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What Small Businesses Need to Know About Tax Reform

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If a portion of your income comes to you via a side project, freelance work or start-up business, you’re likely to see a tax cut in 2018. The new tax bill went into effect Jan. 1. And it offers an attractive 20% deduction for small-business owners, independent contract workers and entrepreneurs.

“Anybody who owns a business should be happy to see this [deduction] because it’s going to likely reduce their taxes,” said St. Louis-based financial planner David Zaegel.

Over 90% of U.S. businesses are “pass-through” companies like LLCs, sole proprietorships and S-corporations, the Tax Foundation reported. They are called pass-through entities because they are taxed differently than normal businesses. Instead of being subject to corporate income tax, business income is “passed through” to the owner’s individual tax return and taxed at the owner’s individual tax rate.

Corporations, on the other hand — which make up 8.1% of U.S. businesses — are technically taxed at the corporate rate, which fell from a maximum rate of 35% to 21% under the new tax plan. Then, when profits are paid out to shareholders as dividends, the income is taxed on the shareholder’s individual tax return, too.

“They were lowering the corporate tax rate and they had to do something for the small-business owners or else everyone would run and organize themselves as a C-corp,” said Zaegel. Under the act, the deduction is set to expire Dec. 31, 2025.

Who is eligible for the new small-business tax deduction?

A business must first operate as a pass-through entity to qualify for the deduction, but that still doesn’t guarantee the deduction. In order to qualify for at least some of the deduction, the business must also:

  1. Operate a qualified trade or business AND
  2. Fall under the maximum income threshold amount — $207,000 for single filers and at $415,000 for those filing jointly.

C-corporations don’t count. Of course, new rules accompany the pass-through deduction to limit abuse, so not all pass-throughs count, either.

To understand the rules, one must first understand the following tax jargon:

Any trade or business conducted by a pass-through entity that is not a specified service trade or business.

The taxpayer’s share of the qualified trade or business’s net income excluding any amount paid to the taxpayer that is treated as reasonable compensation or guaranteed payment for services rendered.

Tangible property — anything you can touch — used to produce qualified business income, that depreciates over time and will still be available for use at the end of the tax year.

Any business that involves performing services in the fields of health, law, consulting, athletics, financial services, brokerage services or “any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.”

When a taxpayer reaches the income threshold — $157,500 for single filers and $315,000 for those filing jointly— restrictions on service businesses and wage limits apply. The benefit is phased out as income rises. Eligibility caps out at incomes of $207,000 for single filers and at $415,000 for joint filers.

How to calculate the deduction:

As long as pass-through business owners fall under the income threshold amount — $157,500 for single filers and $315,000 for those filing jointly— they are in the clear to deduct 20% from the company’s qualified business income and the remaining amount of taxable income would be taxed at the individual’s tax rate.

If they exceed the income threshold but fall under the limit, then new limits start to apply. The deduction would then be limited to the lesser of :

  1. 20% of qualified business income, or

    The greater of:

  2. 50% of the total W-2 wages paid by the business
  3. 25% of the total W-2 wages + 2.5% of unadjusted basis of all qualified property


  • 20% of qualified REIT dividends
  • Qualified publicly-traded partnership income

For the sake of length, time and complexity, we will focus on the part before “plus.”

What if there’s more than one business owner?

Business owners who have business partners sometimes mistakenly believe the income threshold refers to all owners collectively. But it doesn’t.

“One thing to be clear on in this situation is that the income limits they are talking about are for each person,” said Zaegel.

Let’s say there are three equal owners of a qualified trade or business, for example, and the pass-through income is $450,000, divvied up equally among the partners. Each owner (earning $150,000) would fall just under the income threshold for the new small-business tax deduction.

What if the business partners are married or single?

Let’s say the first owner is unmarried, so they avoid the phaseout. The second is married but his or her spouse doesn’t work, so they too avoid the phaseout. They can both deduct $30,000 from their taxable income and are left with taxable income of $120,000 each.

The third owner is married, and his or her spouse is a W-2 employee with a different company and brings home an annual salary of $100,000. They file taxes jointly, so at a combined $250,000, the pair also falls under the phase out limit ($315,000 for married filing jointly) and get the full pass-through deduction.

