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Best small business loans and alternative funding for women

Women-owned businesses are growing now more than ever. However, companies run by women are less likely to obtain a business loan than those run by men.

The government supports Women's Business Centers, known as WBC, which provides business loan training for women-owned small businesses to combat the funding gap between women and men.

In this article, we want to discuss the types of small business loans for women-owned businesses so that you can choose the right one for your business. We will detail the most popular loans for women and information on grants and other initiatives for women entrepreneurs.

Types of small-business loans for women business owners

If you're a woman looking for a small business loan or financing, consider the following options:

SBA Loans

Loans from the U.S. Small Business Administration (SBA) are available from a number of banks, internet funders, and other financial institutions that are supported by the SBA. The possible loan amounts range from $30,000 to $5 million depending on the type, and interest rates differ depending on the funder and loan type. SBA loans frequently go to minority- and women-owned businesses as well as  start-ups in underprivileged areas. Female entrepreneurs can use a number of SBA loans, including the flagship SBA 7(a) funding program, for financing.

Micro loans

Micro loans are frequently offered to local businesses by mission-based  non-profits, with a particular emphasis on those run by women, persons of color, and veterans. A good example of micro loans is Grameen America, which offers enterprising women who live in poverty loans ranging from $500 to $15,000. If you can't be approved by a bank or online funder or have a minor financing gap, micro loans may be an excellent solution.

Working capital loan

A working capital loan is a type of financing a company can obtain to cover ongoing expenses such as paying the bills on time, paying off debt, replenishing inventory, and covering payroll. Typical providers of working capital loans include conventional banks, credit unions, and online funders.

Merchant cash advances

This is a great alternative to a loan. It is an advance on a company's anticipated future earnings, with advantages and disadvantages distinct from those of traditional loans. Simply put it this way, funds are loaned to your firm and quickly deposited into your bank account. The payback amount is based on the success of your business, typically a percentage of revenues for a set time period. This flexibility makes it easier to manage repayment during slow business cycles. For more information, read our blog on how a merchant cash advance operates.

Invoice financing

This is also known as invoice factoring and occurs when a firm sells its invoices (or receivables) to a third-party financial company, in order to obtain business financing. With this type of funding, you get a percentage of the money due on your invoices from the financial company, which then collects the outstanding payments directly from your customer. For further information, see Small Business Invoice Factoring.

Business line of credit

A business line of credit can assist owners in maintaining regular access to working capital or money to manage changes in expenses and revenue.

But there are several distinctions between lines of credit and standard loans. For instance, with a line of credit, you often acquire smaller sums of money but are not required to disclose how you plan to use them. Find out more about how a business line of credit and a standard loan vary.

Additional resources for women-owned businesses

There exist additional resources for you to consider. Women entrepreneurs may receive free assistance from the government and charitable organizations. These programs might offer assistance to women in completing the process for obtaining a small business loan, such as preparing a business plan, as well as direction on matters like beginning a business, handling finances, and marketing. Grants from governmental and non-profit organizations are a free source of capital for women-owned enterprises. Below are some areas to seek funding for women-owned small businesses:

  • Women’s Business Centers: A network of more than 100 educational institutions dedicated to assisting women in starting and expanding their enterprises are known as the Women's Business Centers. These SBA-funded facilities frequently present seminars and workshops on a range of subjects, such as how to launch a company and generate money.

  • Federal contracting programs: For women-owned small businesses interested in receiving government contracts, the SBA administers the Women-Owned Small Businesses Federal Contracting Program. In order to compete for set-aside federal contracts, all "socially and economically disadvantaged people or entities" (including women) must obtain certification from the SBA 8(a) Business Development program.

  • Women-Owned Business Certification: Speaking of certifications, let’s talk about why they are an important resource. Being certified as a woman-owned business entitles you to a number of advantages, including profitable networking opportunities and access to government contracts. Learn more about the top certifications for WBEs in the following paragraphs, and how they might help your firm expand steadily. Read all about it here.

  • Business Awards for Women: Women's business awards are advantageous for both individual and societal advancement. They convince women that they are serving their mission and contributing significantly to their profession, their peers, and their clientele. Most importantly, though, they encourage aspirant professionals to set high goals by increasing women's exposure and providing opportunities for progress.

  • National Association of Women Business Owners: With 5,000 members and approximately 60 chapters nationwide, the National Association of Women Business Owners is a  non-profit organization with headquarters in Washington, D.C. It provides instruction and knowledge on subjects like government contracting, capital access, and business certification.

  • National Women’s Business Council: On matters affecting women business owners, the National Women's Business Council collaborates with the SBA, Congress, and the White House. Resources can be found in the form of conferences, mentor groups, alternative funding programs, and start-up assistance.

Women-owned businesses are the backbone of the economy, with the most innovative and agile growth opportunities in the USA, and we want to help you make the most of your ideas. At One Park Financial, we want to empower women entrepreneurs by giving them quick and easy access to working capital to help them expand their operations. If you’ve been in business for at least three months and are already generating more than $7,500, you can check if you prequalify for working capital in only minutes.

Disclaimer: The content of this post has been prepared for informational purposes only. It is not intended to provide and should not be relied on for tax, legal, or accounting advice. Consult with your tax, legal, and accounting advisor before engaging in any transaction.

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