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Small Business Loans for Women

Date modified: January 10, 2024
We look at some of the loan options geared toward women who are looking for small business funding.
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Imagine transforming a $900 loan from your mother and a small personal savings into a billion-dollar enterprise. This is not a fairy tale but the real-life story of Janice Bryant Howroyd, who founded the ActOne Group in 1978.

Her journey from a modest beginning to creating the largest privately held, minority-woman-owned personnel firm in the U.S. exemplifies what women can achieve with the right financial support.

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This blog is for women like Janice, poised to turn their dreams into successful businesses but facing the common hurdle of funding. We explore the world of small business loans for women, demystifying the process and unveiling options that can propel your business forward.

Whether you're starting from your kitchen table or scaling up, understanding your financial avenues is the first step toward success. Let's explore how the right loan can be the key to unlocking your business potential.

7 Types of Loans for Women to Consider

For woman entrepreneurs like Janice, understanding the specifics of each loan type can be the key to making empowered financial decisions. Various loan options cater to different needs, from starting a new venture to expanding an existing one.

Small business loans.

Here are some financing options you may consider for your business:

Long-Term Loans

As the name suggests, long-term loans are often used by businesses to fund larger-sum projects, like expansions and real estate acquisitions. These loans, which can be repaid over three to ten years, offer flexibility in amounts ranging from $5,000 to over $500,000, with interest rates generally falling between 6% and 30%. Long-term loans offer several benefits for business owners seeking to invest in their company’s future.

These loans are particularly well-suited for:

  • Buying real estate for a new branch or expanding the current location
  • Constructing new facilities or major renovation of existing spaces
  • Making significant long-term investments in heavy machinery or manufacturing equipment
  • Acquiring another business or funding a merger
  • Investing in substantial research and development for new product lines
  • Implementing major technology overhauls
  • Launching a comprehensive, multi-channel marketing campaign
  • Entering new markets

Short-Term Loans

On the opposite side of the funding spectrum, short-term loans offer quick financial solutions for urgent business needs. Typically, they are repaid within three to 18 months and provide amounts between $2,500 and $250,000. Interest rates for short-term loans are often higher, ranging from 10% to 80%.

For women entrepreneurs, short-term loans can be a lifeline during emergencies, quickly providing the necessary funds without long-term financial commitment.

Short-term loans can be used for a range of other immediate, small-sum needs, including:

  • Inventory, supply, and equipment purchases
  • Salaries, utility bills, and rent
  • Marketing and advertising campaigns
  • Taxes and other legal obligations
  • Trade shows, conferences, and business travel

In some cases, short-term lenders may require collateral like equipment or real estate. In other cases, a personal guarantee or a guarantor may be required. Women entrepreneurs seeking short-term loans should be aware that defaults could result in the repossession of assets or significant damage to their credit, as well as the guarantor’s.

Startup Loans

Like Janice, many women may have a business idea that they’re passionate about. However, the biggest hurdle is finding financing without having established business credit or operational history. Small business startup loans for women emerge as a helpful resource in this situation.

Often, startup loans have more flexible eligibility requirements to account for a lack of credit or operational history. These loans offer financing between $500 and $750,000 with repayment terms of one to five years. The interest rates vary from 7% to 30%.

For entrepreneurs with innovative small business ideas for women, startup loans provide financial support for various initial business needs, such as:

  • Securing a location for launching a new business
  • Purchasing the initial stock of inventory or necessary equipment
  • Investing in marketing activities to establish a market presence
  • Hiring the first team members to start business operations
  • Managing operational expenses
  • Testing products or services

If you are exploring startup loans for women, keep in mind that presenting a comprehensive business plan can greatly enhance the likelihood of securing a loan.

Business Line of Credit

Many of the options mentioned above disburse funds in a lump sum. However, some women business owners may not know how much financing they’ll need in the future. This is where a business line of credit steps in.

Searching for a business loan.


With a line of credit, women entrepreneurs can be approved up to a specific amount, often between $1,000 and $500,000. When funding is necessary, women CEOs can draw from the line of credit as needed – there is no minimum amount they need to borrow.

Interest is only paid on the amount that is taken out, with rates ranging between 7% and 25%. Once the borrowed amount is repaid, it is available for use again without the need for female business owners to reapply for financing.

Business lines of credit are great for handling ups and downs in cash flow, unexpected costs, or quickly grabbing a business opportunity. A business line of credit can be effectively utilized to handle a range of financial needs and growth initiatives, like:

  • Addressing unexpected expenses and managing cash flow fluctuations
  • Stocking up on inventory or supplies ahead of peak business seasons
  • Conducting quick repairs or upgrades to business equipment
  • Initiating marketing campaigns to expand customer reach
  • Investing in small technology upgrades or new software subscriptions
  • Funding ongoing training or development for staff without tapping into reserves
  • Managing supplier payments to avoid disruptions in the supply chain

Working Capital Loans

A working capital loan is designed to help cover daily business costs when income or demand fluctuates. With working capital loans, women entrepreneurs can borrow between $5,000 and $250,000 with terms from six months to two years and interest rates between 7% and 30%.