They would calculate their deduction as the lesser of:

  1. QBI* 20% = ($150,000) *0.2 = $30,000
  2. 50%*W-2 wages paid by the business =$100,000*0.5 = $50,000

So, the couple would be able to deduct $30,000 (see: the lesser) and their taxable income is reduced to $220,000 by the pass-through deduction. That being said, the ultimate amount of their taxable income will depend on any other allowable deductions they might qualify for.

For a visual explanation of the pass-through deduction, check out the flow chart below, provided by Leon LaBrecque, a Troy, Mich.- based lawyer and certified financial planner.

Should you take advantage of the new small-business tax break?

If you’ve been planning to monetize your talents into a side hustle, or switch to a contractor role with your current employer, seeing this deduction may motivate you to get on that, stat.

Gig workers like Uber drivers, who average $30,000/year according to Glassdoor, will likely be able to take full advantage of the deduction as they are generally considered independent contractors.

Intuit estimates there were about 3.2 million American workers in the 2017 gig economy, a number that could rise to 7.6 million and comprise about 43% of the total U.S. workforce by 2020.

Before you decide to start your own business in the hopes of earning a tax break, you should do your due diligence, experts warn.

“The 20% shouldn’t be the tax tail that wags the dog,” said Cartersville, Ga.-based certified financial planner Lane Mullinax. He says what’s important isn’t necessarily getting a deduction, but the overall potential of the business itself.

If you’re thinking of ditching your 9-to-5 to make more money working on your side hustle, you should make sure the switch is worth it for your budget as much as it may be worth it for your lifestyle or career.

Mullinax advises figuring out if the cash flows make sense first. He says aspiring entrepreneurs should add up all of the estimated income and expenses to see if the business is worth getting into.

How to set up a pass-through business

If you want to set up a pass-through business to take advantage of the deduction, you have several options. The main three forms of pass-through companies are sole proprietorship, partnership and LLC, which offers more protection and can be taxed as either the aforementioned structures or as an S-corporation.

There is no formal action you need to take to be taxed as an unincorporated sole proprietorship or partnership, as the IRS considers them disregarded entities. All you need to do is operate your business and take care to file the correct form, and you should be able to pass the appropriate amount of business income to your individual tax return, according to Mullinax.

You may elect instead to incorporate as an LLC, as it provides protection and limited liability to its owners. For example, if the business can’t pay its debts, the creditor can’t come after your personal assets and all you stand to lose is the money you put into the LLC.

You can choose to incorporate your company in any state. Taxes are not the same all around, so you may want to think about the pros and cons of incorporating in your home state, and check other states’ corporate statutes.

Think about things like how corporations are taxed, if there is an income tax, minimum tax or franchise tax. If you have time, compare what you project to earn in revenue with the taxes you should expect to pay, too. You can fill out a form to incorporate in any state online.

“There is more interest with the new tax law, but people also need to be aware that they will incur both pieces of the self-employment tax unless they go the S-corp route,” said Zaegel.

Know what you’re giving up as well.

As a full-time W-2 employee, you only have to pay half of the required Social Security and Medicare taxes out of your paycheck. Your employer picks up the other half. That’s no longer the case if you start your own business.

If your net earnings were $400 or more, you will be required to pay the entire self-employment tax. The 15.3% tax is comprised of Social Security (12.4%) and Medicare (2.9%) taxes due to the IRS.

Here’s a chart breaking down each pass-through option and the pros and cons of each.

Choosing your business entity






Sole Proprietorship

No formal action

An unincorporated business owned by one person.

  • Simplest and easiest to set up

  • Complete control of your business as a sole owner

  • Good for testing out a business

  • Personally liable for all business debts

  • Creditors can go after your personal assets if your business assets are no enough to cover your business debts.

  • Cannot pay yourself W-2 wages

  • Generally more difficult to raise money and get bank loans


No formal action

An unincorporated business owned by two or more individuals.

