Best Small Business Loans for Women in 2020

Finding the Best Business Loans for Women in 2020

Women-owned businesses are on the rise in the United States, accounting for 9.2 million employees across the nation (take that, glass ceiling). With so many small businesses just getting started, it’s helpful for innovative women to know where they can turn to for the best business loans. Our team put together a list of the best small business loans for women in 2020 using our proprietary SimpleScore methodology, which compares interest rates, loan amounts, product variety, resources and fees of the best small business loans for women. Let’s take a look at some of the most lady-friendly lenders you can use to get your small business up and running.

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In this article

    The 6 best small business loans for women of 2020

    LenderAPRLoan AmountBusiness RequirementSimpleScore
    Funding CircleStarts at 6%$20,000–$5 million680 credit score; in business three years; $500K annual revenue3.6/5
    Kiva0%Up to $15,000Must raise funds from network of family and friends4/5
    National Funding5%–8%$5,000–$500,000In business at least one year; 600 minimum credit score; $100K annual revenue.4/5
    LendingClub9.77%–35.98%$5,000–$500,00012 months in operation;$50K annual sales; fair personal credit score; own 20% of company2.6/5
    Lendio0%–17%$500–$750,000Credit score of 680 or higher;6 months (or more) in business4.75/5
    Street Shares8%–39.99%Up to $200,000In business for one year3.8/5

    Best overall – Funding Circle

    Funding Circle puts the “fun” in funding women-owned small businesses with high loan amounts, low interest rates, and flexible credit requirements.

    APR Range
    4.99%–27.79%
    Loan Amount
    $5K–$500K
    Term
    3 months–10 years
    SimpleScore
    3.2 / 5.0
    close
    SimpleScore Funding Circle 3.2
    Median APR 3
    Loan Amount 4
    Product Variety 1
    Resources 5
    Fees 3

    Small business loans for women don’t get much better than those available through Funding Circle. This lender provides up to $5 million in small business loans with a current APR as low as 6% with credit approval. Speaking of credit, applicants only need to have at least a 680 FICO score to qualify for a loan through Funding Circle. While low rates and high loan amounts are great, applicants should understand the eligibility requirements prior to submitting a loan request. Specifically, businesses need to have been in operation for at least three years, make at least $500,000 in annual revenue, and illustrate positive book value to qualify. Even considering these restrictions, we still think Funding Circle is a great choice when looking for small business loans for women.

    Best for microloans – Kiva

    Kiva offers a great microloan solution when size doesn’t matter; just make sure your friends and family have a buck to spare to support your mission.

    APR Range
    0%
    Loan Amount
    Up to $15K
    Term
    Varies
    SimpleScore
    4 / 5.0
    close
    SimpleScore Kiva 4
    Median APR 5
    Loan Amount 2
    Product Variety N/A
    Resources 4
    Fees 5

    Kiva is a unique microloan lender that prides itself on offering no-interest loans to entrepreneurs all over the world. In particular, this nonprofit lender takes a special interest in women-owned businesses that are just getting started. New customers can even take advantage of Kiva’s built-in marketing platform where they can advertise their products and services to prospective customers. Applications are quick and easy, only taking around 30 minutes to complete online. After completing the online application, business owners must then prove their worth by inviting friends, family members and customers to lend to them. The loan appears publicly worldwide so investors can contribute to the requested loan amount. There’s a 36-month repayment period on all loans offered through Kiva.

    Best for bad credit – National Funding

    Bad credit? No problem! We think National Funding is a great solution for women-owned small businesses.

    APR Range
    Undisclosed
    Loan Amount
    $5K–$500K
    Term
    Undisclosed
    SimpleScore
    4 / 5.0
    close
    SimpleScore National Funding 4
    Median APR N/A
    Loan Amount 4
    Product Variety 4
    Resources 5
    Fees 3

    National Funding is a small business loan and equipment leasing company that offers many different financial services to small business owners, including women-owned businesses specifically. In fact, this lender caters to the unique needs of a number of minority groups as well, including veteran-owned businesses and minority-owned businesses. Even women with bad credit are welcome to apply for loans between $5,000 and $500,000. Be advised, however, that the APR and factor rate for loans through National Funding can be quite high. That means the money you borrow now will end up costing you more down the road. For example, for a small business loan with a term of 15 months and a factor rate of 1.36, a $100,000 loan will end up costing you $136,000 by the end of your term.

    Best peer-to-peer lender – LendingClub

    Low, fixed interest rates and zero interaction with bankers — need we say more about how much we love Lending Club’s small business loans for women?

    APR Range
    12.15%–29.97%
    Loan Amount
    $5K–$500K
    Term
    1–5 years
    SimpleScore
    2.6 / 5.0
    close
    SimpleScore LendingClub 2.6
    Median APR 3
    Loan Size 4
    Product Variety 1
    Resources 2
    Fees 3

    Lending Club is a 100% online small business lender that prides itself on being America’s #1 credit marketplace. Offering small business loans for women between $5,000 and $500,000, this lender provides some of the most competitive rates in the marketplace. Applicants are eligible for a loan through Lending Club if they’ve been in business for at least 12 months, make at least $50,000 in annual sales, and have not filed for bankruptcies or tax liens in the recent past. Additionally, applicants must own at least 20% of the business and have at least fair or better personal credit in order to qualify. One of the main benefits to applying for a loan through Lending Club is the fixed interest rate and $0 early pay-off.

