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Small business loans for women with bad credit: what you need to know

It's a new year, and we're optimistic about women's immeasurable potential in business! In the U.S., 42% of companies are women-owned businesses by women (13 million). These numbers may only partially represent women's challenges when starting and growing their businesses. For example, women entrepreneurs tend to have less access to capital than men, which can limit their ability to grow and scale their businesses. 

As a business owner with a low credit score (300 to 629 FICO), you may have fewer options, and you'll almost certainly pay higher interest rates. But obtaining a business loan is still possible. There are several options for women-owned small businesses with bad credit out there. In the following sections, we've compiled a list of small business loans for women with bad credit that you can start looking into today. So, girl boss, keep reading and start moving mountains!

Top small business loans for women with bad credit 

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.

Women's Business Centers

The Small Business Administration (SBA) operates a network of Women's Business Centers (WBCs) that provide counseling, training, and resources to women entrepreneurs. Some WBCs also offer microloans to eligible women. The SBA loan programs specifically for women-owned businesses include:

a) Women-owned 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 U.S. citizens.

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

b) The SBA 7(a) loans

The SBA has set aside a portion of 7(a) loans for women-owned businesses. Women can use this popular loan program for various purposes, including working capital, inventory, and equipment. The downside of this loan is that it only offers up to $50,000 in working capital. Interest rates can go from 8% to 13%, depending on the funder.

c) SBA micro-loans

These types of loans are for women entrepreneurs 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. SBA Microloans are issued by a network of community-based lenders and have different rates and qualification requirements.

Suppose you would like to qualify for an SBA loan. In that case, your business must meet specific criteria, such as being for-profit, operating in the United States, and meeting size standards. Companies must also meet the funders' credit and collateral requirements. Even with SBA's guarantee, the conditions are stricter than conventional loans.

Alternative business financing

Alternative business financing refers to funding other than traditional bank loans. They are ideal for women-owned businesses that want fast financing and don't meet the strict requirements that conventional banks ask for. Some examples of alternative business financing include:

  • Crowdfunding: Platforms such as Kickstarter and GoFundMe allow businesses to raise money from many people, usually through online campaigns.

  • Invoice financing: This financing allows businesses to borrow money against unpaid invoices, providing cash flow for operations.

  • Merchant cash advance: This type of financing allows businesses to borrow money for a percentage of future credit card sales. MCA loans are best for small businesses that need capital immediately to cover cash-flow shortages or short-term expenses. 

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

Women small business grants

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

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. 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 can get an additional $25,000. You can apply for an amber grant for women online.

c) Dream Big Awards

The U.S. 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 U.S. 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. Suppose you present a robust application, essay, or business plan. In that case, you can walk away with some free cash to help you realize your entrepreneurial dreams. However, such grants are highly competitive. Even if you win a particular spot, you will most likely receive little money.

Start your financing process today! 

Finding business loans for women with bad credit can be difficult, but it is not impossible. Suppose all these options for women-owned businesses need to fulfill your expectations. In that case, 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.

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