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What is a Business Line of Credit?

by Brandon Wyson10 minutes / June 10, 2024

Running a small business means being flexible and adapting to change faster than the competition. Every small business owner knows the value of cash flow but are you taking full advantage of what credit, or more specifically, a business line of credit can do for you and your team? Let’s talk through the key points of what a business line of credit is and what you can expect after opening one for your business.

How Does a Business Line of Credit Work?

A business line of credit for small business is functionally an amount of money that you can spend, repay, and redraw for the length of your agreement with whatever financial institution you opened the line with. As you spend money in your line of credit, that money counts against your overall line limit. As you repay that money, you can then spend it again as long as your line stays open.

The small business that opens a line of credit is only responsible for paying interest on the balance that remains at the end of a billing period. So, this means that if you fully pay off your business line of credit before the end of each billing period (generally monthly), you will not pay interest on your line.

Where to Get a Business Line of Credit

Business lines of credit are available from a wide range of financial institutions ranging from larger national banks all the way to small online lenders. Let’s talk about the difference between what you can expect from a line of credit at a larger institution versus an online lender.

Banks and Major Financial Institutions: If you are looking to open a business line of credit with a bank or credit union, you can expect generally steep requirements for your credit history, business credit score, your annual revenue, and your overall business history. Many major institutions will also ask for some kind of collateral when opening your line. If an institution requires collateral, it means they are offering secured lines of credit, but we’ll get into that later.
Online Lenders: There is an almost uncountable number of online lenders active today, so it is impossible to speak for all of them, but you can expect some lighter credit requirements and maybe even opportunities for start-ups, something almost impossible to find at major banks. Of course, in exchange for a higher risk line, your interest rate will likely be higher to account for it. It is also likely that most online lenders offer a quicker application process compared to major institutions.

How to Get a Business Line of Credit

While every business ought to have their own process, here are our four recommendations for connecting your business with a line of credit in a smart and comprehensive way.

1. Decide How You Will Use Your Business Line of Credit

While it’s true that a business line of credit won’t accrue interest when it goes unused, that doesn’t mean that your business should open one simply to have one. Think about the potential situations where you may use your line. For example, would your line of credit ever be used to cover payroll?

Or maybe for inventory? Or do you want to use your line for emergencies and unexpected expenses only? No matter what your answer is, your next step is to determine the most money that you could ever require for any of those use cases. The figure you come up with likely represents the credit limit you should look for in your line of credit.

2. Review Your Current Financial Portrait

Just about every lender is going to want to get a good picture of your recent financial history as well as your business credit score. It is possible lenders may want to see your personal credit as well if you are a newer business owner or your business credit isn’t developed enough.

Your first step should be to make PDF copies of at least the last six months of your business bank statements, and a copy of your ID is helpful to have on hand as well.

3. Compare Lenders

Feel free to talk with multiple lenders and collect as much information as you think you’ll need before making your first inquiries. It doesn’t hurt to find lenders who have already funded your industry or have made strides for causes you already believe in. Choosing your lender ought to be just as involved as choosing your final offer.

4. Get Your Documents in Form and Start Applying

This is the easy part. Many online applications today are straightforward and meant to save business owners like you time.

Business Line of Credit Application Requirements

Business line of credit application requirements vary by business, but most lenders will require the following:

Business information, including type of business and ownership.
Financial statements to demonstrate proof of revenue and cash flow.
Credit history, both personal and business credit.
Proof of time in business.
A business plan to demonstrate the intended use of funds.
Collateral, if you’re applying for a secured business line of credit.

What is a Business Line of Credit Used For?

While some business owners like to use their business line of credit in predictable and repeatable ways like covering payroll or inventory, there are several others who keep their line of credit clear in the case of an emergency. Since a line of credit is a re-drawable sum, any expense you expect to repeat itself may be a good fit for your line of credit as long as you are certain you can pay back the full amount before the end of the billing period. If not, you will have to pay interest on the unpaid amount.

Secured Versus Unsecured Line of Credit

A secured line of credit is a line of credit backed with some amount of collateral. This can be real estate or any asset of value that you declare would be forfeited in the event your line of credit went unpaid. An unsecured line, then, is a line of credit tied to collateral. As you may guess, secured lines of credit generally have more generous interest rates and terms while unsecured lines (because they present more risk to a lender) tend to have high interest rates. Repayment terms on an unsecured business line are also likely to be considerably less lenient, as there is much more risk on the lender’s side.