  • Simple and easy to set up for two or more partners

  • Liability for business debts is spread out among partners

  • Cannot pay yourself W-2 wages

  • Each owner is liable for debts and losses


Submit to IRS form 2553 by a Small Business Corporation signed by all shareholders

A corporation that elects to pass corporate income, losses, deductions and credits through to their shareholders for federal tax purposes.

  • Can pay yourself a “reasonable wage”

  • Potential self employment tax savings

  • Provides protection for personal assets

  • Not subject to corporate tax rates

  • Must file with the IRS to get S-corp status

  • May be required to file for foreign qualification in other states where business is active.

  • More administrative overhead (payroll, paperwork, etc.)

  • Allowed no more than 100 shareholders

  • All shareholders must be U.S. citizens

LLC or Single Member LLC

Register online with state agency — declare if the business will be taxed as a sole proprietorship, partnership, C-Corp or S-corp

A limited liability company. A single member LLC has only one owner.

  • Benefits of both a corporation and partnership

  • Flexibility of taxation

  • Provides protection and limited liability to owners

  • Unlimited number of members

  • Annual renewal fees $300 or less in most cases

  • May be required to file for foreign qualification in other states where business is active.

  • Members must pay self-employment tax

  • Some states require you to dissolve and form the LLC again if one member leaves

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Alternative Lending Options: Finding the Top Non-Bank Business Loans

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As of 2018, there was a $5 trillion gap between the funding needs of small and medium business and the traditional, institution-based financing available to them, according to the SME Finance Forum, which works towards expanding financial access for these businesses. This funding misalignment has helped alternative lending become a major new option.

The rise of alternative lending has been a boon for small business owners and other potential borrowers who are not necessarily a good fit for traditional lending and financing. That’s because alternative lending — financing from a non-traditional source — generally has less stringent requirements for borrowers, and it’s available for a wide variety of purposes.

What is alternative lending?

Alternative lending refers to any kind of financing from an external source that is neither a bank nor a stock or bond market. Most often, alternative lenders operate through online platforms, and they can offer a range of products, from term loans to merchant cash advances.

In general, alternative business lending has less stringent requirements than traditional institutions. A bank will generally require good personal and business credit, as well as a certain amount of time in business to extend a small business loan. In contrast, an alternative lender will likely have lower minimum credit score requirements and less strict requirements for time in business.

With fewer qualification requirements come higher approval rates. According to the Biz2Credit Small Business Lending Index, big banks (meaning banking institutions with more than $10 billion in assets) had a small business loan approval percentage of just 28.3% as of February 2020. Alternative lenders, on the other hand, approved 55.9% of small business loans in that same time.

In addition, the average closing period for traditional small business loans is 45 to 60 days. That’s the amount of time you will have to wait between turning in all parts of your initial application and when your funds are released to you. Traditional small business loans typically go through a multi-phase process before releasing the money, which is why they can take as long as 60 days to close. Loans from the Small Business Administration (SBA) can take even longer.

Many alternative lenders, on the other hand, can approve small business loans within one to three business days, or even sooner.

Types of alternative lending

Since small businesses have a variety of financing needs, it’s natural that alternative lending options include a number of different products to meet those needs. You can find the following types of loans through alternative lenders.

Term loans

A term loan is a lump sum that is borrowed all at once, and paid back over a specified term at a fixed interest rate. It’s what most people commonly think of when they refer to a business loan. The repayment term can last anywhere from just a few months to as long as 10 years, and sometimes even longer. The amount available to borrow depends greatly on the borrower’s creditworthiness and business profitability, as well as length of time in business.

Many small businesses seeking term loans will go through a traditional lender, since banks are generally able to offer longer terms and better rates than alternative lenders. However, alternative lenders do provide term loans that may be easier to qualify for.

Business line of credit

Unlike a term loan, which extends the full amount of the loan all at once, a business line of credit allows a small business owner to withdraw money up to an agreed-upon amount within the revolving credit line. Once the borrowed amount is paid back, the full amount is again available to borrow, similar to how a business credit card works.

This kind of product offers business owners a ready source of immediate funds. This can allow a business owner to hire as needed, purchase necessary supplies or even expand the company when an opportunity arises.

Equipment financing

Necessary equipment for running a business can be financially out of reach if you have to rely on making purchases in cash — that’s where equipment financing comes in. This kind of loan will help you purchase the equipment, even if you have a new business or short credit history.