Working capital loans can help women business owners manage working capital effectively by providing them with funds to cover expenses during slower seasons or purchase inventory before higher-demand periods.

Working capital loans can be used by female entrepreneurs to:

  • Cushion against seasonal income fluctuations until business picks up
  • Ensure timely payments to staff and vendors during delays in customer payments
  • Fund daily operational needs, such as restocking office supplies or covering utility bills
  • Maintain staff salaries and rent in slower business periods
  • Prepare for high-demand periods with adequate inventory and staffing
  • Cover fixed commitments, such as lease payments, when cash is tight

Accounts Receivable Financing

If you already have an established business and need additional funds, you may be sitting on a gold mine without even knowing it. Female-owned businesses that have unpaid invoices from customers can sell these outstanding balances and receive a lump sum payment.

Rather than waiting for customers to pay, businesses can get most of the invoice value in advance from a lender. This amount usually is about 80% to 90% of what the customer owes.

When the customer finally pays their invoice, the financing company takes this payment and gives you the remaining amount minus a fee for their service. This fee is typically 1% to 5% of the invoice.

If you’re considering account receivable financing, keep in mind that it is often best reserved for bulk outstanding invoices rather than one-off late payments.

Equipment Loans

Equipment loans provide funds for women entrepreneurs to buy or lease the equipment they need to run their businesses – these include heavy machinery, computers, or even kitchen equipment.

Heavy machinery equipment

When a business takes out an equipment loan, the amount borrowed typically covers up to 100% of the equipment's cost, although some lenders may require a down payment of 10% to 20%. The interest rates on equipment loans can vary, often depending on the business's creditworthiness, the life expectancy of the equipment, and market conditions, but generally range from 6% to 30%.

The terms of these loans are usually matched with the expected life of the equipment, which means a loan could last anywhere from a few years up to a decade or more. The equipment itself often serves as collateral for the loan, which can make this type of financing more accessible than unsecured loans.

Equipment loans cater to businesses looking to enhance their operational capabilities and efficiency. For women entrepreneurs, here’s how they can use the funds from an equipment loan:

  • Upgrading outdated manufacturing machinery
  • Expanding a restaurant's kitchen capabilities with new appliances
  • Purchasing heavy-duty vehicles for construction projects
  • Acquiring medical devices for a healthcare facility
  • Updating computer systems and software across a corporate office
  • Buying new fitness machines for a gym expansion
  • Procuring state-of-the-art technology for a tech startup
  • Implementing energy-efficient tools to reduce operational costs

Qualifications for Small Business Loans for Women

Before you submit your application for small business loans, research the general requirements and eligibility criteria for each lender. Most lenders will require the following:

  • Credit History: Both your personal and business credit histories are reviewed by lenders to evaluate your ability to manage debt. A higher credit score often leads to better loan terms, interest rates, and larger amounts. If your credit isn't great, you still have options, though they might have higher interest rates. Improving your credit score through regular payments and reducing debt can help you access loans with better terms over time.
  • Business Plan Viability: A detailed business plan plays a significant role, as it shows lenders the potential and viability of your business. It should articulate your business model, market analysis, and financial forecasts, portraying how the loan will contribute to your business's success.
  • Financial Records: Lenders will scrutinize your financial statements to gauge your business's financial health. Accurate and current records like balance sheets, income statements, and cash flow statements, ideally spanning the last two years, are necessary. These documents reflect the real financial condition of your business.
  • Collateral: Offering collateral can strengthen your loan application and increase favorable interest rates. Assets like real estate or equipment can be used as collateral but come with the risk of loss if the loan defaults. Carefully consider what assets you can offer and understand the associated terms.

How to Get a Business Loan

Once you have familiarized yourself with the requirements for business loans, you can submit your request. Here’s a step-by-step guide to help you through the process:

  1. Identify the Right Loan Type: The first step is determining whether you need a substantial amount for long-term growth or a smaller, short-term loan for immediate costs.
  2. Research Lenders and Their Criteria: Explore various financial institutions by visiting their websites or contacting customer service. Compare their loan options, interest rates, and requirements, like credit score and collateral.
  3. Prepare a Solid Business Plan and Gather Financial Documents: Your business plan should detail your strategy for using the loan to enhance business operations. Also, gather financial documents, including tax returns and bank statements, to prove your business's financial stability and repayment capability.
  4. Complete and submit the Loan Application: After choosing a lender and organizing your paperwork, submit your application, ensuring all information is thorough and accurate to prevent delays.
  5. Review Loan Terms Thoroughly Before Acceptance: If your application is approved, carefully review the offer, paying close attention to the interest rate, repayment plan, and any additional fees. Understand the agreement thoroughly and ensure it aligns with your objectives and financial situation.

