The best small business loans for women are the same that are the best for men – gender has nothing to do with it. In fact, it’s illegal for lenders to discriminate on credit transactions based on gender at all. The same rules apply across the board: low interest rates and flexible repayment terms make for the best loans.
Because of this, you should always apply through your local bank or credit union first. Traditional lenders attach their interest rates to the Federal Funds Rate (the lowest rate financial institutions can legally lend to one another), so they’ll be able to offer you the best deal – provided you can get approved. It’s notoriously difficult and time-consuming to get business loans through a bank, especially if your business is new and hasn’t had the chance to establish great credit yet.
That’s why I pored over the most popular online lenders in the country to find which ones offered the lowest rates, friendliest repayment terms, and the fastest application and funds disbursement processes outside of traditional banks – no matter how long you’ve been in business or where your credit rating stands.
Money360’s Top Picks for Best Small Business Loans for Women (and Men)
Best for Startups
Best for Businesses With Credit Scores Over 600
- OnDeck (> $100K annual revenue)
- Smartbiz (< $150K annual revenue)
- Funding Circle (> $150K annual revenue)
Best for Businesses With Credit Scores Under 600
- Kabbage (> $100K annual revenue)
How I Found the Best Small Business Loans for Women (and Men)
I focused on attributes that would be the most relevant to anyone looking to obtain a small business loan, whether it was for a startup or a well-established company. Specifically, here’s what I looked at to determine each of my top picks:
- Loan amount. The amount of money you’re allowed to borrow can vary widely from one lender to the next. The lenders included here offer the most generous loan limits, based on what they’re intended to be used for and which kind of borrower they target.
- Minimum qualifications for borrowing. Your time in business, credit score, and revenues influence whether you’ll be able to get approved for a business loan. I looked for lenders whose qualification requirements made them most accessible to borrowers.
- Funding speed/convenience. Applying for a loan with a bank can be time-consuming, and the wait to receive funds is often tedious at best. OnDeck and Kabbage, by comparison, require only a few minutes of your time to apply and funding can be completed in a couple of days.
- APR and fees. The rate you’re charged on your loan can significantly add to its overall cost. Same goes for origination fees, whether they’re hidden in the fine print or not. Smartbiz boasts the best rates overall, while Kabbage charges no origination fee.
- Purpose of the loan. Each of the lenders was chosen based in part on how loan proceeds can be used. Accion, for example, is the only lender that offers microloans to startups while Funding Circle offers larger loans for established businesses that are ready to expand.
- Loan repayment terms. Depending on how much you borrow and the type of business you have, you may need a shorter or longer repayment term. Kabbage loans can be repaid in six months or 12 months, while you can take 10 years to repay a loan from Smartbiz.
The Best Small Business Loans for Women (and Men)
|Lender||Borrowing Limits||APR and Fees||Qualifications|
|Accion||Up to $50,000||8-22% APR|
4-5% administrative fee, based on loan amount
|Borrower requirements vary based on loan type|
|SmartBiz||Up to $350,000||6.25-7.25% APR|
4% referral and packaging fee, closing costs
|2 yrs. in business
$50,000+ in annual gross revenue
600+ credit score for loans of up to $150,000
675+ credit score for loans over $150,000
|Funding Circle||Up to $500,000||5.49-27.79% APR|
0.99-5.99% loan origination fee
|2+ yrs. in business
No minimum revenue requirement
620+ credit score
|OnDeck||Up to $500,000||Line of Credit: 13.99%-39.99%|
Term Loan: approximately 30-50%,
2.5-4% loan origination fee
|1 yr. in business
$100,000+ annual gross revenue
600+ credit score
|Kabbage||Up to $150,000||20-99% APR|
$0 upfront or servicing fees
|1 yr. in business
$50,000+ annual gross revenue
Minimum credit score varies
Best for Startups
Who it’s good for: Small startups that need funding fast (within 24 hours for loans up to $12,000) and less than $50,000 in funding. You’ll need an outside source of income to get approved, and you can’t have declared bankruptcy in the past 12 months. Accion also requires a business plan showing your 12-month cash flow projections.
Who should look elsewhere: Small businesses looking for loans over $50,000.
Best for Businesses With Credit Scores Over 600
OnDeck has established itself as a go-to lender for small business owners who aren’t able to get funding from traditional sources because their credit score is holding them back. OnDeck will consider qualified borrowers with credit scores of 600 or higher. A bank, on the other hand, will generally expect your credit score to be at least 620, if not higher.