Such loans will often use the equipment itself as collateral, which makes the loan easier to qualify for, though you do risk losing your equipment if you fail to repay the loan. The loan term will often be tied to the expected lifespan of the equipment.

Invoice factoring

Prolonged waits on invoiced payments can seriously affect a business’s cash flow. With invoice factoring, a business sells its unpaid invoices in exchange for a cash advance, typically 70% to 90% of the value of the unpaid invoice. The factoring company will then collect payment from your clients and send the remaining balance to you, minus a fee that it collects.

Merchant cash advances

Merchant cash advances are typically extended to businesses that rely on credit and/or debit card payments. This kind of advance provides you with a lump sum loan in exchange for a set percentage of daily or weekly credit card sales. You will continue to pay the daily or weekly percentage until the advance is repaid.

The amount you pay for a merchant cash advances is typically not based on an APR, however, but rather on what’s known as a factor rate. This rate, which can range from 1.2 to 1.5 (meaning 1.2 to 1.5 times the amount you borrow) can quickly get out of hand, however. If you calculate these factor rates as APRs, the APR you pay can range as high as 70% to 200%.

5 top alternative and non-bank lenders

To select the top five alternative and non-bank lenders we looked at a number of lenders. In addition to all being non-bank lenders, the lenders we chose had to meet the following criteria:

  • No more than two years in business required
  • Funding available in one to three business days
  • No prepayment penalties

1. BlueVine

Types of Loans OfferedLoan Amounts OfferedRateTime to Funding
Term loanUp to $250,000Starts at 4.80%Within hours of approval
Business line of creditUp to $250,000Starts at 4.80%Within hours of approval
Invoice factoringUp to $5,000,000Starts at 0.25% per weekAs fast as 24 hours

One of the big benefits of BlueVine is that it has no origination, prepayment, termination or maintenance fees. BlueVine’s term loans are available in 6– or 12-month terms, and you will pay a fixed weekly amount until the loan is paid in full. With the business line of credit, you will have 6 or 12 months to pay back your draw, with fixed weekly or monthly payments. You will pay a 1.6% to 2.5% draw fee every time you draw on your line of credit.

With invoice factoring, BlueVine provides 85% to 90% of the invoice amount upfront. Your customers will continue to make payments in your name, but the outstanding payments will go to the BlueVine account or P.O. Box and you’ll receive the remainder, minus BlueVine’s fees.

Both BlueVine’s term loan and business line of credit are available to any business that meets the following requirements:

  • Been in business for at least six months
  • Annual revenue of $100,000 or more
  • Personal credit score of 600 or higher

Businesses that cannot qualify for these loans may be eligible for invoice factoring, which requires only three months in business, monthly revenue of $10,000 or more and a FICO score of 530 or higher.

The business line of credit is not available in Vermont, and neither the line of credit nor the term loan are available in North Dakota or South Dakota. Invoice factoring is available across all states.

2. OnDeck

Types of Loans OfferedLoan Amounts OfferedRateTime to Funding
Term loan$5,000 to $500,000Starts at 11.89%Same day you are approved
Business line of credit$6,000 to $100,000Starts at 10.99%Same day you are approved

OnDeck has loaned out over $13 billion since 2007, making it one of the largest non-bank lenders. You can qualify for either a term loan or a business line of credit if you have:

  • Been in business for at least three years
  • A personal FICO credit score of 600 or above
  • Annual revenue of $250,000 or more
  • A business bank account

OnDeck promises instant funding as soon as you are approved. There are also no draw fees on the line of credit, unlike with BlueVine. However, you can expect to pay an origination fee for any kind of loan with OnDeck, as well as a $20 monthly maintenance fee for business lines of credit. You can potentially reduce your origination fee to 0% with subsequent loans though, and the monthly maintenance fee will be waived for six months if you make a $5,000 initial draw within five days of opening your line of credit.

