Start-Up Business Loans for Women

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Don’t despair if you are a woman with a start-up business experiencing difficulty obtaining financing. Several unconventional loan programs target new businesses that are owned by women. These resources provide financing with terms designed to help you succeed. The most assessable lending avenues for women-owned start-up businesses are loan guarantees and financing from specially structured organizations.

SBA Guaranteed Loans

The US Small Business Administration helps start-up businesses obtain financing from banks and credit unions. The SBA’s Office of Women’s Business Ownership was created to direct women-owned businesses to these sources. Although the SBA does not make loans directly, it provides a government guarantee that reduces risk to the lending institution.

To obtain an SBA-guaranteed loan for your business, apply to a bank or credit union that has an arrangement with the SBA. The lender gathers information about you and your business that is required for approval by the financial institution and the SBA. A start-up business is required to provide financial projections.

You must agree to conditions the SBA imposes. Common conditions include periodic submission of financial statements and life insurance on you that repays any remaining loan balance upon your death.

Small Business Investment Company

The Small Business Investment Company, SBIC, Program, sponsored by the SBA, provides venture capital arrangements for start-up businesses. There are over 400 privately owned SBICs licensed with the SBA. The SBA does not invest directly in small businesses. Instead, an SBIC invests money it has raised privately and funds borrowed at favorable rates under an SBA program.

Most SBICs concentrate on businesses at a particular stage of development and focus in a distinctive geographic area. An SBIC may provide capital as an equity investment, loan relationship, or combination of both.

A start-up business should locate a “Participating Securities SBIC” because these organizations are experienced with early-stage operations. They can provide equity capital as well as debt investment. This structure is advantageous to new businesses that require funding without the burden of current interest payments.

A “Specialized SBIC” provides lending assistance to specific demographic groups--such as women-owned businesses. The SBA provides a listing of all SBICs.

State Programs

Several states have loan programs specifically available to help women start businesses. The interest rates on these loans are usually more favorable than those offered by traditional lenders. In addition, low collateral requirements benefit start-up businesses using borrowed funds for operating capital instead of asset acquisition. After locating a program in your state, an application procedure is provided along with required forms.

Micro Loans

Micro loans are small lending arrangements provided by several organizations. Loan amounts range up to $50,000. Women-owned businesses with limited options for start-up capital are the most common beneficiaries of these loans. The lenders obtain funding from private foundations, banking institutions, government agencies and individual donations. A micro loan is specifically designed for a small business. Repayment terms are affordably structured for start-up operations. Application for these loans is routinely conducted online.