Small Business Loans for Women - BlueSky Capital Funding

Small Business Loans for Women

Highlighting Some of the Best Small Business Loans for Women

Women all over the world, and particularly in the United States, are building more businesses than ever before.

In fact, according to information published in the US, women entrepreneurs are starting and building businesses at a faster rate than at any other time in history. 40% of the new entrepreneurs in the United States are female, and the number of women owned businesses is growing at twice the rate of meal owned operations.

Women are becoming some of the most important and influential entrepreneurs, driving the global economy forward at almost unprecedented numbers, and definitely making themselves known in industries that were predominantly male oriented in years past.

Unfortunately, for one reason or another, women still aren’t able to fully take advantage of small business loan quite the way that their male counterparts are able to.

A number of financial lending industry reports show that the amount of small business loans for women is considerably lower the on the amount of loans offered to males.

On top of that, about one in four women owned businesses are applying for small business loans for women – and of that rate, those that do will apply for these kinds of financing packages are asking for nearly $35,000 less than what their male counterparts are asking for.

Something has to change.

Thankfully, the dam is starting to break and women owned businesses are starting to get more support than they ever were previously.

Female entrepreneurs recognize that the deck is unfairly stacked against them, but rather than complain about the long odds that they face many are instead using a sledgehammer to break down the old barriers and walls put up to stop them from building and growing businesses.

A number of nontraditional financial institutions and women owned businesses specializing in helping other women entrepreneurs get a small business financing they need have been popping up left and right.

While there is no such thing as a female exclusive lending opportunity (and likely never will be, due to existing laws regarding discrimination against anyone related to their sex or gender), a number of financial institutions have been advertising lending programs intended to help women push back against the odds and get more friendly financing packages going forward.

Below we highlight just a handful of different opportunities women owned businesses are going to be able to leverage. Women-only business grants, mentor programs, and other business resources (financial and otherwise) make up some of the options that we touch on below, opening up new doors and new opportunities that never would have existed for female entrepreneurs in the past.

Let’s dive right in!

Breaking Down Some of the Best of Small Business Loans for Women

Ever since 2008, the real “peak” of the Great Recession, traditional lenders and banking institutions have been anything but friendly to new entrepreneurs for business owners with anything less than picture-perfect credit – including women looking for financial help to build and grow their company.

Information released by a number of investment banking institutions in cooperation with the Pepperdine University has unveiled that only about 30% of women ever end up receiving approval for bank loans that they are applying for.

This number is considerably lower than the 50% of ALL business owners that end up receiving bank loans, showing a serious discrepancy between female entrepreneurs, male entrepreneurs, and the ability to get the financing savvy business people need to improve their financial future.

Some of this has to do with the fact that, as a general rule, women owned businesses have lower numbers when it comes to revenue and profitability on average – at least when they are still quite new.

According to the US Small Business Administration, nearly 33% of all women owned businesses were operating at a loss in 2015 compared to just 25% of all meal owned businesses. On top of that, the same SBA study showed that women entrepreneurs are much more likely to go into underfunded industries with smaller markets. This limits the “piece of the pie” they are able to carve out for themselves in most situations.

On the flipside, however, that same SBA study also highlighted the fact that women owned businesses and much greater profit potential than many businesses with men at the forefront. Women owned operations have to be given an opportunity to succeed (and opportunity most would agree they aren’t being fairly offered), but lending packages do exist to help level the playing field.

Small Business Administration (SBA) Loans

Of all the small business loans for women that exist on the market today, the SBA Loan packages that women entrepreneurs can take advantage of our may be the most flexible and the most diverse.

The SBA was established by the US government to help entrepreneurs – ALL entrepreneurs – take advantage of financing opportunities and other business building resources, recognizing that small businesses form the backbone of this nation’s economy.

While the SBA doesn’t expressly make financing available from their government entity, they do work with banks and other nontraditional lenders with the SBA working to subsidize a portion (or all) of a loan. This opens up a world of new small business loans for women that they otherwise might not have been able to take advantage of for one reason or another.

Because the US government is going to be guaranteeing at least a portion of the SBA loans that you can sign up for, traditional lenders are going to see them as a lot less risky. This makes traditional lenders more likely to do business with you – particularly if you have little to no track record in the world of business before – insignificantly levels the playing fields for women owned businesses.

SBA loan packages for women can provide top-notch financing options with very friendly interest rates and long-term repayment periods.

There is a bit of a rub with these kinds of financing deals, however.

