Business Loans For Women

Name: Business Loans For Women
Creator: Savvy
Published: 2022-01-27T12:12:11+10:30

Home > Business Loans > Business Loans For Women

It won't affect your credit score.

Written by , updated on July 26th, 2023

How do small business loans for women work?

A loan for a female-owned business is no different from any other finance deals available to SMEs across Australia. For the most part, these loans are unsecured, meaning you won’t need to put up any valuable assets such as equity in your home or your business’ equipment or machinery as collateral. Because of this, they’re more easily accessible to small businesses who perhaps don’t have the required assets to serve as collateral, as well as being faster to process.

You can generally get approved for as little as $5,000 up to a maximum of $500,000 without security, although small businesses are less likely to be approved for amounts on the higher end of the scale due to their lower turnover compared to larger businesses. You can repay this amount over as few as three months, with longer terms reaching up to five years in length. The loan amount and term your lender greenlights will depend on your business’ situation, such as its credit score and revenue.

In terms of what the money can be used on, there are essentially no restrictions (provided the money is going towards business expenses). As such, whether you’re looking to finance a storefront fit-out, inventory or even the purchase of another business, you can do it with a business loan.

How should I compare different small business loan offers for women?

There are several key factors which you should consider during the comparison process of different microloan options for women in business. The key features to keep in mind when comparing loans are:

Interest rates

The simplest way to compare business loans on offer in the market is by their interest rates, as these are almost always prominently displayed by lenders. While small differences in rates may not seem like a big deal, they can amount to savings of hundreds of dollars in reality which, if your business is dealing with relatively small turnover, can be significant. You may also be able to claim the interest portion of your loan repayment as a tax deduction, saving even more money in the process.

Available loan terms

As mentioned, loan terms can range from between three months and five years. However, this range isn’t offered by all lenders. For instance, some will raise their minimum loan term as high as six to 12 months, while others cap their maximum repayment periods at two years. It’s important to prioritise lenders who offer terms which suit your business’ cashflow needs and not compromise this, as not keeping up with repayments will affect your ability to access financing in the future.

Available loan amounts

Again, while loans can be taken out for amounts between $5,000 and $500,000, most lenders will offer their own individual borrowing range. Unsecured business loans are more commonly available for up to $250,000 to $300,000, while some lenders also raise their minimum required amount to $10,000. As such, if you need a loan on the smaller or larger end of the scale, you should always compare closely to ensure you can borrow what you need.

Repayment flexibility

Some lenders in the market offer loans without any early repayment penalties, which also may be something you look to prioritise. Paying above the minimum required amount for each instalment will not only help you shift your business debt from your books sooner, but also reduce the interest you’re required to pay. The faster your loan debt is paid down, the faster the required interest will fall. Paying off quickly can also boost your business’ credit score, making finance accessible in the future.

Eligibility criteria

Each lender will have its own eligibility criteria when it comes to accepting applications. Some of the most prominent of these which may impact your business and its suitability for a loan are:

Minimum turnover: as low as $5,000 per month, but some lenders will require up to $1 million per year
Minimum trading time: in most cases, you’ll need to have been trading for at least six months, but some specialist lenders offer loans to startups. However, some require up to 12 months of trading history
Credit history: lenders generally won’t approve applications for businesses and business operators who have been bankrupt in the past.

Types of business loan

Unsecured business loans

The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.

Secured business loans

If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.

Small business loans

Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.

Low doc business loans

Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.

Lines of credit

A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.

Invoice finance

Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.

Equipment loans

A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.

Supply chain finance

With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.

Inventory finance

Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.

Overdraft facility

An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.

Cash flow loans

You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.

Why compare business loans through Savvy?

100% free service

It won't cost you a cent to compare a range of business loans through Savvy, enabling you to come back at any time.

Reputable lending partners

You can compare business loan offers through a range of trusted Australian lenders, giving you more confidence in the process.

Online comparison process

You can fill out our simple online form to generate business finance quotes tailored to your business' needs in minutes.

Top tips for maximising your chances of business loan approval

Plan out exactly what you need and why

Creating a plan before you apply to map out the expenses which need covering will help you minimise the chances of applying for more than your business needs or can afford. Some lenders may ask for business plans, so these can come in handy here on top of revenue projections.

Show verifiable credit

Lenders will always lean more towards businesses who have not only a positive credit history but also a proven track record of repaying debts, particularly other business loans. This makes your business appear more creditworthy.

Provide loan security

If you can do so, opting for a secured business loan instead of an unsecured one can increase your chances of approval significantly. This is because lenders consider these loans to be safer, as there’s something to fall back on. They also offer lower rates and greater borrowing ranges over $1 million.

Apply with a guarantee

Having someone, such as you or another of your business’ directors, supply a personal guarantee to repay the loan should the business become unable to do so also adds an extra layer of security for your lender and can increase your approval chances.