Women in Business: How to Get a Small Business Loan

The National Association of Women Business Owners paints an encouraging picture; there are more than 11.6 million woman-owned businesses in the United States, employing almost 9 million people and generating 1.7 trillion dollars in sales. For all the benefits to their owners, employees, and the economy, however, many women find getting a business loan difficult. Alliant Business Systems has advice if you’re one of them.

What is a Woman-Owned Business?

There are many grants and small business loans for women entrepreneurs. Each has its own criteria and qualifications, but the accreditation criteria established by the Women’s Business Enterprise National Council (WBENC) are a helpful starting point because they’re considered a credible baseline whether you’re seeking a targeted business loan or trying to qualify for a government contract.

  • The business owner must be a citizen of the US
  • The business must be open for six months or longer
  • A woman must own 51 percent or more of the business, must hold its highest position, and must have a hands-on role in the planning and running of the business.

Your business may meet these qualifications and still be turned down on the basis of the industry your industry serves. Businesses like LulaRoe, Origami Owl, Amway, Herbalife, Mary Kay, The Pampered Chef, and other MLM based businesses are summarily disqualified, as are nonprofits, gambling establishments, or any type of business that’s illegal in your jurisdiction.

Traditional Lenders for Women-Owned Businesses

There are a number of traditional lending options open to women-owned businesses.

  • Small Business Association: The SBA works with major lenders and acts as a loan guarantor. They also offer a plethora of informational resources and other assistance to businesses of nearly every type.
  • Banks: If you have excellent credit, your bank can be a good source of financing. Many banks even have programs specifically tailored to women-owned businesses.
  • Credit Unions: By some estimates, banks turn down as many as 78% of applicants. Credit unions offer many of the same advantages of working with banks, but also offer higher approval rates.

Non Traditional Lenders for Women-Owned Businesses

If you find your lack of credit history, bad credit, or your industry preclude you from the options listed above, nontraditional lenders may be an alternative. Be aware, however, that even though their criteria are somewhat looser, qualification may still be difficult. Furthermore, once you take fees and repayment terms into consideration, some of these choices can be downright onerous — including APR rates that can run from 30 percent to more than 100 percent.

The Application Process

Applying for credit will involve a business credit check at a bare minimum. If your business has only been in business for a couple of years, you should also expect a personal credit check, and credit checks for your principal members as well. Your business plan will come under scrutiny, as will your banking and credit card records. You will also need to state the purpose for the loan, and will be expected to demonstrate the good character of your business. Additional requirements may apply depending on the lender and nature of the loan, and it never hurts to build business credit.

Help with Small Business Financing for Women

No matter what the source of your financing — a grant, a loan from your credit union, an SBA 7a loan — the process can be complex and arduous. Don’t be discouraged; the incentives are real, and with the help of a knowledgeable ally, they need not be out of reach. To find out more about securing financing for your woman-owned business, consult with Alliant Business Systems. As a certified SWaM (Small, Women and Minority-Owned)  business in the Commonwealth of Virginia, we understand the process, the pitfalls, and rewards better than most!