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If you are a woman looking to start or grow your own business, a small business loan may be just what you need. Below, you’ll find information about small business loans for women, how to become certified as a woman-owned small business, how to apply for a loan, and business loan options for women. Small Business Loans for Women: Lantern’s Top Seven Picks for Small Business Loans for Women (in alphabetical order) Below are our top picks. These options depend on criteria such as the minimum credit score required, the time to get the funds and whether the lender offers special programs for women borrowers. See a full breakdown of our rating methodology at the end of the article. Avant Best Egg Fundbox OnDeck Payoff Prosper Upstart (The data used in our analysis is accurate as of March 3, 2021.) Types of Small Business Loans for Women With so many options, from Small Business Administration (SBA) loans for women From cash advances to cash advances, what type of funding is right for your business? Knowing can be challenging. We are here to help. Explore the different types of business loans for women so that you can choose the right one for your business needs. 1. Business Line of Credit What is Business Line of Credit? Like a personal credit card, a business line of credit gives you access to a set amount (say $50,000, for example), but you only pay interest on the amount you use. Generally, if you do not exceed the approved credit limit, you can withdraw and repay as needed. Each lender has its own way of setting approvals, loan limits, and interest rates. Some factors to consider are: Your business credit rating Your personal credit score Your business operating hours Income Your business plan Why choose a business line of credit? A business line of credit is a good option for business owners who want readily available cash for unexpected expenses, small purchases or short-term financing. This funding method offers a balance of flexibility and control, so you can spend as much as you want and pay only what you use (including interest). Remember, in general, lenders want potential borrowers to have strong credit and income history. However, if you’ve only been in business a short time and haven’t built up your credit, it’s more difficult to qualify for a business line of credit from a bank than if you’re a more established business. Online lenders generally have lower approval requirements but may have higher interest rates and lower credit limits. 2. Term Loan What is Term Loan? A term loan allows you to borrow a fixed amount and repay it with interest over a predetermined time. Why choose Term Loan? Term loans are a great option for women-owned small businesses that require a large amount of funds. Term loan gives you the flexibility to use the funds for any part of your business and repay the money over a period of time that suits the growth of your company. With both long-term and short-term options, you can decide which is right for your business needs. Longer-term small business loans often have lower monthly payments, but you’ll pay more over the life of the loan because of increased interest over the extended repayment period. A short-term loan may result in a higher monthly payment, but you are likely to pay less interest because of the shorter repayment period. Remember that both banks and online lenders offer term loans. While banks typically offer low annual percentage rates (APRs) to their customers, getting a term loan from someone can be challenging if your business is brand new or you have a low credit rating. Additionally, banks often require some form of collateral in case you default on your term loan. 3. SBA Loan What is an SBA loan? We. The Small Business Administration (SBA) guarantees small business loans provided by banks and other approved lenders. An SBA loan for women can provide low interest rates, flexible terms, educational opportunities and business mentoring to those who qualify. You can apply for amounts ranging from $500 to $5 million depending on the loan type and use the capital for almost any business purpose. Here are some common SBA loans for women: SBA 7(a): Small business loans for women with established businesses. Up to $5 million in financing for almost any business-related purchase, including property. Additional options include the SBA 7(a) Small Loan (up to $350,000) or the SBA Express Loan, which has a 36-hour turnaround time for qualified applicants. SBA 504: These small business loans for women are for refinancing loans related to the purchase of new or existing buildings and land, property renovations, new construction or expansion of your business. Why choose an SBA loan? SBA loans can offer lower interest rates and longer loan terms than other lending options. They may also allow higher loan amounts that are better suited for larger purchases. So if you want to grow your woman-owned business and have a strong credit history, an SBA loan may be a great option. Plus, if you’re a veteran, the SBA offers several resources and funding options to help you keep your business afloat. When comparing your options, if you qualify, make sure you also evaluate small business loans for veterans. The qualifications for SBA loans are strict and the application process can be long and difficult. So if you need money fast or don’t have strong credit, this may not be the right option for you. 4. Commercial Real Estate Loan What is Commercial Real Estate Loan? A commercial real estate loan finances the purchase of a building for use as office space, a retail outlet, or any other business activity. Why Choose Commercial Real Estate Loan? If you are growing your business and need more space, or if you are expanding into retail, a commercial real estate loan may be an option to consider. Remember that commercial real estate loans look different depending on the lender and the value of the property. How much financing you get depends on the loan-to-value (LTV) ratio: the size of the loan compared to the value of the property. For example, if you buy a building for $200,000, you may receive $150,000, or 75% of the total cost. The remaining amount should be self-funded and serves as the down payment. In addition to the down payment, you may need to pay appraisal, inspection and local filing fees. It’s a good idea to talk to your lender about fees and additional costs so you can accurately assess whether a commercial real estate loan is right for your needs. 5. Equipment Loan What is Equipment Loan? Equipment loans provide financing for the purchase of machinery, vehicles or other equipment related to the business. The equipment you are buying serves as collateral for the loan. Why choose Equipment Loan? Both new and established small businesses can benefit from equipment loans. If you need equipment but don’t have the capital to buy it outright, equipment financing can help. Remember, these small business loans for women with bad credit can be helpful because the equipment acts as collateral. But it is necessary to strive to ensure that your loan term does not exceed the useful life of the equipment. If you don’t want to take out a loan, there are also equipment leasing options. 6. Personal Loan for Business What is Personal Loan for Business? Personal loans are based on your personal credit history and can finance your business. Why choose Personal Loan for Business? Personal loans for business can help you get start-up capital. Even if you do not have established business credit but have good personal credit, a personal loan can be a good option. Remember that individual lenders may have restrictions on what you can use the money for, including rules for business expenses. Unsecured personal loan amounts are usually lower than loans secured by collateral, so you may need to combine the personal loan with other financing to make a larger purchase. 7. Invoice Finance What is Invoice Finance? Invoice financing uses your unpaid invoices as collateral for a cash advance. Why choose invoice financing? If you have a business-to-business (B2B) service with an irregular billing cycle, invoice financing can help cover administrative costs as your customers wait to collect payments. The lender pays you a percentage of your outstanding invoice amount. You can use that money to reinvest and grow your business faster than you think
Women Owned Small Business Loans
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