3. Funding Circle

Types of Loans OfferedLoan Amounts OfferedRateTime to Funding
Term loans$25,000 to $500,0004.99% to 24.99%Within one business day after approval

Funding Circle has some of the more stringent guidelines for lending. To qualify for one of their term loans, you will need to have:

  • Been in business for at least two years
  • A personal FICO score of 620 or higher
  • No bankruptcies in the previous seven years
  • Located in an eligible state (Funding Circle does not operate in Nevada)

In addition, Funding Circle requires a lien on business assets and a personal guaranty from the business owner. However, there is no revenue requirement to qualify.

Loan terms can range from six months to five years, and your payment will be a fixed monthly amount. There are no prepayment penalties or maintenance fees, but you can expect to pay an origination fee of between 3.49% and 6.99% of the total amount borrowed. Additionally, there is a late payment fee of 5% of the missed payment.

4. National Funding

Types of Loans OfferedLoan Amounts OfferedRateTime to Funding
Term loan$5,000 to $500,000Not provided by lenderWithin 24 hours of approval
Equipment financingUp to $150,000Not provided by lenderWithin 24 hours of approval
Merchant cash advanceUp to $250,000Not provided by lenderWithin 24 hours of approval

National Funding has been in business since 1999, making it one of the oldest alternative lenders for small business. The lender does not specify its requirements for a term loan, but instead invites potential borrowers to fill out its application to connect with a loan specialist so that the lender can find the right loan for you. You won’t need collateral or a business plan to qualify, but you will have to sign a personal guarantee.

For the equipment financing loan, however, you will need to have been in business for at least six months, have a FICO score of over 575 and get a quote from a vendor for the needed equipment. Finally, any business that has been in business for at least a year and takes in at least $3,000 per month in credit card sales is prequalified for the merchant cash advance.

Though it is unclear how much you will pay in interest, National Funding focuses on offering a high approval rate, even to businesses with less-than-stellar credit. You can also receive early payoff discounts, as well as a variety of payment terms and options.

5. Kabbage

Types of Loans OfferedLoan Amounts OfferedRateTime to Funding
Line of creditUp to $250,0001.25% to 10.00% fee per monthWithin one to three business days

To qualify for a Kabbage line of credit, you only need to have been in business for at least one year, and take in $50,000 per year or $4,200 per month in revenue. There is no collateral requirement.

You may borrow from your line of credit in amounts as low as $500, all the way up to your limit. When you make a withdrawal, the money will show up in your bank account within one to three business days, or instantly in your Paypal business account. Each withdrawal is considered a separate loan, with a repayment term of 6, 12 or 18 months.

Kabbage’s interest rate is calculated monthly, which can mask how high an APR you are actually paying — according to ValuePenguin, the APR can range between 20% and 80%. The monthly fee ranges from 1.25% to 10.00%; however, there is no origination fee.

Pros and cons of alternative lending


There are a number of reasons why small business owners might choose to borrow with an alternative or non-bank lender. Benefits of alternative lending include:

  • Easier to qualify: With fewer and less stringent qualification requirements, alternative lending opens up funding opportunities for small business owners who may not otherwise be able to get the financing they need, especially if their credit is not excellent.
  • Rapid approval and funding: Alternative lenders approach the underwriting process differently from traditional lenders, which means they can both approve loans and release funds more quickly. This means small business owners can get the money they need when they need it.
  • Available to new businesses: Though traditional funding sources generally require a long history of profitability before extending a small business loan, alternative lending options will consider newer businesses for loans.


However, even though there are a number of excellent reasons to consider an alternative lender for small business financing needs, there are still some alternative lending hazards to beware of. This includes:

  • Confusing interest rates and fees: It can be difficult to compare apples-to-apples when it comes to alternative lending rates, since each lender uses its own methodology for calculating rates rather than clearly stating APRs. In addition, it can be difficult to determine exactly what and how much you will be paying due to additional fees, such as origination fees and draw fees, depending on the alternative lender you choose.
  • Shorter repayment terms: Alternative lenders often offer shorter repayment terms than traditional lenders. This helps to mitigate the risk to the lender, but it also means higher monthly payments for the borrower.
  • Less flexible payment options: Many alternative lenders require daily or weekly repayment, fixed repayment amounts or automatic ACH payments toward your loan. If your business has any cash-flow difficulties, this could cause some further financial problems.

