The 5 Best Small Business Loans for Women
Obtaining financing can be a significant hurdle when starting or expanding a business; this is particularly true for women. According to Inc., one-third of female entrepreneurs say a lack of capital held them back when getting their startup off the ground. Furthermore, the National Women’s Business Council (NWBC) Annual Report found that men start their companies with nearly twice the capital that women do. NWBC cited the fear of having one’s loan application denied as a major reason women are less likely to apply for a small business loan.
American Banker additionally points to institutional bias among traditional banking establishments as a reason why women, while comprising a third of small business owners, receive less than 20% of federally backed Small Business Administration (SBA) loans and an even smaller share of conventional business loans.
It all seems pretty grim, right? Fortunately, in comes the internet, the great equalizer. Applying for an online business loan is one way a female entrepreneur can overcome bias in the lending market. Because these “alternative” lenders use algorithms to approve applicants, gender bias seems to be reduced, according to American Banker. The fear of being rejected for a loan — again, a contributing reason why women don’t apply for as many business loans — is also lessened when you’re applying online as opposed to applying in person, says AB.
The following are some of the top online business loans for women. These are all highly rated alternative lenders that can help any qualified applicant get approved and receive the financing they need to start or expand female-owned businesses. All of these lenders offer term loans/installment loans, and some also offer lines of credit.
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Accion (see our review) is a nonprofit microfinancier that has been providing business loans to women and other underrepresented entrepreneurs in developing countries since 1961. In 1991, they started offering loans in the US. Today, they are among the top online microlenders and an excellent financing option for female entrepreneurs just starting out. Many Accion loans are granted to lower-income individuals, minorities, and women. The average loan amount is just $10,000.
Accion offers installment loans with very fair terms and great customer service to boot. Accion loans have fairly relaxed qualification requirements, though it might take you a month or so to get your cash.
Accion Loan Terms:
- Borrowing amount: $500 – $50K
- Term length: 6 – 60 months
- Interest rate: 8% – 22%
- Closing fee: 3% – 5%
- Processing fee: $135
- APR: Approx. 9.5% – 33%
- Collateral: Personal guarantee (specific collateral in some situations)
- Repayment frequency: Monthly
Qualification requirements vary from state to state but you generally have to have a credit score of 575 (500 in some places). It doesn’t matter how long you’ve been in business and there are no strict income requirements, as long as you make enough to repay your loan. Check the requirements for your state here.
Most common industries Accion lends to include healthcare providers, restaurants and cafes, daycare centers, cleaning services, retail shops, and spas/salons.
How to Apply for an Accion loan:
Simply fill out an application for the loan you want on the Accion website. After you submit the application, someone will call you and let you know if you were approved. Time from application to funding typically takes about three to four weeks.
Accion is perfect for small woman-owned businesses which need a small amount of capital to get up and going. Overall, Accion is one of the best alternative (non-bank) startup term loan providers outside of the SBA. Learn more in our Accion review.
Fundation (see our review) loans are a little bit more difficult to get than some online loans, but they are still easier to qualify for than traditional bank loans. Fundation, est. 2011, also boasts very quick time to funding — typically less than a week — and fair interest rates. Fundation provides term loans in the forms of working capital loans and business expansion loans.
Fundation’s helpful customer service and transparent policies make them a very respected institution in the world of alternative lending.
Fundation Loan Terms:
- Borrowing amount: $20K – $500K
- Term length: 1 – 4 years
- Origination fee: 2% – 3%
- APR: 7.99% – 29.99%
- Collateral: Personal guarantee, UCC-1 blanket lien
- Repayment frequency: Bi-weekly
Applicants must have a credit score of at least 600 and have been in business for at least 2 years, with annual revenues of at least $100k. Additionally, you must have at least three full-time employees (including yourself).
How to Apply for a Fundation Loan:
Apply for a Fundation loan via the form on their website. After this, they may provide you with an estimated quote. Within 24 hours of filling out the app, a representative will call you and let you know your approval status. The time from application to funding is usually between 2 and 7 days.
While not appropriate for small startups, Fundation provides high-quality term loans for established women-owned businesses looking to expand. Learn more in our Fundation review.
StreetShares (see our review) is a P2P lender whereby lenders compete to offer you the best loan, resulting in competitive interest rates. Founder Mark Rockefeller describes StreetShares as “Shark Tank meets eBay.” StreetShares is veteran-friendly, but you don’t need to be a veteran to use it. It’s a good financing option for established small-to-medium women-owned businesses, and especially businesses owned by female veterans.
StreetShares offers business loans in the form of both traditional installment loans and lines of credit.
StreetShares Loan Terms:
- Borrowing amount: $2K – $100K
- Term length: 3 – 36 months
- Interest rate: About 6% – 14%
- Closing fee: 3.95% or 4.95%
- APR range: 7% – 39.99%
- Repayment frequency: Weekly
Like the other lenders on this list, StreetShares has more relaxed borrowing requirements than you’d see with a traditional bank lender. StreetShare borrowers must have been in business at least one year with revenues of at least $25K to qualify. However, if your business has already made $100K, you can qualify even if you’ve only been in business for six months. You’ll need a credit score of 620 to apply to StreetShares.