    Best for startups – Lendio

    Move aside, gentlemen — Lendio’s small business loans have just made it easier for your women counterparts to compete in the startup space.

    APR Range
    0–17%
    Loan Amount
    Up to $750K
    Term
    1–5 years
    SimpleScore
    4.8 / 5.0
    close
    SimpleScore Lendio 4.8
    Median APR 5
    Loan Amount 4
    Product Variety 5
    Resources 5
    Fees N/A

    Startups are hard enough to secure funding for without adding the hurdle of being a woman to the mix. That’s where Lendio comes to the rescue. Women seeking funds for their startups can apply for loans between $500 and $750,000 through Lendio, receiving their loan in as little as two weeks. Interest rates vary quite a bit, so it’ll help to have good credit when applying through this lender. The good news is that Lendio’s loan terms are pretty flexible, allowing you to pay back what you owe over the next 25 years. Though you might want to opt for a shorter time frame to avoid paying off debts for a small business you’ve since retired from managing.

    Best for veterans – StreetShares

    Street Shares is the Uncle Sam of small business loans for women. We salute these financing solutions.

    APR Range
    9%–40%
    Loan Amount
    $2K–$100K
    Term
    3 months–3 years
    SimpleScore
    4 / 5.0
    close
    SimpleScore StreetShares 4
    APR 4
    Max Credit Line Amount 5
    Draw Period 4
    Resources 5
    Fees 2

    Street Shares is a unique lending solution that’s run by veterans of the United States military. New customers can apply for a loan up to $200,000 with a 3- to 36-month repayment period. Street Shares makes it easy for women business owners to pay back their loans, deducting a fixed, weekly payment directly from customers’ verified bank accounts. Business owners may qualify for a loan through Street Shares if they have been in business for at least one year, have reasonable credit and are U.S. citizens.

    What is a small business loan?

    A small business loan is a loan guaranteed by the U.S. Small Business Administration (SBA). This guarantee means that even if borrowers can’t repay their debts to their lender, the SBA has the funds necessary to pay out the guaranteed amount. Small business loans are different from personal loans in this regard, and require supporting business documentation in order to qualify.

    How do small business loans work?

    Small business loans come in all shapes and sizes in order to meet the unique needs of each borrower. Business owners can choose from a small business line of credit, accounts receivable financing, working capital loans, small business term loans, SBA small business loans, equipment loans, and small business credit cards when selecting a financing option. The loans work in the same way as any other loan: Borrowers receive funds, accrue interest on those funds, and repay what they have borrowed over a set term. One of the main differences in being able to qualify for a small business loan versus a personal loan is the need for a business plan and supporting business documentation.

    Finding the best business loan as a woman business owner

    The best business loans for women are those that offer low interest rates and are offered through lenders that focus primarily on supporting female entrepreneurs. When seeking out the best small business loans for women, it’s a good idea to look for investors that fit your demographic. Most investors are white men, which can have a major impact on how funding gets allocated to women-owned businesses. Be sure to do your homework on how many female entrepreneurs your chosen lender has supported before submitting your application.

    Payment and terms

    Payment and term agreements vary from lender to lender. Typically, a lender looks at your credit score, profitability, and business plan to determine the best financing solution for your small business. One of the biggest things to watch out for are lenders with factor rates. These are different from interest rates as they are calculated in advance based on the original funding amount and can lead to small business owners paying more for their money than they would if they borrowed from elsewhere.

    [Read: How to Start a Successful, Minority Woman-Owned Small Business]

    How to get approved for a small business loan

    There are a few simple steps that can improve your chances of being approved for a small business loan, including the following:

    1. Review business finances: Reviewing your finances can give you a better sense of what loans you may qualify for and can help you better target your applications to the right lenders.
    2. Strengthen credit score: Higher credit scores can unlock lower rates and a wider variety of lenders. Additionally, a better credit score can help you qualify for a larger loan amount and ultimately impacts your ability to secure loan approval.
    3. Gather the required documents: Many lenders require you to submit information about your business during the application process, so be sure to gather any documents you think you might need. This includes information about your yearly profit margins, business history, and business plan.
    4. Develop a business plan: Speaking of business plans, many lenders are likely to look favorably on prospective borrowers if they have a strong business plan. Whether you’re just starting out or have been in business for several years, it’s a good idea to come up with a plan for how these funds will help your business succeed.