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Small Business

Guide to Small Business Funding for Women

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Source: iStock

As the number of women-owned businesses grows across the U.S., women entrepreneurs are increasingly in need of funding for their businesses. While there aren’t specific small business loans for women, there are many lenders and organizations that offer small business help for women entrepreneurs, including SBA loans, term loans and business lines of credit, among other resources.

Small business loans for women: 3 options to consider

SBA loans

Best for: Businesses looking for long-term financing and businesses struggling to get loan approval.

The Small Business Administration (SBA) offers small business help for women that includes business training, counseling and assistance in accessing financing. The SBA can also help you if other lenders have deemed your business too risky. Since SBA loans are guaranteed by the Small Business Administration, lenders may be more likely to approve your application and even offer lower interest rates and longer repayment terms.

The SBA offers multiple loan types, with amounts ranging from $500 to $5.5 million. Requirements to qualify for each loan type are unique, and eligibility varies depending on the lender and the loan program. However, SBA loans are available for most business purposes.

Term loans

Best for: Businesses that can clearly project how much cash they’ll need or for startup capital when a business doesn’t want to forfeit any ownership to an investor.

A term loan is a typical loan arrangement that allows you to borrow a lump sum of money and pay it back in installments, with interest. Interest rates and other fees can vary greatly from one lender to the next, but you’ll likely need to present your business plan, expense sheet and financial projections in order to apply for a term loan at any bank or credit union.

Some lenders are committed to offering small business term loans to women. Learn more about these lenders and their loan product options below.

Business lines of credit

Best for: Businesses that need ongoing access to capital or that have an open-ended project.

A business line of credit is an account that allows you to draw money up to a set limit. Similar to a credit card, each time you pay down your balance you can draw up to the limit again, and fees and interest payments are based on your account balance. Unlike business credit cards, which generally have higher interest rates, business lines of credit tend to have lower interest rates and allow you to make cash withdrawals without any limitations and write checks from your account.

You can take out a business line of credit through a bank, credit union or online lender. Qualification is based on your personal credit.

5 best small business loans for women

To select the top five small business loans for women, we looked at a number of lenders and chose a mix of online and traditional bank lenders. While traditional lenders may be more difficult to qualify for, the two we have listed are among the most active SBA lenders, making them a potentially compelling option for women business owners.

Additionally, the lenders we selected had to meet the following criteria:

  • Transparent websites. These lenders clearly list necessary information on their websites so small business owners can easily find what they need.
  • Wide range of amounts and term lengths. Many of these lenders offer a range of loan products as well as amounts and term lengths, which means they can cater to a range of small business owners’ needs.
  • Lender credibility. These lenders have all been in business for at least a decade and have established themselves in the space through things like positive customer reviews and high approval counts.

1. Kabbage

Type of financing



Min. credit score

Best for...

Business line of credit

Monthly fee is 1.25% to 10.00% of principal

Up to $250,000


Ongoing access to capital

Although Kabbage often refers to its financing product as a loan, it is technically a line of credit, one the company says is commonly used by women business owners for inventory purchases, office expansion, marketing campaigns, equipment purchase and hiring employees. Kabbage’s monthly fees for business lines of credit start at 1.25% and are only charged based on the amount you draw.

Kabbage offers a simple online application process, and you can manage your line of credit account from a mobile device.

2. Smartbiz

Type of financing



Min. credit score

Best for...

SBA loans

5.04% to 10.29% APR

$30,000 to $5,000,000

650 for a $30,00 to $350,000 loan

675 for a $500,000 to $5 million loan

Faster processing on SBA loans

According to Smartbiz, 30% of its 7(a) SBA loans are granted to women-owned businesses. The national average is only 14% for SBA lenders.

Smartbiz helps expedite the application process by submitting your application to an online marketplace of multiple SBA lenders at once. Prequalification is available within five minutes, and funding is available in as few as seven days upon approval.

3. Wells Fargo Bank

Type of financing



Min. credit score

Best for...