Three Challenges That Women Face

It is noted that women-owned businesses represent 40% of all U.S. companies. Despite this, they still face unique hurdles. 

Signing up for a business loan.

Recognizing these obstacles is key to devising effective strategies to surmount them and level the playing field.

Limited Funding Opportunities

Despite making up a significant portion of the business sector, women entrepreneurs often find it harder to access funding. Women business owners are 50% more likely to be denied loans or receive less funding than their male counterparts. To address the challenge of limited funding opportunities, women entrepreneurs can explore several resources for lenders and investors who support women-owned businesses. These include women-focused financial institutions and loan programs, online lending platforms with a mandate for supporting women, Women's Business Centers sponsored by the U.S. Small Business Administration, and networking groups like the National Association of Women Business Owners. Additionally, venture capital firms, angel investors focusing on women-led businesses, and women-centric crowdfunding platforms like iFundWomen offer viable avenues.

Balancing Business and Personal Life

Many women entrepreneurs juggle business responsibilities with primary caregiving roles. For instance, employed women spend about 2.3 hours daily on housework, while working men spend 1.6 hours. To manage this, women can prioritize tasks, delegate responsibilities, and adopt flexible working arrangements. Embracing technology to streamline business operations can also save time and reduce stress, making it easier to fulfill personal and professional commitments.

Overcoming Societal Biases

Societal biases continue to pose challenges, often resulting in women being perceived as less credible or facing more scrutiny. Indeed, social and gender biases have historically limited women's participation in entrepreneurship. Building a strong network of mentors, peers, and advocates helps navigate these biases. Confidence, assertiveness, and honing negotiation and leadership skills can help women entrepreneurs counter these biases and establish themselves as capable and respected professionals.

Alternative Funding Sources to Small Business Loans for Women

For women entrepreneurs like Janice, finding funding doesn't always mean taking on debt. There are alternative sources of capital that don't require repayment, making them ideal for those who might struggle with high-interest loans. Let's delve into these options, offering financial empowerment without the burden of payback.


Crowdfunding is a way to raise money where you ask many people, usually through the Internet, to support your business financially. Platforms like Kickstarter and Indiegogo let you set up a campaign where you share your business idea and ask people to contribute money.

This can be a great option for women to gauge interest in their products or services. By offering donors something special in return for their support, women entrepreneurs can fund their businesses with the help of community support.

Women’s Entrepreneurship Partner Group

Women-focus entrepreneurship groups like Women Who Startup and Female Founders Alliance provide a blend of financial advice, professional mentorship, networking opportunities, and tailored resources specifically designed to address the unique challenges faced by women in business.

These resources cater to various needs, ranging from educational workshops and leadership webinars to platforms for promoting women-owned businesses and accessing funding. For instance, Women Who Startup emphasizes community building and skill-sharing, while Female Founders Alliance focuses on connecting women entrepreneurs with investors and mentors.

Below are the specifics of some other notable groups:

  • SheEO operates on a unique model of pooling funds from members to invest in women-led ventures, fostering a collaborative approach to business growth.
  • Ellevate Network offers a strong emphasis on professional development, including mentorship programs and skill-building events.
  • Ladies Who Launch provides resources for both personal and business development, including inspirational events and practical workshops.

To join, visit the organization’s website, where you can fill out an application. Becoming a member of these groups unlocks a wealth of benefits, including access to special events, expert business advice, and a supportive community attuned to the unique challenges faced by women entrepreneurs.

Small Business Grants for Women

Grants are great because you don't have to pay them back. Here are a few to look into:

  • Amber Grant Foundation
  • Cartier Women's Initiative Award,
  • Tory Burch Foundation's Fellows Program
  • Eileen Fisher Women-Owned Business Grant

Applying for small business grants varies by program. Generally, these grants have designated application periods and criteria, such as meeting certain business criteria and having a professional background. While applying, often directly through their websites, you'll be asked to present a comprehensive business plan, demonstrate your financial management skills, and explain how the grant will propel your business forward.

Exploring these grant options can open new avenues for growth and support, offering a valuable opportunity to fund your business aspirations without the burden of repayment.

Sum up

Securing funding might seem daunting, but it's a manageable task with the right approach. Start by matching your business needs with the appropriate financing option. Strengthen your application with a comprehensive business plan and tap into the support offered by women's entrepreneurship groups.

With these strategies, obtaining the necessary capital to fuel your business growth is well within reach. Remember, each step taken is a leap forward in turning your entrepreneurial dreams into reality. Keep pressing forward; the world needs your unique contribution.


Ethan James   Lead Writer
Ethan James is an experienced Financial Writer at Lendza with over a decade of experience.