Small business loans for women have not evolved to satisfactory levels.
Despite greater number of women entrepreneurs, differences continue.
Studies indicate that men start with double the capital available for women.
This is particularly worrying in the current scenario.
Small businesses make up nearly 99.7% US employer firms.
In fact, small businesses accounted for 64% of new jobs from 1993-2011.
The rate of closures and new startups are almost identical.
For 10-12 % firms opening on an annual basis, there are as many that close.
So, the role of adequate funding becomes an important consideration.
This is particularly important, given the ever-increasing role of small business in the economy.
Small businesses created almost 12 million jobs of the 18 million plus new jobs.
From mid-2009 to 2011, this spike is even more pronounced.
Small businesses contributed 67% of the new jobs created in this period.
However, the size of women-owned small businesses is still low.
2007 US data indicates there are 7.8 million women-owned firms.
This compared to the national average of 27.1 million is perceptibly lower.
The number of businesses owned by men is almost double at 13.8 million.
The availability of capital is a major factor in this regard.
Women face some unique challenges, and they also need to be addressed accordingly.
This is exactly why small business loans for women need to be customized accordingly.
There are quite a few financial organizations that are rising to this challenge.
This is particularly interesting given the severe lack of conventional options.
The financial loans in conventional banks are not geared specifically for women.
Key Features of Small Business Loans for Women in United States
As a result, initiatives started trickling in.
The fact that these are working is well borne out in numbers.
The 68% increase is based on the growth seen 1997 onward.
In fact, percentage growth is even higher than the 1.5x growth in national small businesses.
But alarmingly, we are seeing women entrepreneurs turned away by loan officials.
The worry then is what’s triggering this kind of reaction.
Is the current loan structure not geared to servicewomen?
The question then is what are the unique features of small business loans for women?
The core idea is to make these loans attractive for women.
Given the lesser availability of capability, the interest rate needs to be attractive.
The repayment terms and loan availability are the other key considerations.
Collateral and their requirement is another important feature as well.
An effective business loan provider for women should also help them get clarity.
Businesses do need debt financing at some or other point of time.
But sometimes, you need to make an informed choice.
Look for options that provide you this support.
Additionally, women can also look out for options that help them create the business plan.
These are the value-added services that can help enhance the quality of loans they choose.
US Small Business Association: Office of Women’s Business Ownership
If you are looking for small business loans for women, this is the first stop.
The organization aims to boost small businesses.
Needless to mention, they have a special division dedicated to women.
The main idea is to empower women entrepreneurs.
Empowerment is not just about financial ability.
It also includes legal awareness and helping them make an informed choice.
They also aim to bring socially or economically disadvantaged women at par.
Needless to mention that the loan program creates a level playing field for all.
They offer comprehensive counseling and training facilities too.
This helps women come of their cocoon of self-doubt and indecision.
To make this more accessible, they provide this service in multiple languages.
This addresses the primary concern of a majority of women in US.
Moreover, it manages to open up effective channels of communication for them.
Women entrepreneurs can experience all round growth and development.
The innovative challenges that they hold every month further boost their aspiration.
Moreover, they have special provision for products and services meant for women.
The SBA also offers cash prizes worth as much as $40,000.
This is part of the HER Challenge and allows women to innovate and think out of the box.
Established in 1979, this division is working tirelessly with women entrepreneurs.
They have a wide range of loan programs to facilitate a wide range of businesses.
Additionally, they also liaison with organizations like
- National Women’s Business Council
- Association of Women’s Business Centers
These go onto connect more aspiring women entrepreneurs with relevant programs.
It creates a window of opportunity for those who stepped back only due to lack of funds.
Application for SBA Loan Program
The application process for all types of SBA assistance is simplified now.
The ideal loan program is just a few clicks away.
This also includes small business loans for women.
You can easily avail the loans guaranteed by SBA.
These can be used to start a business as well as expand existing operations.
The Small Business Association also provides other types of financial assistance as well.
Apart from the plain vanilla loans, they help entrepreneurs connect with investors.
This can go a long way in helping women entrepreneurs find the necessary investment capital.
There are different types of investors interested in business.
They can look for the equity stake or debt financing.
Needless to mention that entrepreneurs can benefit to a great extent from these contacts.
The SBA guaranteed surety bond is another prominent initiative.
This helps in protecting your and your client’s work.
The SBA guaranteed surety bonds wield a lot of power in the financial world.
Moreover, they act as a major reassurance for women working with limited means.
This gives them the confidence to move ahead with their project.
The SBA also empowers interested candidates to look for Government grants.
In fact, there are many relevant grants for those interested in research and development.
The SBA becomes the messiah of hope and helps in seamless implementation.
The SBA’s disaster cover is another major positive for women entrepreneurs.
Many parts of the United States are very susceptible to natural disasters like Hurricane.
Often these result in massive destruction of property and business.
But the Small Business Association makes revival for these businesses simpler.
They offer low-interest disaster loans.
These go a long way in helping businesses limp back to normalcy.
Needless to mention this is particularly beneficial for businesses headed by women.
1) Term Loans
This is another type of option that women can explore.
If you are looking for small business loans for women, this is the most familiar type.
These have a very simple operation structure.
You pay back the lump sum over a fixed period of time.
You also pay back a set amount of interest along with that.
In fact, these are the most common types of loans that entrepreneurs go for.
But there are other organizations as well that offer similar services.
If you don’t want to contact banks, you can approach Lending Club, Bond Street and the like.
The advantage is that most of these provide loans at lower rates of interest.
