How to find the best small business loans for women in 2023
Tue | February 2023
When seeking a business loan, several requirements come into play, such as cash flow, credit rating, business plan, length of operation, and the amount of money needed. The more a business can prove its ability to repay the loan, the easier it will be to secure approval.
If you're a female business owner, having access to additional funding can help cover expenses like equipment, payroll, inventory, and hiring new staff. In the following sections, we'll answer some common questions about small business loans and suggest some of the best options for women entrepreneurs to explore today.
Can I get a business loan with a 500 credit score?
Yes, but just with particular funders. Many online funders, bank loans, and Small Business Administration (SBA) loans often require applicants to have credit ratings of at least 650. But don't worry if your credit score is low; we will explore other financing options, such as revenue-based financing, working capital, and microloans.
How much can you borrow?
How much you can borrow depends on how much you want and the loan term. Some loans are better suited for significant investments, while other types of capital work best for meeting urgent requirements. According to the statistics from the Federal Reserve, $663,00 is the typical small business loan amount. The average small business loan for alternative funders is $80,000. Loans for small businesses can be as high as $1.2 million. For comparison reasons, business loans from alternative funders range from $5,000 to $200,000.
Best types of small business loans for women
Whether you're just starting or looking to expand, having extra capital can help your business thrive. In the following sections, we will compare business loans and business funding options for women.
1. SBA Loans
Loans are available through several banks, online funders, and other financial organizations backed by the U.S. Small Business Administration (SBA). They are a fantastic alternative for general expenses because the loan amounts may range from $30,000 to $5 million depending on the kind, and interest rates may change depending on the funder and loan type
It's crucial to review which SBA loans apply to you and your business. Even though they are not reserved particularly for women, SBA loans provide attractive interest rates and payback terms. They frequently offer relief to business owners who are unable to find funding elsewhere. However, they frequently have stringent standards, and because they are in high demand, approval takes time. You can find providers in your area on the SBA website.
2. Commercial banks
These are the traditional loans you consider when you think of borrowing money. Even while bank loans for small businesses frequently have the lowest interest rates, their eligibility standards are the hardest. Additionally, the acceptance rate for small business loans is shockingly low, given the current financial climate.
It's important to mention that a bank or other funder will eventually require payment of the borrowed funds plus interest. Your credit score could be negatively impacted if you don't make loan payments on time. Determining the appropriate borrowing quantity is crucial for this reason. Alternatively, you can try other avenues like the ones we mention on this list!
3. Working capital loans
You can get a working capital loan to cover a business's day-to-day operating expenses. With these short-term loans, you can cover ongoing business costs like rent, salaries, utilities, and inventory purchases. While working capital loans are not ideal for long-term expenses, they can assist companies in controlling operational costs and maintaining a steady cash flow.
Working capital loans can be a lifeline for companies with significant seasonality or cyclical sales during downtimes. Working capital funding is a good option if you need to get money fast and in the short term, but if you need something for a big project, there might be better routes.
4. Equipment loans
Funding for equipment is another great option since your business most likely needs equipment to function. The cost can work as collateral depending on the type of equipment you buy.
Equipment loans make good small business loans for women-owned startups without a long operational history, solid credit, or substantial assets. The cost of the pricey equipment might be paid for gradually over time. However, it's important to mention that you might end up paying more than the equipment's actual value because of the interest payments and the possibility that your funder would demand a down payment.
5. Revenue-based financing
Revenue-based financing, also known as merchant cash advances (based on the business’s future revenue), is a method of acquiring working capital in which funders agree to provide money to a company in exchange for a percentage of the company's ongoing total gross revenues. It is a different financing model than more traditional equity-based investments and it is technically not a “loan” but an advance against your future revenues.
With Revenue-based financing, a company can raise capital without sacrificing some of its equity or pledging some of its assets as collateral. In this case, your company repays the capital over time using the revenue it receives from doing business. Until you pay back the financing, the funder will take a percentage out of your business banking account daily or weekly.
Get your business financing with One Park Financial
At One Park Financial, we believe in the growth and potential of women's small businesses, and since 2010, we have been making a difference in the lives of small business owners across the country. We will work individually with you to get you the capital you need and access to a network of affiliated or third-party funders that offer a variety of flexible financing without all the hassles, hurdles, and games associated with traditional bank financing.
You must have been in operation for more than 90 days and have a monthly revenue of at least $7,500. You only have to respond to a few quick questions in our online form if you're ready to get started and have a fantastic chance to push your company to the next level with us!
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