Business Line of Credit Versus a Business Credit Card

The biggest difference between a business line of credit and a business credit card is how you can use the two products. While business credit cards can be used in just about every transaction that allowscard payment, lines of credit are considerably more flexible, as they represent an amount of capital provided on behalf of a lender. It’s just about impossible to pay an invoice or payroll, for example, with a business credit card, but this is more than possible with a line of credit.

Another key difference between business lines of credit and business credit cards is that lines of credit generally have higher draw limits than business credit cards. A business line of credit amount is generally chosen based on larger and not short-term expenses like payroll or restocking inventory. A business credit card, while still likely to have a limit higher than a personal card, often isn’t suited for the same expenses that a line of credit can handle.

What to Consider Before Getting a Business Line of Credit

While a business line of credit may seem like the ideal option for your business, it can depend on the specifics of the line of credit offered. Consider rates, terms, and alternative options before taking out a line of credit.

Rates and Terms

Each lenders will offer different rates and terms for a business line of credit. While comparing lenders, pay attention to the rates and terms available to your business. It’s also worth looking at repayment terms at this time.

Line of Credit Alternatives

Aside from a line of credit, small businesses have other financing options available, including:

Term loans: Term loans come with a fixed loan amount, rate, and repayment schedule. The fixed aspects of a term loan make it an attractive option for business owners who want a lump sum loan with a consistent repayment schedule.
SBA loans: Supported by the U.S. Small Business Administration, SBA loans are guaranteed by the SBA but facilitated through a lending partner, such as a bank, credit union, or online lender. The SBA has multiple loan programs to choose from.
Equipment financing: Equipment financing lets a business take out a secured loan to purchase equipment. When the loan is paid off, the equipment become fully owned by the business.
Revenue-based financing: With revenue-based financing, small businesses can secure financing in return for a percentage of business revenue, up until the predetermined repayment amount is reached.

Business Line of Credit FAQs

Even with a good grasp of the basics of a line of credit, it is more than understandable to still have some questions. These are the most common questions when it comes to business lines of credit.

How Do You Pay Back a Business Line of Credit?

In most cases, it is possible to pay back your business line of credit in the same way you would pay back any loan or lump sum financing with a lender. While lender methods will vary, it is more than likely that lenders will give you a specific online portal for repayment.

How Do I Request a Line Increase?

It is more than likely that most lenders will determine your eligibility for a line increase in the same way that they will assess your ability to take on more financing in general. With that in mind, you may want to get in contact with your lender’s renewal department.

When deciding whether your business needs a line increase, it is important to think about both the maximum amount of money that you may need to draw in a billing period. But an equally important consideration is the highest amount of interest you are able to take on. Do some thought experiments

and talk with your lender to better understand the maximum line size that could work for your business.

Does a Business Line of Credit Help Build Business Credit?

Responsibly and consistently repaying your line of credit at the end of each billing period is a proven way to show credit responsibility. While there is no way to know for sure how much keeping good standing with your line will help your overall credit score, you’re certainly not hurting your score by doing so.

Can an LLC Open a Business Line of Credit?

Yes, LLCs can open a business line of credit as long as they meet eligibility requirements. To qualify, LLCs should make sure they have a business plan, bank statements, proof of revenue, and both business and personal credit scores ready.

Brandon Wyson

Content Writer

Brandon Wyson is a professional writer, editor, and translator with more than nine years of experience across three continents. He became a full-time writer with Kapitus in 2021 after working as a local journalist for multiple publications in New York City and Boston. Before this, he worked as a translator for the Japanese entertainment industry. Today Brandon writes educational articles about small business interests.

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Small Business Grants for Veterans in 2024

Manage Your Money

by Brandon Wyson10 minutes / June 9, 2024

Veterans and small business are a natural match and it’s not hard to see why. Running a small business takes personal discipline and an uncommonly strong determination. These are also two very prominent traits of the men and women who serve in the American military. Those veterans who successfully adjust from servicing our nation in the military to servicing our towns and cities as small business owners are in a way continuing their mission to protect and serve.