Because the government is going to be guaranteeing most, if not all, of these loans should you default there are some pretty stringent requirements you are going to have to meet to take advantage of these loans.

Some of the loans available have lower levels of requirements, and others are going to require you to have pretty decent credit in at least some history in the world of business even to apply. It’s important that you research ALL of your options – from the SBA Micro Loan program to the SBA 7(a) Loan program and everything in between – to find the right solution for your specific needs and your application criteria.

Nontraditional Lending Opportunities Exist, Too

While traditional lending opportunities from banking institutions, credit unions, and through the SBA are going to be perfectly fine for some women owned businesses, female entrepreneurs with less than perfect credit, no history in business, and minimal cash flows already are going to want to look elsewhere.

The Great Recession absolutely devastated the traditional lending institution which is why so many of those bankers and lenders are gun shy about offering any small business loans to women, or anyone else for that matter.

This created a vacuum in the lending industry, a vacuum that nontraditional lenders swept into and have been filling quite well ever since.

Online lenders in particular have gained quite a bit of traction with women owned businesses in the last five years or so.

These kinds of lenders usually offer short-term loans (from between three months and 18 months or so) with reasonable interest rates and loan repayment terms, but from time to time you can find real “sharks” in the industry that are quite a bit more predatory and should be avoided at all costs.

With online lenders, you want to be sure that you know exactly what type of loan you are getting into as well. Term loans, lines of credit, secured/unsecured business loans, cash advances, and a whole host of other lending opportunities are available if you have to be certain that you aren’t sacrificing your long-term financial future just to plug up a couple of short term financial holes.

The biggest benefit to moving forward with nontraditional lenders is the ability to apply for these kinds of loans quickly and easily, and to get access to your funding almost immediately should you be approved.

There are plenty of nontraditional lenders out there you can Google and research more completely, and we encourage you to do your due diligence before you sign on the dotted line for any of these small business loans for women entrepreneurs.

There are a lot of great options out there for you to pick and choose from, but a handful of bad apples, and you don’t want to get mixed up with the wrong lender that’s really going to put the squeeze on you after promising the moon and the stars.

Lines of Credit for Female Owned Businesses

Lots of nontraditional lenders offer lines of credit for female entrepreneurs, a form of financing that is particularly useful for women owned businesses with credit that can range from very poor to average or slightly above average.

The advantage in these kinds of financing packages is that they offer incredible flexibility when it comes to how you choose to use your funding going forward.

When you take advantage of a business line of credit you’re going to be able to use any of the funds you receive in any way you see fit, without limitation, without restriction, and without any rules placed upon as far as how you can deploy these funds throughout your business.

On top of that, you might receive a business line of credit for save $50,000, but there’s no reason you have to use all of that line of credit at once. You could use $5000, $10,000, or $15,000 of that line of credit at once – and that’s what you’ll have to repay back, with interest and loan fees only ever assessed on the money that you actually use.

These are some of the most popular loans for women-owned businesses, particularly because you’ll be able to use them as a replenishing line of credit for your operation. Just be sure that you make your loan payments on time (and that you do your best to repay back the total amount you’ve used from your line of credit before dipping back in again) and you’ll have a lot of freedom to build and grow your business as you see fit.

Small Business Grants for Women Are Incredible Opportunities

A little bit different than your traditional small business loans for women, in that grants intended for women owned businesses are essentially “free money”, the beautiful thing with these financing options is that you usually aren’t going to have to pay back even a single penny of the money you receive.

Because this is basically free money, however, you’re going to find these kinds of financing packages to be a lot tougher to get approved for and a lot more restrictive in how you use them.

Obviously, you’ll want to look into federal grants, state and local grants, and grants from private organizations or operations that make this kind of money available to women owned businesses, and it’s not a bad idea to quickly move through the application process to gain access to this source of funding – even while you pursue other small business loans for women, too.

Grants will inevitably carry rules and restrictions for how you are supposed to use the money you have received, but these kinds of grants usually have a lot of flexibility in how you deploy these resources inside of those restrictions.

Most of the time, these grants are set up for women looking to start new businesses or grow existing companies (with an emphasis on resources available for marketing and taking advantage of new opportunities), but from time to time you come across grants that make it possible to leverage money any way you see fit.

Women-owned businesses will want to look into the SBA Innovate HER Challenge grant, the Small Business Innovation Research grant, the Small Business Technology Transfer program, the Rural Business Investment program, and any other grant opportunities they can dig up in their research.

Combined with some of the other small business loans for women we have highlighted above, you can really pour some jet fuel on the growth rate of your business with these kinds of financing packages!

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