Microloans for Women-Owned Businesses

Women own 42% of all U.S. businesses, have 9.4 million employees, and $1.9 trillion in revenue, according to findings by the National Women’s Business Council (NWB). But even though they’re now slightly more likely than men to start businesses, women continue to face unique challenges in access to financing. According to the Federal Reserve Banks Small Business Credit Survey, women-owned businesses apply for financing at similar rates to businesses owned by men, but are less likely to receive the full amount they sought (43% vs. 48% of men).

Want to know more about lending opportunities for you business? Recently, Lendio’s GM, Denada Ramnishta, talked with Alignable, Accion Opportunity Fund, and SBA about Lending Solutions for Women- and Minority-Owned Businesses. You can watch the webinar here.

 

About Business Loans and Financing for Women-Owned Businesses

The good news is that business loans for women aren’t out of reach. There are several loans women can use to run and grow their businesses, whether they need a source of short-term working capital or funding for a large-scale investment. 

Microloans For Business Owners

Microloans are what they sound like: small loans.

These loans are typically much smaller compared to the other loan options discussed so far. They can be a good fit for owners who:

• Haven’t been in business that long
• Have smaller annual revenues
• May not be able to qualify for other business loans, based on their credit
• Don’t need as much financing for their business

A microloan is worth considering for home-based business owners with smaller operating costs or mobile business owners like food truck operators or DJs.

The SBA’s microloan program offers up to $50,000 in funding for qualifying businesses. According to the SBA, the average microloan is $13,000. The maximum loan repayment term is 6 years, and interest rates range from 8 to 13%.

You could use it to:

• Meet your working capital needs to cover initial expenses
• Buy inventory or supplies
• Outfit your business premises with furniture or fixtures
• Buy necessary machinery or equipment

The only thing you can’t use a microloan for is refinancing existing debt or purchasing real estate. And you don’t necessarily need to be starting a business to use a microloan. They can also work for women with existing businesses.

Both for-profit and nonprofit organizations offer microloans to women, as well as minorities and other business owners:

• Accion is a nonprofit that offers up to $50,000 in microloan funding to brand-new and established women-owned businesses. The amount you can borrow depends on which state your business is located in.
• Kiva is a nonprofit that offers crowdfunded microloans of up to $10,000 with no interest. Repayment terms stretch up 36 months. (As a side note, Lendio’s corporate employee donation program works closely with Kiva to provide microloans to small business owners across the globe, too.)

As with any other loan, take your time to review your financial position, the interest rate, repayment terms and the minimum requirements to qualify. If a single microloan doesn’t fully meet your business funding needs, you could qualify for more than 1 loan.