Short-term loans range from three- to 12 months, while long-term loans offer payback periods of 15- to 36-months. The annual interest rate starts at 5.99% for long-term loans, but if you’re working with a not-so-great credit score, expect a significantly higher rate. According to OnDeck’s website, the average annual rate is around 30%.
Be aware that OnDeck charges an origination fee of 2.5-4% the first time you borrow, which is taken right out of the loan proceeds. You’ll have to factor in the fee to make sure you’re getting a big enough loan to cover it, so you don’t shrink your available working capital.
Who it’s good for: OnDeck holds a lot of promise for business owners who want access to higher loan limits, but have a credit score under 600.
Who should look elsewhere: Payments for term loans are automatically deducted from your business bank account on a daily or weekly basis, so OnDeck may not be your best choice if your business has an irregular cash flow. Kabbage will be a better fit for that.
SmartBiz is a technology platform that connects borrowers with one of its three partner SBA Loan lenders, but makes the application and approval process significantly easier for both parties by moving everything online. It’s possible to get funded through the SmartBiz program in as little as seven days.
It offers loans of up to $350,000 for small business owners who have at least two years of operating history, and loan repayment can be stretched out over 10 years. Borrowers pay a 4% referral and packaging fee, closing costs, but these fees are similar to most you’ll run into with other platform lenders.
Who it’s good for: SmartBiz is ideal for businesses owners with credit scores over 600 because its interest rates are some of the lowest available outside of traditional lenders. It also offers the longest repayment terms of any online lender – up to 10 years.
Who should look elsewhere: If you need funding quickly, or if your credit score falls below the minimum limit required for a loan (600+). SmartBiz may not be able to deliver the speed you’re looking for either. While smaller loans can be funded in a week, it may take up to a month to receive funding for larger loans.
In a sea of peer-to-peer lenders, Funding Circle stands out for a few reasons. First, it offers higher borrowing limits than other peer-to-peer competitors, like Lending Club or Prosper, that cap loans at just $35,000.
Funding Circle doesn’t require your business to have a minimum amount of revenue to qualify, as long as you’ve been in business for two years or longer. These loans are better when you need a longer repayment term, rather than a shorter payoff window.
Who it’s good for: Any business with a credit score higher than 600 that can manage a repayment term between one to five years.
Who should look elsewhere: Funding Circle may be a miss if you can’t afford to wait longer than a couple of business days to get funded. It can take up to 10 days for loan proceeds to be deposited to your account, so either OnDeck or Kabbage will be faster options.
Best for Businesses With Credit Scores Under 600
Kabbage offers small business lines of credit up to $150,000. As long as you have at least 12 months of operating history, it’s possible to qualify for a loan if you’re averaging $4,200 in revenue per month.
Beyond your credit score, Kabbage also takes into account things like your average monthly revenues, transaction volume, and your online seller rating. All of those can help to offset a lower credit score. However, if you have very poor credit because of bankruptcy or frequent missed payments, you may still be turned down.
Kabbage loans come with six- or 12-month repayment terms. There’s no preset interest rate; instead, you pay a monthly fee, which ranges from 1.5% to 10% of what you borrow. You pay a higher fee the first months, then a 1% fee for the rest of the loan term.
Who it’s good for: Kabbage loans may be appealing to anyone with less than established credit who owns a fledgling business they’re hoping to expand, or an established business that boasts steady, but modest revenues.
Who should look elsewhere: A Kabbage loan may not work out if you don’t have an established business, or you’re looking for a larger loan amount than $150,000.
How to Get Your Small Business Loan Approved
Whether or not you’re able to get approved for a loan has the potential make or break your small business. Here are a couple of things everyone should consider before approaching any lender.
Strengthen Your Credit Rating
When you’re applying for a business loan, your personal and business credit scores will likely both come into play. You need to make sure your scores reflect how financially responsible you are.
In terms of improving your personal credit, the two things that carry the most weight are your payment history and credit utilization. On-time payments can raise your score while late payments can substantially lower it. Maxing out your available credit can also drag your score down. If your score could use a boost, paying all of your bills on time and reducing your debt load can work in your favor.
If you don’t have a business credit profile, make it a point to establish one with Dun & Bradstreet. If you have vendor lines of credit or a business credit card, those accounts can be reported on your business credit, helping you to grow your business credit score.