    [Read: Best Bad Credit Business Loans for 2020]

    Alternatives to business loans for women

    In addition to small business loans, there are a variety of other funding avenues women entrepreneurs may wish to pursue. These include:

    • Grants: Grants are essentially free money, so they should always be at the top of the list when it comes to funding sources for small businesses. There are many grants geared specifically toward women, including Grants.gov, the Girlboss Foundation and the Eileen Fisher Women-Owned Business Grant.
    • Angel investors: Angel investors are wealthy individuals who believe in a particular business or startup enough to invest substantial capital in its growth. These investors are typically found through networking and pitch events.
    • Venture capital: Venture capital is another funding option to consider for women-owned small businesses. Venture capital is usually offered in exchange for partial ownership and control over a company, so be sure your venture capitalist is aligned with your business objectives prior to requesting funding from them.
    • Crowdfunding: Crowdfunding is a great option for woman-owned small business funding, especially if you have a particular product or project that you think can garner widespread support. Popular crowdfunding platforms include Kickstarter, Indiegogo and GoFundMe.
    • Small Business Association Loans: The Small Business Association offers loans to qualified borrowers, including women who are small business owners.

    [Related: The Small Business Guide to SBA Loans]

    How to choose the best small business loan for you

    There’s plenty to consider when choosing the best small business loans for women. Understanding what to look for when selecting a lender is the first step to finding the right solution. The following illustrates some of the things that make certain business loans better for women than others:

    1. Community commitment: Many of the lenders outlined in this article have indicated a specific interest in supporting women-owned businesses and businesses owned by marginalized groups. Before selecting a lender, find out what programs they have available that are specific to women.
    2. Low rates: The biggest factor to consider when choosing a small business loan is the interest rate. Many lenders offer competitive, low interest rates to qualified borrowers who can demonstrate a good credit history. One of the best ways to ensure a low interest rate is by referencing the lender’s minimum required credit score and comparing it to your own before applying.
    3. Longer terms: It’s a good idea to opt for small business loans that have reasonable repayment terms. Applying for a $100,000 loan that needs to be paid back in six months might not be the best start for your small business. Make sure the available repayment terms meet your needs by researching what timeframes are offered through your chosen lender.
    4. Additional fees: Some lenders impose a factor rate in addition to an interest rate. This can lead small business owners to paying much more for their loans than they originally anticipate. Other lenders also apply a prepayment fee and broker/agent fees, so be on the lookout for unexpected costs associated with your loan!

    [Read: What Are Online Business Loans (And How Do I Apply For One)?]

    Check Your Business Loan Rates

    View our top-rated lenders and find the best rates today. It’s quick and easy.

    Small Business Loan FAQ’s

    The short answer? It depends. If you’re trying to obtain a loan without a solid business plan and without a proven concept, it’s probably not a good idea. But if you’re applying for a loan to get your proven business plan back on track or take it to the next level, a small business loan can be well worth the process to apply.

    While current federal anti-discrimination laws prevent official tallies on lending to women-owned businesses, there is evidence that a gender gap exists when it comes to obtaining small business loans. Specifically, recent Biz2Credit research found that in 2019, women-owned businesses received 31% less funding than male-owned businesses when they applied for a loan.

    It depends on the lender through which you’re applying for the loan. Some lenders accept applications from those with bad credit while others have stricter credit score requirements for business owners. Be sure to read the fine print associated with the loan that you’re interested in applying for as the rates advertised are always based on an assumed minimum credit score.

    We welcome your feedback on this article and would love to hear about your experience with the business loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Methodology

    SimpleScore

    We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.

    Our editorial team:

    • Identifies five factors to compare across each brand
    • Determines the rating criteria for each factor
    • Calculate an average of those five factor scores to get one SimpleScore™

    We break down each of these five factors and their rating criteria for our review of the best auto loan companies of 2020.

     

    Why do some brands have different SimpleScore on different pages?

    Some brands offer a variety of financial products, which is why they have different SimpleScores on different pages. We rate individual products that brands offer — not the brand as a whole. 

    For instance, in our American Express personal loans review we rated the company a 4.25 out of 5 based on rates, loan amount, customer satisfaction, customer support and fees. In our review of the best small business loan rates, American Express earned a 3.4 out of 5 SimpleScore based on its business loan product. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of each brands’ services and how they compare to competitors’ products.

    Median APR

    Lenders with a lower median APR are awarded higher scores — because even if you’re APR is average, your business is not.

    Maximum loan size

    Lenders that dole out loans with high maximums are also rewarded with higher scores. It takes money to run a business, and businesses need access to as much capital as it takes.

    Product variety

    Need more than just a business loan? Lenders that offer more than one type of financial product for businesses score higher than others that don’t.

    Educational Resources

    We gave out higher scores to lenders that have the following subjects covered in their blogs: loans, marketing, employee and staff, and credit or finance resources.

    Fees

    Fees can add up fast and eat into operating costs –– that’s why we give a higher score to lenders that have fewer fees.

    Carly Severino

    Contributing Writer

    Carly Severino is a freelance copywriter and editor with more than 15 years of writing experience and is the current founder of Word Nerd Writing & Editing Services. Specializing in content marketing and SEO, she is adept at helping businesses meet their objectives through strategic planning and flawless copy.

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.