woman business funding

The number of women-owned businesses is on the rise. Four out 10 businesses in the U.S. are owned by females, and they employ more than 9 million people.

Like other entrepreneurs, female business owners face the challenge of securing enough funding to launch or expand their businesses. Fortunately, there are many loan programs and options available to help female entrepreneurs meet their funding needs.

1. SBA Express Loan

Female entrepreneurs in need of quick cash can apply for an SBA Express loan. These loans give small business owners access to funds up to $350,000.

An SBA Express Loan is partially guaranteed by the Small Business Administration (SBA). The SBA doesn’t offer loans directly. They work with a network of approved lenders that handle the underwriting and issuing of the loans.

The advantage of an SBA Express Loan is the quick turnaround time. Credit decisions are made in just 24-36 hours. Funds can be used for a variety of purposes, from working capital to real estate purchases and even debt refinancing.

However, the quick decision does come at a price: higher interest rates.

SBA Express loans are better suited for women-owned businesses that:

  • Are well-established
  • Have excellent credit
  • Need $350,000 or less

The terms for SBA Express loans are:

  • 25 years for real estate
  • 7 years for line of credit
  • 5-10 years otherwise

Loan Requirements

  • Credit score of 650 or higher
  • Invested equity in the business
  • Debt service coverage (DSCR) of 1.1 or higher
  • Solid business plan
  • Strong revenue
  • Demonstrate that the business is profitable
  • No other delinquent loans with the government
  • Demonstrate that you cannot get reasonable financing through other sources
  • Collateral if the loan is over $25,000

2. Standard SBA 7(a) Loan

Women-owned businesses can also apply for a standard SBA 7(a) loan. A 7(a) loan is ideal for female entrepreneurs who need to borrow more money. The turnaround time is longer than an Express loan, but the interest rate and down payment requirements are typically lower.

A 7(a) loan allows for great flexibility because you can use the funds for just about any business expense.

Here’s what you need to know about the standard 7(a) loan:

  • You can borrow up to $5 million
  • SBA will guarantee up to 85% of loans up to $150,000 and 75% for loans greater than this amount
  • Revolving lines of credit have 10-year terms
  • SBA turnaround time is 5-10 business days
  • Collateral is required for loans greater than $350,000

To increase the chances of approval, make sure that you have:

  • Good credit
  • A strong business plan
  • Enough cash flow to repay the loan
  • Enough collateral to satisfy the lender’s requirements
  • Appropriate debt ratios

SBA 7(a) loans are the most popular option for small businesses, and they are an excellent choice for female entrepreneurs.

3. Bank and Credit Union Loans

Many entrepreneurs turn to SBA loans to meet their cash flow needs, but banks and credit unions also offer small business loans.

For female business owners, a traditional business loan will likely offer favorable interest rates and terms.

Borrowing limits and eligibility requirements will vary from one lender to the next. Many local credit unions offer loan programs specifically for women-owned businesses and local businesses.

There are a few benefits to taking out a loan through a bank or credit union:

  • Better rates
  • Loans can be tailored to meet your needs
  • Repayment of the loan will help improve your credit

The primary issue with securing a loan through a traditional bank or credit union is that you will need good or excellent credit. If your credit is fair or even poor, you may still get approval for a loan, but the interest rate may be higher.

You will also need to demonstrate that your business has an established operating history.

Approval time can be lengthy. It may take several weeks or months to get a decision, so this type of loan may not be ideal for women-owned businesses that need quick cash.

4. Online Business Loans for Women

Online lenders are a viable alternative to traditional banks and credit unions. They offer quite a few benefits for women-owned businesses. The biggest benefit is the quick decision process.

Applicants can be approved for a loan in as little as 24 hours, and funds can be dispersed in just a few days. Apply today for the best offer from Sutton Funding, specializing in business funding for woman business owners.

Requirements for online business loans aren’t quite as stringent as with conventional bank loans. This may make it easier for new women business owners to get approved.

Interest rates may be slightly higher, but you may not have to pay certain fees, such as origination fees.

These small business loans for women can help female entrepreneurs secure the funding they need to launch or grow their operations. It’s important to weigh the pros and cons of each loan type to find an option that works best for your business.

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Henry Gross

Henry Gross

Henry Gross is the managing partner at Sutton Funding.

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