More women in the United States are becoming business owners. Because of this trend, there's more financial support given to female entrepreneurs.
In the previous sexist entrepreneurial community, it was difficult for women to get a loan or investor. But today, more financial options are available for female entrepreneurs. This helps encourage women to become business owners.
Today, more than 11.6 million businesses are owned by women. These businesses employ 9 million workers and have earned over $1.7 trillion.
Female entrepreneurs are a large part of the U.S. economy, and more female-run businesses are encouraged.
To ensure you have financial security, taking a business loan helps cover major finances. Here are the 4 best business loans for women.
1. Term Loans
Term loans are increasing in popularity.
A traditional term loan is a borrowed amount of money which is paid off in a fixed amount, including interest. Since these interest payments are affordable, term loans are a popular option amongst small businesses.
These loans also have a high acceptance rate. There's a 50% acceptance rate, which is higher compared to other types of business loans.
That's because term lenders usually look for less. The most important factor they look at is your credit score.
They want your business to have good credit and your business to have two years of experience -- but a lender will overlook this if you have excellent personal credit.
When you apply for a term loan, have a general idea of the amount you need. A lender will ask for collateral. It's advisable the loan covers the cost of your month-to-month expenses.
If you're using the loan to buy equipment, find out the costs before signing up for the loan.
Alternative lending loans, such as a term loan, are popular business loans for women. Women have a greater chance of receiving these loans compared to other loans.
2. SBA Loans
The Small Business Administration (SBA) has been assisting small business owners ever since the 1950's. These loans are government-backed with few risks.
This is to ensure capital runs to small businesses, boosting our economy.
In addition, 50-75% of applicants are approved for a loan as high as $3 million!
There are also interest benefits.
Typically, SBA loans have between 7-8% interest and the loan can be paid off over an extended period of time. SBA loan also have lower down payments, flexible overhead requirements, and often don't require collateral.
When applying for an SBA loan, have an idea of how much you'll need and what you'll be using the loan for. A lender will likely approve of your request regardless, but your chances will increase if you state specifics.
In addition, certain programs include counseling programs to help achieve your business goals faster. The SBA also offers loans and grants specifically for women and minorities, which female entrepreneurs can take advantage of.
Keep in mind, since the government is involved, a lot of paperwork is required. It may also take a long time for your application to be accepted and for you to receive the money.
3. Business Line of Credit
A business line of credit is an attractive option for all business owners, but are great business loans for women. When your company needs a little extra cash, a business line of credit offers financial support for your business.
When you open an account, you can put down a small amount such as $5,000, or even a large amount such as $100,000.
You use this money whenever it's necessary; you can only use a portion of this amount or you can withdraw the full amount.
Think of how a credit card works. When you sign up for a credit card, you're given a limit. But interest only applies to the amount on the credit card.
The only time you pay interest is when you take money out, and interest only applies to the amount you take out. However, interest amount varies. You can pay as little as 1.75% or as high as 9.75%.
A business line of credit is unsecured, so collateral isn't necessary (larger lines may require collateral).
To receive the full benefit from a business line of credit, you need to pay off the card on time and not use more than your limit.
To qualify, a lender requires your business to have been active for a few years -- but if your business generates $25,000 after a few months in business, a lender will usually waive this requirement.
Credit isn't usually checked unless you ask for a higher line.
While there isn't a specific business line of credit loan for female entrepreneurs, these type of loans will likely grant these loans to women compared to other types of loans.
4. Working Capital Loans
Do you only require a small amount of capital to run business operations?
Working capital loans are perfect. These loans have short terms and can be paid quickly. But the real benefit to female entrepreneurs is nonprofit lenders often give these loans, so they may have more benefits for women.
You can get a working capital loans as low as $5,000 and as high as $150,000. The only restriction is you can't buy property.
But these loans are useful for buying equipment or you can use this loan to get your business up and running. Since these loans are easy to pay off and don't have crazy interest rates, they're great when building business credit.
However, these loans aren't given to large corporations. You qualify if you're self-employed, run a small business, only have a few employees, and have very low capital.
Use These Business Loans for Women
Since more women are owning businesses, there are more business financing options for women. Even though there aren't special business loans for women, women are likelier to receive certain loans and additional support.
With all loans, pay attention to the credit limit and interest rates. Choose the loan that fits your budget and needs. When you follow these best practices, you can be the next woman to bring millions into your business.
Do you need a business loan? Take a look at the loans we offer.