What women business owners need to know to get the right loan (2024)

Supporting Small Business Owners

Could a microloan offered by a community development lender help your business?

Small amounts of money can fund big dreams. If you’re a small business owner or a hopeful entrepreneur, you may be able to access a microloan to start or grow your business. Here’s what you should know about microloans, how to find them, and how to apply for them.

What is a microloan?

A microloan is a short-term loan (from six months to five years) of up to $50,000 for your small business. There are many types of microloans, but we’ll focus on those funded by the Small Business Administration (SBA), as they tend to offer more favorable terms and more protections for borrowers.

Keep in mind, the SBA offers “traditional” business loans, as far as size and terms, via lenders like Wells Fargo. Explore more about SBA loans and other financing options available to small businesses like yours.

The SBA also helps fund microloans, which tend to be offered via nonprofit community groups who often offer management and technical assistance for small business owners.

To receive a microloan funded by the SBA, small businesses must meet certain criteria.

What are the criteria for getting a microloan for your business?

Microlenders typically offer more flexible terms. For example, a microlender may be able to finance your business based on a business plan and your projections for cash flow. They often require some form of collateral, however, as well as the personal guarantee of the business owner.

Each microlender is looking for someone with a good business idea who, for some reason or another, can’t get access to capital. While microloans may be just right for some small businesses, they are typically best for borrowers with limited working capital and little to no credit history. Many times they are offered specifically to borrowers in underdeveloped communities and countries or prioritized for minority business owners, women business owners, and low-income applicants. Explore more resources to help minority and women business owners.

In determining whether to lend, the most important criteria a microlender will look for are a strong business vision, an understanding of the marketplace and the competitive landscape, and a financial plan. Since many microlenders also offer support for business owners, not knowing these things may not be a deal breaker. The microlender may also be able to help you develop business plans, understand how much you need to borrow, and even walk you through the application.

What can microloans be used for?

Depending on how a microlender is financed, a microloan can be used for working capital, inventory or supplies, furniture or fixtures, machinery or equipment, or real estate. They cannot be used to refinance existing debt.

How to find and apply for a microloan

First, find an organization. The SBA provides a tool that can help you search for microlenders in your area. (Wells Fargo supports many of these microlending organizations.)

Once you find an organization that fits your needs, find out what it requires to apply for a microloan. Most microlenders require that you gather financial information, including personal and business credit history, bank statements, and tax returns. A list should be available on the microlender’s website. Explore what you need to know before applying for any business loan.

By starting small and taking all the necessary steps, you could grow your small business — or even your small business idea — into a successful venture. Learn more about products and services that can help your small business thrive. To talk with a banker, make an appointment today.

What women business owners need to know to get the right loan (2024)


What women business owners need to know to get the right loan? ›

Although women own 38% of all businesses in the U.S., according to the Women's Business Enterprise National Council, they often face obstacles when obtaining financing. In 2022, 25% of women-owned businesses were rejected for a loan, compared to 19% of male-owned businesses.

Is it easier to get a loan as a woman owned business? ›

Although women own 38% of all businesses in the U.S., according to the Women's Business Enterprise National Council, they often face obstacles when obtaining financing. In 2022, 25% of women-owned businesses were rejected for a loan, compared to 19% of male-owned businesses.

How easy is it for a woman to get a business loan? ›

For example, qualifying for a bank or credit union loan might be difficult for women who don't have a strong credit report or an established business-operating history. Filling out the paperwork can be time-consuming, and the approval process is notoriously long.

Is it easier for a woman to get an SBA loan? ›

SBA loans are available to both men and women entrepreneurs. But women tend to seek funding at lower rates than their male counterparts due to the fear of getting rejected for the funds.

How to choose the right business loan? ›

How to choose a business loan
  1. Understand your credit score and debt-to-equity ratio. ...
  2. Determine your funding needs. ...
  3. Research lenders. ...
  4. Consider the interest rate and APR. ...
  5. Look at repayment terms. ...
  6. Understand collateral or personal guarantee requirements. ...
  7. Consider application fees. ...
  8. Compare loans.

Do banks give loans to first time business owners? ›

Some large, national banks like Bank of America, U.S. Bank and Wells Fargo offer certain loan options for companies with less than two years in business. In general, however, online and nonprofit lenders are more likely to offer startup business loans.

Is it hard to get a business loan with no money? ›

Without cash on hand, you may not be able to get just any business loan. Most lenders want to see a flow of revenue and profit to consider you for a loan.

How much can I realistically get for a small business loan? ›

How much of a business loan you can get depends on your business's annual gross sales, creditworthiness, current debts, the type of financing, and the chosen lender. In general, lenders will only provide loans up to 10% to 30% of your annual revenue to ensure you have the means for repayment.

What credit score is needed for a small business start up loan? ›

SBA-qualified lenders usually set their own criteria when assessing your eligibility. Most lenders will require a minimum FICO score of 620 or higher for their SBA Loans.

Is it hard to get a $100,000 business loan? ›

Some lenders make it difficult to qualify for a $100,000 business loan. Traditional lenders like banks and credit unions prefer applicants with good-to-excellent credit, at least two years in business and an annual revenue of $250,000. Online lenders have less strict requirements than traditional lenders.

What disqualifies you from getting an SBA loan? ›

The most common reasons SBA loans are denied are poor credit, too much existing debt, or insufficient collateral. Other reasons include: Prior bankruptcy. Negative taxable income.

What is the easiest SBA loan to get approved for? ›

SBA Express loans, part of the SBA's 7(a) loan program, offer the easiest application process and the fastest approval times among all SBA loans. These loans, with payoff periods as long as 25 years, are designed for purposes such as refinancing debt, buying equipment, or improving real estate.

Do people get denied for SBA loans? ›

Many businesses can't qualify for an SBA loan, but that doesn't mean there aren't other options available. Once you review why your application was rejected, you can choose to apply again or explore alternatives.

How can I increase my chances of getting a business loan? ›

A strong credit history, with a good payment track record and low credit utilization, increases your chances of approval. Another crucial factor in getting a small business loan is your business's financial health. Lenders want to see evidence of stable revenue and positive cash flow.

Is it better to get a business loan or use your own money? ›

Both personal loans and small business loans are effective ways to cover expenses to get your small business off the ground. Your choice may come down to how much money you actually need, where you can get the lowest interest rate and whether or not you want to put your personal credit on the line.

What are the benefits of being a female business owner? ›

Getting your business certified as a women's business owner offers some of the following benefits:
  • Access to federal funds and contracts. ...
  • Networking and educational opportunities. ...
  • New clients and profitable business partners. ...
  • Tax benefits. ...
  • Access to new funding opportunities.

Is it harder to get a mortgage as a business owner? ›

Yes, it can be harder to get a mortgage if you're self-employed. You'll need to provide more documentation than someone who has had the same W-2 employment for several years. Some lenders do not work with self-employed individuals because of the increased underwriting requirements.

Is it harder for a woman to start a business? ›

First, women who want to pursue entrepreneurship are less likely to get the funding required to start a company, which naturally inhibits them from chasing their dreams. Another reason women tend to start fewer companies than men is that they often lack the "overconfidence" of most male startup founders.

Is it hard to get a loan for a small business? ›

While getting a business loan can be difficult since most require strong personal and business credit scores, reliable cash flow and at least two years in business, there are alternatives available to obtain the cash you need.

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