Business Loans for Women

Despite extraordinary progress in recent years, women still face disadvantages compared to their male counterparts in areas of business growth, including less access to funding, struggles to be taken seriously in male-dominated industries, and an unbalanced share of household responsibilities.

Benefits of business loans for women-owned companies

Between 2012 and 2019, women-owned employers grew 16.7%, compared to the 5.2% growth of their male peers, as reported by the National Women's Business Council (NWBC) in 2022. However, 75% of women-owned small businesses got approved for financing in 2021 compared to 81% of men-owned firms.

Here are some of the ways small business loans for women could help close the gap.

Expanding access to resources

There are multiple barriers to accessing financing for women business owners, from gender bias to the time required to apply and manage financing, and the continued uneven burden of housework and childcare on women. Business loans for women could meet the needs of this underserved group, so they can start, maintain, or grow their small businesses.

Overcoming economic inequality

The financial equity gap only grows for women of color. For example, 17% of Black women are actively starting or running new businesses, compared to 10% of white women and 15% of men. Yet only 3% of Black women have mature businesses. This is just one of the reasons the gender income gap persists. Business loans for Black women and other minority women help address issues of economic inequality that might hinder business growth.

Facilitating business growth

Nearly one in three men-owned businesses sought financing to expand their business and pursue new opportunities, compared to just over one in four women-owned businesses, according to the NWBC's 2022 report. Loans designed specifically for women-owned businesses could help encourage women entrepreneurs to pursue more growth opportunities.

Ways business owners can use financing

A small business loan for women could help cover expenses related to establishing and maintaining a business. Popular ways women use business loans include:

• Purchasing more inventory: If the business owner wins a big contract or is just looking to stock up for a busy season, they might be able to negotiate better pricing with vendors when ordering in bulk. A small business loan could give peace of mind and buying power while investing in inventory that is crucial to business operations.
• Expanding office space or locations : When a business is growing, adding more space or another location could provide many benefits, including the ability to produce more or add additional staff. Additional financing could support these endeavors.
• Launching a new marketing campaign: Whether you're using online tools, such as email marketing, or more traditional methods, getting the word out about your business is a way to leverage a small business loan for growth.
• Upgrading equipment: Whether buying new equipment, entering into a new equipment lease, or updating existing equipment, a business loan for equipment could help a business run efficiently and effectively.
• Hiring and training new employees: When a business gets too big for one person to manage, a small business loan could aid in hiring and training new employees, so the business owner can focus more on growth.

Types of loans for women in business

Owners have many options when it comes to loans for women in business. Some lenders may have financing specifically dedicated to women business owners, while others may offer more general small business loans that women can take advantage of. It's important to remember that all business loans or lines of credit will vary by lender, so business owners should be sure to choose financing with the features they value most. There are several different loan types to consider.

Business line of credit

A business line of credit is similar to a credit card: Use it as needed. Make payments on a regular, predetermined schedule, and access additional funds as the borrower pays down the balance.

A line of credit is a flexible type of business funding for women that can address changing needs. Subject to minimum draw requirements, draw the amount needed from the line of credit, as long as this draw doesn't exceed the amount of the line available.

Traditional bank loans

A traditional bank loan is what many people picture when they think about a business loan. These could come from large commercial banks or small community banks. Larger banks may have more stringent credit requirements but larger loan offerings. Smaller community banks may approve loans based on a more comprehensive assessment of a business' health.

SBA loans for women

The U.S. Small Business Administration (SBA) works with preferred lenders to offer small business owners loans with affordable interest rates and the SBA's promise to repay the loan if the borrower defaults.

While there are no specific SBA loans for women, the Office of Women's Business Ownership within the SBA operates local Women's Business Centers across the country to help women entrepreneurs find business financing.

Online loans

Online lenders also offer loans for women in business. Unlike banks, online lenders don't have physical branches, and they often specialize in a particular type of loan or borrower — like funding for entrepreneurs. Online loans can provide a range of funding and varied repayment terms and may suit short-term needs.

Microloans

Microloans are very small loans. They could work well as a business loan for individuals with bad credit or those who lack the collateral typically required for a traditional loan. Nonprofit organizations typically provide microloans, which are available for up to $50,000.

Business loans for minority women

Minority business owners can find additional business loan options intended to address inequitable access to business funding. Minority loans are available from a variety of lenders, including Community Development Financial Institutions, or CDFIs. CDFIs are mission-driven lenders that serve under-resourced communities, including racial minorities and low-income applicants.

How to get a business loan

Women-owned businesses can often apply for business loans or lines of credit online, depending on the type of financing they believe best fits their situation. Application processes will vary across lenders and financing options.

For example, to apply for an American Express Business Line of Credit, you can begin by ensuring you meet minimum eligibility criteria, including being at least 18 years old and being in business for at least a year.

If you meet the minimum criteria, you can apply online for a line of credit. Note that the American Express Business Line of Credit may have different eligibility criteria, terms and features from the lending products that are discussed above in this article.

FAQs: Business loans for women

Is it hard for a woman to get a small business loan?

Women entrepreneurs face challenges no matter what type of business financing they seek. Just 2% of the venture capital funding invested in 2022 went to women-founded firms. And according to statistics shared by Fundera in 2023, 25% of women business owners seek funding, compared to 33% of men. Women also ask for around $33,000 less than men when applying.

Women can take advantage of a variety of financing options, but some may have more attractive processes than others. For women balancing work and home responsibilities or small business owners who may be unable to step away during bank hours, loans with online applications can be a great option. Business owners can make the process even easier by gathering all of the necessary documents and information in advance and researching a lender's minimum criteria before applying.