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Small Business Loans for Women – Your Stress Free, Step-By-Step Guide

small business loans for women, Small Business Loans for Women – Your Stress Free, Step-By-Step Guide

More than 11.6 million American firms are owned by women. If you’re a woman who’s planning to start her own business, now’s the time to get your finances sorted. 

Luckily, female business owners now have access to thousands of small business loans for women. In this post, you’ll learn all about getting your business off the ground, understanding small business loans, and the types of loans you qualify for. 

Ready? Let’s get started.

How Do Small Business Loans Work?

Many small businesses owners will need help to start a business or keep their existing small business growing. A small business loan can give you the capital you need to invest in your business. 

When you’re growing your business, you’ll usually come to a point where you need to invest in new equipment, hire new employees, purchase a new store, or develop a new marketing strategy to increase your profit. But you may find that you don’t yet have enough profit to pay for these things. 

This is often a catch-22, as your business may be unlikely to increase its revenue without these types of investment. Small business loans are developed for these types of situations. 

Generally, you’ll need to pay back your loan, with interest, over a set period of time. The type of loan you qualify for will depend on your business. Lenders will look at how long you’ve been in business, your credit score, your financial health, and any available collateral. 

Small Business Loans For Women

Between 1997 and 2017, the number of businesses owned by women increased by 114%. And women-owned businesses have an employment growth rate of 27% vs 13% for all businesses. 

Women are making massive strides in business. However, they still face greater hurdles when they’re getting their business started and entering growth mode.

On average, women launch their small businesses with half as much capital as men. When we look at the firms that are the most successful, men launched their businesses with six times more capital than women.  

Small business loans for women can help even this playing field, so women have more opportunities to get their businesses off the ground. 

Here are some excellent options if you’re looking for a small business loan:

Small Business Administration Loans

If you’ve got strong credit, and you’re looking for a long-term business loan, the Small Business Administration may be able to help you out. This is a government entity with plenty of resources for female business owners. 

The SBA doesn’t actually provide these loans itself. Instead, lenders like banks make the loans, and the SBA subsidizes some of that loan in the event that the borrower defaults. 

This means that lenders have less risk, making it easier for you to get approval, even if you’re just starting your business.

There are a few different SBA loans available, depending on your needs. If your business is already a few years old and you’re looking for capital to expand, the SBA 7(a) loan program may be right for you. And if you need equipment or commercial real estate, check out the SBA 504 loan. 

Term Loans

When you’re thinking about a traditional business loan, a term loan is probably what comes to mind. This means that you’ll receive a lump sum of money that you’ll pay off each month (with interest) over a repayment term. 

These loans are usually large, so they’re a good choice if you need more than $25,000 but less than $500,000. You’ll usually have plenty of time to repay the loan, as term lengths can be up to five years. 

These types of loans are usually excellent if you need assets like property or vehicles for your business. 

Short Term Loans

Think of a short term loan as a term loan only shorter. Just like a traditional term loan, you’ll receive a lump sum of money which you’ll pay off over time. However, these loans are much smaller, so you also have less time to pay them off.

Because these loans have shorter terms, you’ll also have much higher interest rates. Since these rates are higher, and you have less time to pay off your balance, you may find them a little more difficult to manage when it comes to cash flow. 

At the same time, a shorter loan term also means that your loan is accumulating interest for less time. This can mean the overall cost is lower compared to a longer-term loan. 

Lines of Credit

A line of credit can be hugely helpful if your needs change regularly. This is called revolving credit, and you can draw on it at your discretion. 

You’ll only be charged interest on the amount you borrow, making this type of loan a great option if your business is seasonal, you need to be able to access cash, or you have emergency expenses. 

Equipment Financing

If you need equipment for your business, you can get a loan specifically for this purchase. The equipment that you buy is used as collateral for these types of loans, and you can borrow up to 100% of the value of that equipment. 

Generally, the term of the loan will be the projected life of that equipment. Since you’re using the equipment as collateral, the loan is seen as less risky, and you’ll enjoy lower interest rates. 

Online Loans

Online loans are often used by business owners who don’t have the best credit rating.

They’re generally used for emergencies or unexpected expenses, and interest rates are usually much higher than loans from other lenders and banks. 

Wrapping Up

As you can see, there are plenty of small business loans for women if you’re ready to start or expand your business. 

Be sure to do your research and compare lenders, and avoid borrowing more than you need. 

Need some help choosing the perfect loan for your small business? We’re sure to have an option to suit you. Get in touch today and let’s talk. 

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