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Women entrepreneurs are an integral part of the small business ecosystem: They own 39% of all small businesses in the U.S., employing millions of people and generating trillions in revenue.

Unfortunately, their importance to the economy and their communities isn’t matched by equal access to small business financing.

Financing makes entrepreneurship possible. Without it, businesses either fail to get off the ground or to capitalize on growth opportunities, often succumbing to cash flow issues. Yet when it comes to small business loans, fewer women apply, see their applications accepted, and receive the amount of money they need compared to men.  

If you’re a female small business owner, the odds are against you getting the money you need to survive past a few years in business. That’s why it’s important to be aware of the opportunities available to you, and how to take advantage of them.

From loans to grants, here are the best small business financing options available to women entrepreneurs today.

Loans for women entrepreneurs

There are few mainstream loan options specifically earmarked for women. There are, however, a number of loans that are better suited for women to pursue than traditional bank term loans, which often don’t go far enough to meet the needs of women-owned ventures.

SBA loans

SBA loans, or Small Business Administration loans, are some of the most sought-after loans in the small business financing world. The SBA partially guarantees bank loans for highly qualified applicants, encouraging banks to extend the kind of rates and terms reserved for bigger, more established companies.

There are three SBA loan products that women with different businesses at different stages might consider:

  • SBA 7(a) loan: The most popular SBA loan program can loan out a maximum of $5 million, with generous terms, for all kinds of working capital needs.
  • SBA CDC/504 loan: This loan program is for real estate and equipment purchases, with amounts that also range into the millions, sometimes repaid over decades.
  • SBA Microloans: The Microloan program maxes out at $50,000, but its funds are dispersed through community lenders, many of which look to back new businesses owned by disadvantaged entrepreneurs—including women, minorities, and veterans.

Online lenders

A new class of online lenders has emerged over the last few years, specializing in extending financing to entrepreneurs quickly.

The interest rates and repayment terms of loans, business lines of credit, invoice financing, and other forms of small business financing from online lenders won’t match what you get from a bank. Their benefits, however, include less-strict standards and fast funding times—some in as little as one day. 

A recent study found that women’s personal credit scores are, on average, 25 points lower than men’s scores. Part of the reason for that is the explosive number of new female entrepreneurs. Regardless, this still makes online lenders a better bet for women business owners than banks.

Crowdfunding

There are few areas in the business financing world where women are more likely to receive funding than men—and crowdfunding is one of them.

Several studies have shown that while women are less likely to use crowdfunding than men to finance their projects, they are more successful at it. A recent ESMT Berlin study showed that women were 14 percent more likely to reach their crowdfunding goal. This success rate demonstrates how differently crowdfunders perceive women entrepreneurs compared to venture capitalists and lenders.

Crowdfunding is a large umbrella term that doesn’t just include reward- and donation-based funding like Kickstarter, but peer-to-peer lending and equity crowdfunding. Tons of niche platforms catering to specific industries, dollar amounts, and models now exist, which means it’s easier than ever to find a crowdfunding site that may work for you.

Credit cards

You may not think of as a business credit card as a loan, but they essentially act as short-term loans that carry as little as zero interest if you pay it back quickly enough—or if you qualify for a 0% APR during your introductory period.

While using your credit card to finance business payments can get out of hand if you overspend, responsible use of your card racks up reward points, gives you purchase protections, and improves your business credit score—making you more attractive to lenders with affordable long-term loan options down the road.   

Other microloans

There are also a plethora of non-SBA-backed microlenders, many of which have microlending programs specific to women entrepreneurs. Some of the most microlending organizations out there include Accion, Opportunity Fund, Grameen America, the Tory Burch Foundation Capital Program, and Kiva.

Grants for women entrepreneurs

Another option for financing: grants, many of which are for women-owned businesses. That said, grants—essentially free money to start and grow your business—are very competitive, which means they will be even more difficult to qualify for than loans.

Here’s a list of some of the best small business grants out there today, the first half of which are specifically for women business owners:

  1. Eileen Fisher Women-Owned Business Grant Program
  2. Amber Grant
  3. #GIRLBOSS Foundation Grant
  4. Cartier Women’s Initiative Award
  5. GrantsforWomen.org
  6. Open Meadows Foundation
  7. IdeaCafe Grant
  8. Grants.gov
  9. The National Association for the Self-Employed Growth Grants
  10. FedEx Small Business Grant
  11. The Halstead Grant

Note that many of these grants are for small amounts compared to what you might get from a loan—but they are free and can function as crucial financing when you’re in need.

Female founders raised just 2.2% of all venture capital dollars invested in 2018 and received just 5% of SBA loans. Clearly, traditional lending and investing have a long way to go before it catches up with the advances women entrepreneurs are making.

That’s why it benefits all women business owners to explore their financing options, from crowdfunding to online lenders to grants, when seeking funding for their business. As women continue to show that their ventures are as good a bet as any small business owner’s, we will see these trends shift until we have a new normal.

About the Author(s)

Eric Goldschein

Eric Goldschein is an editor and writer at Fundera, a marketplace for small business financial solutions such as business loans. He covers entrepreneurship, small business trends, finance, and marketing.

Editor and writer, Fundera
women entrepreneurs in a meeting around a table