Equipment Express Loan

5.50% to 9.50% APR for vehicle loans

6.00% to 12.25% for equipment loans

$10,000 to $100,000

Not disclosed

Purchasing vehicles or equipment

In 2013, Wells Fargo Bank committed to lending $55 billion to women-owned businesses by the year 2020. The bank offers several small business loan products, including its Equipment Express Loan. The interest rate on the bank’s secured vehicle loans starts as low as 5.50%.

However, you’ll need to be an existing customer of the bank to apply. Wells Fargo small business loans are only available to customers who have had a checking or savings account with the bank for a minimum of one year.

4. Celtic Bank

Type of financing



Min. credit score

Best for...

Express Loan



Not disclosed

Wide variety of loans

Celtic Bank is perhaps best known as an SBA lender, but the Utah-based lender offers a variety of loans well-suited to all types of businesses, small to large. The Celtic Express loan offers loans between $20,000 and $150,000 for up to 120 months.

To be eligible, the business must be a for-profit, owner-operated enterprise. Loan proceeds may not be used for construction or tenant improvements. Newer businesses are considered, but you must have a location identified and be able to start operations at funding.

5. OnDeck

Type of loan



Min. credit score

Best for...

Short-term loan

11.89% APR and up

$5,000 to $500,000


Business owners with lower personal credit scores

OnDeck is an online lender that has funded over $6 billion in small business loans for women. The lender offers business loans for women with bad credit, with a minimum credit score requirement of just 600. However, its APRs start relatively high, at 11.89% and up.

In order to qualify for a loan with OnDeck, your business must be at least a year old and earn at least $100,000 a year in revenue. Those who qualify may receive funding within as little time as 24 hours.

Alternative financing options for women-owned businesses

Grants for female business owners

Small business grants can provide you with funds to start or expand your business — and, unlike loans, they don’t have to be repaid. Grantors who fund women-owned businesses include the federal government, local governments and private funds. The amount of money available and the requirements to qualify will vary depending on the source of the funds.

Here are a variety of women-owned business grants to consider:

  • Amber Foundation Grant. Grants of $4,000 are awarded on a monthly basis to women-owned businesses of all kinds. Monthly grant winners are eligible for an additional $25,000 grant at the end of the year.
  • Cartier Women’s Initiative. This grant is for women-owned, women-run businesses focused on sustainable social and/or environmental impact. Applicants in a select group receive one-on-one business training and cash awards of $30,000 or $100,000.
  • Girlboss Foundation Grant. Grants are available up to $15,000 for women entrepreneurs working in the areas of design, fashion, music or the arts.
  • NASE Growth Grants. The National Association for the Self-Employed (NASE) offers $4,000 grants for female business owners. You must become a NASE member to apply.
  • SBA. Though there technically are not Small Business Administration grants for women (or anyone else), the SBA does facilitate federal grants for all types of business owners through the Small Business Innovation Research and the Small Business Technology Transfer programs.

Equity financing opportunities

Venture capital firms and individual investors, sometimes known as “angel investors,” differ from lenders. Instead of offering debt, these venture capitalists offer to make a long-term investment in your company in exchange for equity. They may also require some form of ownership and/or a seat on your company’s board of directors.

Here are some investing groups and firms that cater to women-owned businesses:

Additional resources for women-owned businesses

  • SBA Women’s Business Centers: The SBA offers over 100 office locations throughout the U.S. where women can receive free training, workshops, mentorship and more. Use the SBA directory to find your nearest location.
  • Women-Owned Small Businesses (WOSB) Federal Contracting Program: This federal program sets aside contracting opportunities for women applicants in industries where women’s businesses are underrepresented or disadvantaged. Those industries include construction, manufacturing, publishing and more.
  • National Women’s Business Council (NWBC): This federal advisory committee advises the president, the U.S. Congress and the SBA on matters affecting women entrepreneurs and women-owned businesses. The NWBC hosts round-table events around the country to gather input and promote women’s STEM-focused and rural-owned businesses.
  • DreamBuilder: This free online program offers interactive courses for women on how to start, build and finance your business. Courses are available in Spanish and English.
  • National Association of Women Business Owners (NAWBO): NAWBO is an advocacy organization that promotes networking events for women entrepreneurs, provides online resources and has local chapters throughout the U.S.

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