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How to Get a Small Business Loan as a Woman

10+ min read • Jul 16, 2022 • Rachel Mennies

There are a wide range of loan options for small business owners—but as a woman business owner, actually accessing them can sometimes present a challenge.

Women own 40% of all US companies, but only receive 7% of proffered venture funds for their startups. Half of all US women-owned businesses are also minority-owned. This presents both staggering opportunities for success alongside some undeniable structural barriers to accessing that success.

Research shows that single women in particular tend to have lower credit scores than their single male counterparts for various reasons—which can lead to further entrenched gender bias in accessing loans or other financing. However, some of America’s most successful startups are helmed by women, from Spanx’s Sara Blakely to Beautycounter’s Gregg Renfrew and beyond. While it’s unquestionably harder for women business owners out there, their success could serve as a roadmap for yours.

Below, read more about your loan options as a woman-owned small business—and some grant options, too. Most of these are not specifically designated for women, but there are some loans that better suit the type of financing and risks that women business owners take, including various US Small Business Association (or SBA) loans.

What Is an SBA Loan—and Why Is It a Good Option for Women Business Owners?

While the SBA doesn’t loan money directly to small businesses unless they’re eligible for disaster recovery, the SBA helps small businesses access funding by setting loan guidelines for small businesses and reducing lender risk. As a result, they can be one of the safest, easiest ways to access loans for women-owned small businesses.

What makes SBA loans so beneficial? They offer enviably lower rates, lower down-payment requirements, and larger borrowing allowances than private-sector lenders often offer, especially to newer or smaller businesses. And these benefits can help you to grow your credit and connect you, in the longer term, with other funding opportunities.

Types of SBA Loans

There’s an SBA loan option out there to cover just about every aspect of your woman-owned small business. Some of the most common SBA loans include the 7(a), 504, and SBA Express—but there are numerous others that may suit a particular need or aspect of your business.

SBA 7a Loan

There are 2 types of SBA 7(a) loans: SBA 7(a) Standard and SBA 7(a) Small Loans. They have similar rates and terms, but the Small Loan is capped at a maximum loan amount of $350,000.

The 7(a) is also one of the most flexible SBA loans. You can use it to:

  • Buy land
  • Cover construction costs
  • Buy or expand an existing business
  • Refinance your existing debt
  • Buy machinery, furniture, supplies, or materials

SBA 504/CDC Loan

SBA 504 loans can be a bit more complicated than 7(a)s. Because you must use a 504 to fund a specific fixed asset, a thorough examination of your project costs will come into play. When your loan is funded, the lender will initially cover 50% of your costs and the SBA will cover 40%—which means that you’re responsible for covering at least 10% right off the bat. You’ll also be required to personally guarantee at least 20% of the loan.

According to the SBA, “504 loans are available through Certified Development Companies (CDCs), SBA’s community-based partners who regulate nonprofits and promote economic development within their communities.” 

You must use an SBA 504 loan to finance fixed assets, although some soft costs can also be included. Examples of qualifying projects include:

  • Buying an existing building
  • Building a new facility or renovating an existing facility
  • Buying land or making land improvements such as grading, landscaping, and adding parking lots
  • Buying long-term machinery
  • Refinancing debt incurred through the expansion of your business or the renovation of your facilities or equipment

SBA Export Loans

Is your woman-owned small business considering exporting goods to other countries? This is often seen by US lenders as a particularly risky option, and it can be harder to access funding as a result. But never fear: the SBA is here to help.

Check out the SBA’s export finance offerings, which include export loans, export express loans, and export working capital loans.

SBA Microloans

If you need a smaller amount of funding quickly to jumpstart your woman-owned small business, the SBA offers microloans—up to $50,000—for this exact purpose.

According to the SBA, microloans can be used for a wide range of purposes in order to rebuild, reopen, repair, enhance, or otherwise improve your small business, including towards:

  • Working capital 
  • Inventory 
  • Supplies 
  • Furniture 
  • Fixtures 
  • Machinery 
  • Equipment 

An SBA microloan, however, cannot be used to purchase real estate or pay down debts.

SBA Disaster Loans

Hopefully, you’ll never need disaster loan assistance for your small business—but if the COVID-19 pandemic has taught us anything, it’s that we never know what lies ahead.

Unlike other SBA loans, which utilize an intermediary lender, the SBA administers disaster loans themselves. These are specifically earmarked, per the SBA, for “declared disasters, including civil unrest and natural disasters such as hurricanes, flooding, and wildfires.” This also includes the PPP and EIDL loans administered during the pandemic.

Types of SBA disaster loans include:

  • Physical damage loans to cover repairs and replacement of damaged physical assets 
  • Mitigation assistance to cover small business operating expenses
  • Economic Injury Disaster Loans (EIDL) to provide economic relief to small businesses and nonprofit organizations that have suffered damage to their home or personal property
  • Military reservist loans to help eligible small businesses with operating expenses to make up for employees on active duty leave

Whichever type of SBA loan fits best for your small business, make sure to consider your options today—and Lendio is here to help!

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Rachel Mennies

Rachel Mennies is the owner of The Little Book, LLC, a small business that provides writing and editing services to individuals, nonprofits, and businesses of all sizes. At last count, Rachel's writing and editing skills have helped shape nearly 500 articles and blog posts for Lendio.com.