How to Apply for a StreetShares Loan:
Start by filling out an online application. At this point, StreetShares will do a soft pull on your credit (will not affect your credit score) and let you know if you are approved to continue the process. If approved, you’ll then have to provide additional documentation, including recent bank statements and business tax returns.
After that, if your loan is approved by an underwriter, it will go to auction to be funded by investors. The auction is automated; it usually takes just a few minutes to generate some offers. Once you select a loan, the money will be deposited to your account within a day or two.
StreetShares is a unique but trustworthy institution that can provide shorter-term financing to small women-owned businesses that might otherwise be shut out of the traditional lending market. However, given that you can only borrow 20% of your annual revenue, and loans cap out at $100K, it will probably not be the best fit for medium-to-large businesses. Learn more in our StreetShares review.
OnDeck (see our review) is one of the biggest online lenders. When they started in 2007, they were the first lender to rely on technology to make their lending decisions. Today, OnDeck is known as one of the most lenient online lenders, which, while not necessarily a great distinction, means your businesses is more likely to be approved for a loan.
With their relaxed borrowing requirements and high borrowing limits, OnDeck can be a viable source of capital (both term loans and lines of credit) for women-owned businesses that have been rejected by traditional banking institutions.
Even though OnDeck’s rates are higher than those of some other lenders, term loan rates are fixed (they do not compound over time), and you get 25% of the fee back if you pay your loan back early.
OnDeck Loan Terms:
- Borrowing amount: $5K – $500K
- Term length: 3 – 36 months
- Fixed fee: Avg. 1.19
- Origination fee: 2.5% – 4%
- APR range: Approx. 7% – 98%
- Collateral: UCC-1 blanket lien, personal guarantee
- Repayment frequency: Daily or weekly
OnDeck requires businesses to have been in business for at least 9 months and have a credit score of 500 and annual revenue of $75k.
How to Apply for an OnDeck Loan:
The process is fast and simple. Simply fill out an online application with some information about your business and requirements, and a representative will be in touch within 24 hours. If you’re approved and choose to accept the loan offered, funds will be transferred within a day or so.
OnDeck is a convenient short-term loan option for fast cash, particularly if you’ve been unable to secure financing from other sources. Just make sure you understand all the terms and that you have a good cash flow if you choose a daily repayment loan.
Learn more about this alternative lender in our OnDeck review.
SBA loans are highly coveted among small businesses, but they can take a long time to get —if you’re even eligible, that is. In comes SmartBiz (see our review), an SBA/online loan hybrid, which uses technology to simplify and speed up the process of getting an SBA loan.
Importantly, SmartBiz makes SBA loans more accessible to female entrepreneurs. Approximately 30% of SmartBiz loans are to women-owned businesses (remember that, in the overall industry, less than 20% of overall SBA loans go to women).
SmartBiz offers a very specific type of loan: a general 7(a) small business loan with a 10-year term and variable interest rate. While the process is not as fast as some other online lenders — time to funding can be a couple weeks to a couple months — it’s still much faster than a traditional SBA loan, which can take up to 3 months. Also, the APR is relatively low.
SmartBiz Loan Terms:
- Borrowing amount: $30K – $350K
- Term length: 10 years
- Interest rate: Variable, prime rate + 2.75% or 3.75%
- Referral/packaging fees: 4%
- SBA guarantee fee: 2.25% (only for loans above $151K)
- Bank closing costs: Typically $317
- APR: Currently 7.73% – 8.44%
- Collateral: Personal guarantee and lien on business assets
- Repayment frequency: Monthly
SmartBiz borrowers must have been in business at least 2 years and have a personal credit score of at least 670. The income requirement varies depending on how much you’re borrowing.
How to Apply for a SmartBiz loan:
SmartBiz can determine your loan eligibility within a few minutes of receiving your online application, which you can fill out on their website. With regular SBA loans, you might not find out your eligibility until you have completed and submitted a lengthy application; with SmartBiz, you’ll get an email letting you know if you’ve been approved or denied after answering a few basic questions about your business.
Upon approval, you’ll be assigned a personal “relationship manager” who will help you with your application throughout the process. After that, you’ll need to submit various documents, depending on your loan amount. This is the most time-consuming part of the process, sometimes taking up to a few weeks.
SmartBiz is a strong choice for established women-owned businesses with good credit who might need a larger loan but can wait up to a couple months to get it. Learn more in our SmartBiz review.
Which Loan Should I Apply For?
The best type of loan for your woman-owned business depends on various factors, including your income, time in business, credit score, amount of capital needed, how soon you need it, how fast you can pay it back, and some other considerations. Here’s a little roundup of each of the five best small business loans for women:
- Accion — Microloans and lines of credit for startups and established businesses
- Fundation — Medium-term loans for established businesses
- StreetShares — Veteran-friendly P2P term loans and lines of credit for newer and established businesses
- OnDeck — Short-term loans and lines of credit with relaxed borrower requirements
- SmartBiz — 10-year SBA term loans for established businesses with good credit