Small business loans for women with bad credit and how to apply

March 2022

Women entrepreneurs are on the rise, and a low credit score isn't a good enough excuse to stop them on their way to success. We're feeling optimistic about the immeasurable potential of women in business! For example, 42% of all U.S.-owned companies are women-owned businesses.

Sadly, when it comes to women's access to funding, if your personal credit score is low (300 to 629 FICO), you may have fewer options — and you'll almost certainly pay higher interest rates — but obtaining commercial financing is still possible. Online and alternative funders are excellent places to start looking for financing.

We've compiled a list of business loans and funding alternatives for all women. Women business owners, it is time to connect your business with new growth opportunities! So, girl boss, keep reading and start moving mountains!

Business loans and commercial financing for women with bad credit

If you're a female entrepreneur, you've already far from facing uncountable challenges. Female entrepreneurs can obtain financing through various sources. In the following sections, we will describe some of the best small business loans for women with bad credit, including other types of financing such as grants and alternative funding.

1. Business loans and alternative funding 

If you have a low credit score or bad credit history and are just starting, an online funder could be an excellent choice for you and your business. Online funders offer everything from term loans to lines of credit and typically provide a more flexible approach to business funding. They are ideal for women-owned businesses that want fast financing and don't meet the strict requirements that traditional banks ask for. Online funders can offer the following business loans and alternative funding for women-owned businesses:

  • Short-term loans: These are easy to apply for and receive. They frequently require little to no collateral, making them appear very appealing in a pinch. However, in exchange for convenience, you will pay high-interest rates and fees.

  • Fast-working capital loans: These are short-term types of financing that help businesses manage operational costs and stable cash flow.

  • Invoice factoring: Invoice factoring is a type of invoice financing in which you "sell" some or all of your company's outstanding invoices to a third party to improve cash flow and revenue stability.

  • Merchant cash advances: This funding method is not a loan, and it's focused on the future profit potential of your business as opposed to your past credit history. MCA loans are best for small businesses that need capital immediately to cover cash-flow shortages or short-term expenses. 

2. U.S. Small Business Administration Loans

Loans from the U.S. Small Business Administration, called SBA loans, are issued by SBA-backed banks, financial institutions, and online funders but are sponsored by the federal government. There are different government business loans for women with bad credit aimed at minorities, startups, and new businesses. Below are some types of government business loans for women with bad credit:

a) Women-owned small business federal contracting program

Women business owners interested in SBA loans should adhere to the Women-Owned Small Business Contracting Program. The purpose of this federal program is to limit competition and open the playing field for women entrepreneurs that want to get funding from the different SBAs programs. To qualify for this program, you should meet the following requirements: 

  • Meet SBA size standards.

  • Be at least 51% owned and controlled by female US citizens.

  • Have women make high-level decisions regarding business operations.

b) The SBA 7(a) loans

Another government small business loan for women with bad credit is the SBA 7(a) loan. The downside of this loan is that it only offers up to $50,000 in working capital; however, it can be extended up to six years, and interest rates can go from 8% to 13%, depending on the lender. Last year, more than 50% of female-owned businesses received 13.7%, or $5.01 billion, of the approved SBA 7(a) loans.

c) SBA micro-loans

These types of loans are aimed at entrepreneur women who are just getting started and want to invest in inventory, furniture, and equipment. They can go up to $50,000, and the payback period is as much as eight years. They are issued by a network of community-based lenders and have different rates and qualification requirements.

3. Women small business grants

Looking for women's small business grants is an excellent option for outstanding female entrepreneurs like you. Remember that most of the following grants are highly competitive and have strict eligibility requirements. If you feel confident about the potential of your business; Below, you'll find several grants for women-owned businesses:

a) Cartier Women's Initiative Award

The Cartier Women's Initiative is open to women-run and women-owned businesses from any country and sector that aim to have a solid and sustainable social and environmental impact. If you have a startup or only 1 to 2 years in business, you can qualify for this grant that selects seven finalists to receive $100,000 and 14 applicants to earn $30,000 each.

b) Amber Grant

WomensNet gives a monthly $10,000 reward to a women-owned business. At the end of every year, all selected women have an opportunity to get an additional $25,000. You can apply for an amber grant for women online.

c) Dream Big Awards

The US Chamber of Commerce sponsors this $25,000 grant that honors the achievements of small businesses and highlights their contributions to America's economic growth. You need the following requirements to qualify for the Dream Big Woman-Owned Business Achievement Award:

  • For-profit small business operating for at least one year primarily within the United States.

  • Be at least 51% owned or controlled by one or more women who are US residents.

d) The Black Founder Startup Grant

The Black Founder Startup Grant program from the SoGal Foundation and other sponsors provides grants from $5,000 to up to $10,000 to Black and multiracial women and nonbinary entrepreneurs.

Grants for female entrepreneurs are a viable source of free funding for select, exceptionally talented women. If you can present a powerful application, essay, or business plan, you may be able to walk away with some free cash to help you realize your entrepreneurial dreams.

However, such grants are highly competitive, and even if you win a particular spot, you will most likely not receive a large sum of money.

Choose the proper business funding for you.

Finding business loans for women with bad credit can be difficult, but it is not impossible. If all these options for women-owned businesses don't fulfill your expectations, you can opt for alternative funding sources and online funders. One Park Financial has supported dozens of women-owned businesses to prosper, create new jobs, and generate economic growth in their local communities.

Our business funding programs work to give fast working capital to entrepreneurs with more than three months of operations and at least $7,500 in monthly revenue. Our funders specialize in providing options designed to meet the needs of small businesses. Check if you pre-qualify for business funding by filling out our online form.

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.