Are There SBA Loans for Women Entrepreneurs?

Given that women in the United States now own four in every ten businesses, responsible for almost two TRILLION dollars of revenue every year, you might be surprised to learn that even in 2021, women entrepreneurs can still struggle to get financing.

As a result, being aware of the financial assistance and small business loans available for you and the criteria for qualifying is one easy way to increase your chance of being accepted. The SBA themselves definitely offer at least one loan, but you also have a few other options, which this article will now go through.

Small Business Association (SBA) Loans For Women

Whilst the SBA doesn’t make loans directly, but rather guarantees them by providing a lending partner, it still helps with several programs that are particularly targeting women business owners and entrepreneurs.

One such program is the well known SBA 7(a) loan, through which women can borrow sums up to five million dollars, with a repayment term of around five to ten years, though when financing real estate this way you get a lengthier period of up to twenty five years.

There is no credit score “minimum” you need to meet in order to be eligible for the 7(a), but it’s worth knowing that the majority of SBA lenders will want a credit score of 620 at least, with the rest of your application being perfectly filled out and zero evidence of bankruptcies.

In order to qualify for a 7(a) loan in the first place, the SBA states you must meet their definition of a small business, so you must therefore be:

  • Permanently based in the United States
  • Earn less than $7.5 million on average, annually
  • Exist within a specific size guideline depending on your industry (see the SBA’s Size Standards Tool as this will tell you your eligibility)
  • Operate on a for-profit basis

As a woman entrepreneur, you can use the 7(a) loan for the following situations:

  • Refinancing an existing business debt, credit card, loan or line of credit
  • Picking up new stock, supplies or inventory necessary for your business
  • Buying equipment or vehicles required for the business
  • Gaining land or more real estate for the business
  • Paying for everyday expenses including payroll, the hiring or training of new employees and affording any of your tax obligations
  • Opening up a new location
  • Performing renovations or decorating your business

Another service that the SBA offers is their Express loans, which are ideal for those women who only need a little bit of financial support in the form of a short or long term capital loan.

This allows women to borrow anywhere up to $350,000; it is typically necessary for your business to have been operated for at least two years minimum and be bringing in a considerable revenue.

That being said, Express loans take a far shorter time to be reviewed, accepted or rejected, as they are designed to make the process faster. They can, however, still take between two and three months to be paid out, and interest rates are slightly higher because of the speed of the approvals process.

There are several other SBA loan programs that might be worth considering for women entrepreneurs too, which you can check out here.

Bank/Credit Union Small Business Loans for Women

Although the amount that you can borrow will depend primarily on the individual bank or credit union’s loan criteria, opting to borrow money from these places as a woman who owns her own business can be useful.

Positives of going down this route include that banks tend to offer lower, fixed interest rates when financing small businesses, especially those owned by women or minorities. You will, however, require good (or excellent) credit to be accepted and receive the lowest rates.

That said, if you’ve already got a relationship with a bank, whether for business or personal banking, then it’s possible that the establishment will consider this and be more willing to approve your loan.

Likewise, getting a business loan from a bank could well improve your business’ overall credit rating (or your own personal one) provided that you make your repayments on time. You may also find that they will specifically alter the terms of the loan in order to make it fit your business’ financial circumstances, whereas all SBA loans must follow

However, as with anything, there are of course some negatives to think about. If you don’t have an existing credit report with a high score or an established business history, you may find it hard to qualify for a loan via the bank or through a credit union.

No bank wants to give away money for the sake of it, and as such, the paperwork and the extensive application process is very time consuming.

You could be waiting months at a time before you even get approval, and even then, additional time in order to actually get the funding paid out. This is very inconvenient if you need the money immediately, and you might want to consider online loans instead.

Online Business Loans

With such a plethora of lenders now offering money via online services, you may want to take advantage of their quick turnaround and less rigorous credit checking. Though the interest rates are often much higher this way, if you find a reputable lending source, it will usually be around the same as from a bank.

However, because of the higher risk in lending as a result of less criteria to meet, it’s possible you will need to repay sooner rather than later, unless you want to have a huge amount of interest added to your loan.

This is usually offset by the lack of procurement, origination or prepayment fees that the SBA or a bank might charge you, saving your business money in the long run.

Their borrowing limits are typically more generous, too, but it’s very easy to get yourself into trouble that way, so only ever borrow what you can afford to pay back!

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