Moreover, the processing time is much lesser.
So candidates can hope to get financial assistance within a short duration of time.
The loan term can vary anywhere between 1-5 years.
Candidates can get a loan anywhere from $25000- $500,000.
The best part is these loans can be processed in as little as 2 days.
However, you need an annual revenue inflow of $90,000 to be eligible.
Your eligibility criterion also includes 600+ credit score.
So, it may not work for women who do not meet these requirements.
Especially, disadvantaged women looking to establish themselves may find it difficult.
So what is the option available to them?
How can they look for small business loans to further their aspirations?
Well, the best way will be to look for alternative loan providers.
2) Online Lenders
Though not a specially designed alternative, these can be very handy.
They offer small business loans for women at convenient terms.
Most of these online alternatives have relatively simple terms of operation.
The processing time is also much lesser.
This is more of an alternative lending arrangement.
Essentially these address all potential hindrances that women face.
These provide favorable payment terms and credit limits.
These can be favorable for women who have been in business for less than a year.
If you have an average or even poor credit limit, these can be of help.
These sources essentially provide speedy and short-term funding.
So they are ideal for women in times of emergency.
Of course, the APR or the rate of interest is significantly higher.
In many ways, this provides the lender an interest in this business.
The higher lending rates justify the greater risk that the lender is shouldering.
You have convenient repayment terms as well.
These can span from daily allocation to weekly and monthly installments as well.
Often you can avail these on the basis of simple personal guarantee.
In times of emergency, this can be rather handy.
There are a variety of these online outfits providing relevant lending service.
Each of these is geared towards a specific purpose.
So there are some good for those with low credit scores.
There can be some that are beneficial for women looking for working capital.
So, you need to take a constructive view of the money you need.
Both the loan duration and urgency of it is important.
That will help you decide what type of organization you will approach.
If you are looking for small business loans for women, there aren’t too many grants.
Most of the government-sponsored grants are for non-profit organizations.
But you can hope to get grants indirectly.
For example, there are a number of grants offered to non-profit firms.
Some of these are also for special programs to train women to run the business.
These programs also teach them the tricks of financial management.
As a women entrepreneur, you can surely benefit from this type of grant exercise.
There are many such similar options.
Of course, you have to undertake in-depth research.
You have to carefully consider the available options and see what works.
Additionally, you need to be very well versed with the legal formalities.
Grants for women looking for small business loans is never simple.
The best way to look for grants is by tapping available resources
Look at the state level Government organizations and look for options.
Most states have some type of offering for women-led businesses.
Most state websites have a business segment.
This is where you need to look for relevant information.
They list out the different types of incentives to encourage businesses.
The MBDA or the Minority Business Development agency is also a great option.
If you are looking for small business loans for women, this can open floodgates of opportunity.
They offer funds to many women-owned businesses.
This falls under the purview of the work undertaken for the development of minorities.
Women entrepreneurs should be sharp to grab this opportunity.
4) Private Grants For Women
Another source of small business loan for women is private grants.
In fact, these have been empowering women entrepreneurs across the board.
The trick is to connect to the right sources at the right time.
That will help bring about maximum gains.
Eileen Fisher Women-Owned Business Grant
This program comprises of five annual grants.
But the pre-condition is that the business has to be run by women completely.
It needs to reflect social consciousness, diligence and perseverance.
Sustainability and innovation is the buzz word here.
Projects primarily get selected on the basis of these criteria.
Huggies- Mom Inspired Grants
You can get as much as $15000 under this loan program.
Motherhood brings about myriad development in us.
This grant is aimed at devising innovative products inspired by this joy.
In many ways it will help new mom find job options a lot easily.
FedEx Small Business Grant
$75000 is awarded annually under this program.
Most times the firm encourages potential applicants to share their vision.
The advantage of this business is the public voting element.
The judges decide on the potential candidates using various parameters.
The public voting is part of the entire process.
The reason why it is a big positive is this helps in promoting the business.
The more votes you get, the better publicity your project gets.
So at the end of the day, it provides the all-important footfalls that your business needs.
Both the firms have joined hands for this grant program.
It is designed specifically to bring opportunity to women and those disadvantaged by society.
You have the opportunity to win nearly $3 million in grants.
There are also individual $150,000 worth grants.
Recipients also get an opportunity to visit Google headquarter.
5) Lines Of Credit
Apart from these, you also have the conventional lines of credit.
If you are looking for small business loans for women, this is a dependable option.
In fact, this is one of the most flexible options as well.
You only have to pay interest on the sum that you withdraw.
Once you have repaid the entire amount, the line of credit gets refilled again.
There are many alternative lenders with attractive interest rates.
They normally provide the line of credit at lower rates.
This often helps in attracting more loan seekers.
The line of credit is available at a significant discount to conventional rates.
This is the best option if you have a low credit score.
Additionally, processing these can be quite simple.
So, if you need a loan in a hurry, this can be a convenient option.
The low balance requirement is an added advantage in this content.
Small business loans for women are a very important growth driver.
US holds the top rank in terms of women entrepreneurs with thriving businesses.
But that said, there is still scope of huge improvement.
Studies indicate that gender-based differences prove to be a major hurdle.
Often these business loans can act as an important icebreaker.
It can hope to bring about significant economic parity.
That will, no doubt, encourage entrepreneurship among women.
The potential for high-growth women-led businesses is dependent on the operating atmosphere.
In this context, small business loans for women can make the environment conducive.
It can provide a fresh lease of confidence among women
It will help them strive better.
So, the first step toward success can be the small business loans for women in United States.