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Originally Posted On: https://blog.join-eby.com/article/best-microloans-for-women-owned-businesses

Women-owned businesses account for 42% of all businesses in the United States. Despite this, women entrepreneurs face significant challenges when it comes to accessing funding for their businesses.

Traditional banks often have strict lending requirements that can make it difficult for women to secure loans. However, microloans for women-owned businesses can give a practical alternative.

In this blog post, we will guide you through everything you need to know about microloans for women entrepreneurs. including what they are, the benefits they offer, and how to apply for them. Keep reading to learn more.

What are Microloans?

Microloans are small loans provided to entrepreneurs and small businesses with limited access to traditional banking services. These loans help individuals start or grow a business. They can use it to buy equipment or cover operational expenses.

Microloan Providers

When it comes to accessing microloans, there are many providers available.  These providers offer a range of services. Some of the most well-known providers include:

EBY Financing

EBY focuses on financing women-owned businesses, with the aim of empowering women entrepreneurs worldwide. They offer loans ranging from a few hundred to tens of thousands of dollars, with repayment terms ranging from several months to several years.

EBY’s unique feature is its personalized approach to supporting borrowers. They assign a dedicated loan officer to each borrower and offer training and mentorship programs.

Small Business Association (SBA)

The SBA is a government agency that provides a variety of loan programs, including microloans, to small businesses. The loans are administered through local nonprofit organizations. They have a maximum amount of $50,000 with repayment terms of up to six years.

The Tory Burch Foundation

This nonprofit organization provides access to capital through a partnership with Bank of America. The loans are available to women entrepreneurs. They range from $500 to $50,000 with interest rates between 7% to 13%.

Kiva

Kiva is a non-profit organization that provides microloans to entrepreneurs around the world. The loans are crowdfunded by individuals who contribute as little as $25. Kiva does not charge interest on the loans.

Accion

Accion is a global nonprofit that provides microloans and other financial services to underserved individuals and small businesses. Accion offers loans ranging from $200 to $100,000. Their interest rates range from 7% to 35%.

Grameen America

Grameen America is a nonprofit organization that provides microloans to low-income women entrepreneurs in the United States. Loans serve small business start-ups and expansions. They range from $2,000 to $15,000, with an interest rate of 15%.

Kabbage

Kabbage is an online lending platform that provides access to small business loans up to $250,000. Kabbage uses an automated lending platform that evaluates the creditworthiness of applicants. They use a variety of factors, including:

• Revenue
• Cash flow
• Social media presence

Benefits of Microloans for Women Entrepreneurs

Accessing traditional funding sources can be a challenge for women entrepreneurs. Many financial institutions have strict lending requirements.

Microloans provide an alternative option for women entrepreneurs. Here are some benefits of microloans for women-owned businesses:

Accessibility

Microloans are often more accessible to women entrepreneurs than traditional loans. Microloan providers have less stringent requirements for credit scores, collateral, and business plans. This makes it easier for women entrepreneurs who may not meet the criteria for traditional loans to secure funding.

Flexibility

Microloans are more flexible than traditional loans in terms of loan amounts and repayment terms. Women entrepreneurs can borrow smaller amounts of money.

They can repay the loans over a shorter period. This is helpful for those just starting out or looking to fund a small project.

Support

Microloan providers offer support and resources beyond just financial aid. They may give business coaching and networking opportunities. Access to other services that can help women entrepreneurs succeed is also offered.

Impact

Microloans have a positive impact on women entrepreneurs and their businesses. Women-owned businesses that receive microloans experience increased profits, growth, and job creation.

How to Apply for a Microloan

Applying for a microloan as a female entrepreneur can be a straightforward process if you know what to expect. Here is a step-by-step guide on how to apply for a microloan.

Research Providers

Start by researching microloan providers that offer loans to women entrepreneurs. Take a look at their eligibility requirements. Ask about their loan terms and interest rates to find a provider that suits your needs.

Gather Key Documents

Most microloan providers will need certain documents as part of the application process. Ascertain what you will need. These may include:

• A business plan
• Financial statements
• Tax returns
• Personal identification documents.

Complete the Application

Once you have identified a microloan provider, gather the necessary documents and complete the application form. Make sure to give accurate and detailed information about your business and its financials.

Wait for Approval

After submitting your application, you will need to wait for the provider to review and approve your application. This process can take from a few days to a few weeks, depending on the provider.

Receive funds

Once approved, the funds will go into your business account. Make sure to review the loan agreement and repayment terms before accepting the loan.

Tips for Receiving Approval

While microloans can be an excellent source of funding for small businesses, receiving approval can be challenging. To increase your chances there are many steps you can take. They include:

Be Prepared

Microloan providers will need documentation and information about your business, such as a business plan, financial statements, and tax returns. Make sure you have all the necessary paperwork ready before applying.

Have a Clear Purpose

Be specific about how you plan to use the loan and how it will help your business. This will show the lender that you have a solid plan and are not taking out the loan on a whim.

Show your ability to repay

Microloan providers will want to see that you have a steady stream of income to repay the loan. Provide details about your revenue streams and any other sources of income you may have.

Build a Strong Credit History

While a poor credit score may not disqualify you from receiving a microloan, having a good credit history can certainly help your case. Make sure to pay your bills on time and maintain a low credit utilization ratio.

Seek Advice

Many microloan providers offer advisory services that can help you improve your business plan, financial statements, and credit score. Take advantage of these resources to strengthen your loan application.

The Power of Microloans

Microloans are essential for supporting women-owned businesses worldwide. They give financing that might not have been available otherwise.

These loans are easier to obtain than traditional bank loans. This makes them a crucial option for women entrepreneurs who face cultural and social barriers to accessing financial services.

Microloans also offer lower interest rates and more flexible repayment terms. They provide valuable training and support services, such as business planning, financial management, networking, and mentorship.

EBY repositions underwear as a tool for empowerment rather than one of seduction. Ten percent of proceeds go to the Seven Bar Foundation to empower women out of poverty and into business through microfinance with a small loan. It’s what we call a first break, and that can be as little as $80 or as large as $7,000. This loan enables an underprivileged woman to start or grow her business. As she becomes self-sufficient, the cycle of poverty is broken. Loans are repaid and passed to another woman, creating a multiplier effect. EBY consistently fuels this loop so that it never ends.  We’re not about one-time solutions or patching up holes with pretty pink BAND-AID®s, though we love a colorful accessory. We want to consistently fuel the empowerment of women through business.