the provider with the shortest turnaround time possible.

Best Small Business Loans for Women: Frequently Asked Questions

How Hard Is It for a Woman to Get a Business Loan?
It’s not hard for a woman to get a business loan as it was a decade ago. Today, female entrepreneurs can access many low-cost loan options like SBA loans, SBA Microloans, and National Funding loans.
How Can I Get a Loan to Start a Business With Bad Credit?
One of the best ways to get a loan to start a business with bad credit is to apply for friendlier and more accommodating loan options such as credit union and SBA loans.
How Can a Woman Get Money to Start a Business?
There are plenty of loan options for women-owned businesses like SBA loans, SBA microloans, Merchant cash advances, and National Funding. Women can also apply for grants like The Girlboss Foundation grant and the Eileen Fisher Woman-Owned Business grant.
What Is the Minimum Credit Score for a Business Loan?
The minimum credit score for a business loan is 550. Though it’s a poor score, you still qualify for less strict, more-friendly, and accommodating loan options like merchant cash advances when you have a credit score of 550. Nonetheless, you want to aim for a higher score of above 680 to qualify for better loans.
Do Business Loans Look at Personal Credit?
Some lenders look at both your personal and business credit scores. A poor personal credit score may therefore affect your business loan application efforts.

Final Thoughts

There’s no doubt women-owned businesses are excelling despite challenges like lack of business capital and bad credit score. Today, there are small business grants and low-cost business loans like invoice financing, SBA, merchant cash advances, asset-based financing, business line of credit, and term loans that women-run businesses can benefit from.

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