Review Your Business Financials
Having a firm financial foundation can help your business stand out when competing for a lender’s attention. It’s even more important if your credit score isn’t that great.
When you’re comparing borrowing options, zero in on what the lender’s requirements are as far as revenues and time in business are concerned. That can help you to eliminate lenders that are most likely to say no right off the bat.
Next, take a closer look at things like the amount of sales you’re reporting each month, what your expenses are, how your assets compare to your liabilities, and where your cash flow is going.
Drafting some basic reports, such as a profit and loss statement or a balance sheet, can make it easier to pinpoint trouble spots that may cause a lender to raise an eyebrow.
From there, you can work on addressing issues that could block your path to getting to a loan. For example, if your revenues have dropped off in recent months, you’d want to examine why that is and what you can do to get them moving in the right direction again. Just like with your credit score, the goal is to make your business look as good as possible in the eyes of the lender, and to have the documentation to back it up.
Small Business Loan Alternatives for Women
While it’s a federal offense to discriminate on credit transactions, there’s no legal hangup for sex-specific grants and private investments. These can be great avenues to funding your small business, since you don’t necessarily need to pay the money back. And if you’re a woman business owner, there are grant programs and venture capital firms out there that are set up to cater directly to you.
Each of the alternative small business funding methods listed below have wildly varying application processes and minimum requirements for being approved. The competition is stiff, too. It’s generally much more difficult to get your business approved for grant funding, or to get investors. Before you pursue any of these funding sources, you’re going to want to fully flesh-out your business plan, make sure it’s rock-solid, and then create a pitch deck to sell your idea, as well as yourself and your team.
The great thing about small business grants is that they don’t have to be repaid. Even better, it’s possible to find grant programs at the federal, state, and local level that are designed just for women-owned businesses.
For example, there’s the Small Business Administration’s annual InnovateHER Challenge, which offers up to $40,000 in funding for female entrepreneurs to develop products and services that positively impact the lives of women and families.
Besides public grant programs, women can also track down financing from private sources. For example, the Eileen Fisher Women-Owned Business Grant offers $100,000 in funding to 10 women entrepreneurs each year.
Venture capital firms are in the business of investing in businesses. These companies offer funding to startups. In exchange, they receive an ownership stake in the business. Once the business becomes profitable, it repays the initial investment to the venture capital firm, along with a predetermined share of the profits.
The upside is that venture capital can provide a steady stream of funding, even after you move past the startup stage. If your business never becomes profitable for some reason, then you’re not on the hook to repay the funding.
There are scores of VC firms out there, and a handful of them work primarily with women-owned startups. BBG Ventures, Female Founders Fund, and Golden Seeds are just a few firms that are actively investing in women-led companies across sectors like tech, healthcare, and e-commerce.
Angel investing works similarly to venture capital, but instead of working with a firm, you’re usually dealing with individual investors or angel groups. Angel investors are often business owners themselves who are out to help up-and-coming entrepreneurs succeed.
Like venture capital, it’s possible to raise hundreds of thousands, or even millions of dollars through angel investments. Again, the investor gets an ownership stake in your company based on the premise that it’ll be profitable at some point. If it doesn’t happen, you’re not responsible for repaying the investment, which is a major advantage over a loan.
Topstone Angels, BELLE Capital USA, and 37 Angels are examples of angel investment groups that cater to women.
Taking your funding needs to the crowd is another possibility for anyone wanting to launch a startup or bolster an already-thriving business. There are two basic ways you can crowdfund a small business. First is equity crowdfunding, which is similar to venture capital or angel investing. When a pool of investors comes together to back your business, each of them gets a percentage of equity in return. Startups can raise up to $1 million through equity crowdfunding and platforms like Plum Alley specialize in connecting women entrepreneurs with investors.
Next is rewards-based crowdfunding. Think Kickstarter or Indiegogo. Instead of offering equity in your company, you can give investors a different kind of incentive, like sample product or other rewards.
The Bottom Line
There is no such thing as small business loans for women. There’s just small business loans, and they’re for everyone. The best rates and repayment terms are likely going to be found through your bank, but if you need the cash fast or can’t get approved for a small business loan through a traditional lender, one of the platform lenders listed here will be your next best option. Whichever lender eventually approves your loan, be sure to thoroughly review the details of any offer to make sure it meets your business’s financial needs, and that you can actually pay it back.