There are several groups who recognize the value and strength of veteran small business owners and offer grants to give back to this strong community. Learn more about what opportunities are out there for veteran small business owners seeking grant funding by studying this list.

Top Grants for Veterans

Military Entrepreneur Challenge by Second Service Foundation

The Second Service Foundation (formerly the StreetShare Foundation) is a collective that provides support and a strong community for veteran small business owners through education and grants. This year Second Service is running the Military Entrepreneurship Challenge, their newest grant opportunity for veteran small business owners with a strong business idea.

Deadline: Second Service offers multiple challenges based on your local area. Subscribe to the Second Service Foundation email listing here for regular updates.

Amount: Expected to be $15,000, $6,000, and $4,000.

Where to Apply: Application page opening date TBA

Key Requirements: Applicants must be veteran, reserve, or transitioning active-duty members of the United States Armed Services of at least 21 years of age. The veteran entrant must own at least 51% of the business they are applying on behalf of and must be “low-income and otherwise lack the financial means” to grow their business. After a video application, selected entrants must pitch their business at an in-person event where winners are selected by attendees and judges.

Application Difficulty Level: Medium to Hard

Warrior Rising Vetrepreneur Program

Warrior Rising is one of the strongest and most well-known veteran business communities in America. Over the years, their funding capacity and capacity to take in new vetrepreneurs has jumped impressively and the 2024 Warrior Academy business workshop is shaping up to be the biggest yet.

Deadline: Warrior Rising accepts Vetrepreneur applications year-round

Amount: Based on individual need.

Where to Apply: Apply to join the Warrior Rising Community here.

Key Requirements: Applicants must be a member of the US Armed Services, current or veteran, or a spouse or close family member of a veteran. After applying, Warrior Rising meets vetrepreneurs where they are, in any stage of their business. Once you are a member of the community, expect invitations to regular events and funding opportunities selected for the vetrepreneur community.

Application Difficulty Level: Easy

U.S. Chamber of Commerce CO-100 Awards

The Chamber of Commerce Co-100 awards is a national grant competition with a specific category for veteran-owned small businesses. This annual contest celebrates business owners with strong business plans and well-thought-out plans for growth.

Deadline: July 8, 2024

Amount: $25,000

Where to Apply: When applications open later this year, vets can apply for the veteran grant through the main CO-100 portal.

Key Requirements: You must create an account with The Chamber of Commerce on their specific Co-100 Awards portal. The 2024 portal is not live yet, but check this page regularly for updates. Applicants for the veteran category of the Co-100 Awards must be a veteran or transitioning active-duty member of the Armed Services. The applicant must be the majority owner of a for-profit business with less than 250 employees and a gross revenue under $20 million.

Application Difficulty Level: Medium

Grants for Veterans vs Government Grants

Grants from the government operate very differently than the grants on this list. Many of the groups on this list benefit from funding that comes from the government, and this is usually how the federal or state governments get involved with grant funding. There are, however, opportunities for small business owners to get grant funding directly from the government; learn about the best ways to be involved here.
MORE >> Government Grants for Small Businesses

Choosing the Right Grant for Your Business

As a veteran small business owner, each grant on this list is both uniquely familiar with the problems you most likely face as well as the anxieties of running your business. Each grant on this list which is run by vet groups pride themselves on short applications and long relationships meaning that it is more than possible for a vet small business owner to apply to each grant on this list with no problems.

Tips for Making the Best Grant Bid

Business grants for veterans are highly competitive, so taking every step to help your grant bid stand out could help. Here are tips to focus on to help make your bid the best it can be.

Research and Review Before Applying

Before beginning any applications, conduct a thorough review of each grant to make sure it aligns with you and your business. Aside from double checking that you meet all requirements, consider looking at past winners and see how they compare to your business. Are they community-driven small businesses? Or do most past winners come form a specific business area? Putting your time and energy into the right grants could be a key to your success.

Highlight Your Story

So many grant competitions ask their applicants to demonstrate their determination and ethics but for veteran grants, the judges and review panels likely already know applying veterans are of good character. It then makes much more sense to double down on firm, specific, and dollar direct plans for what you would do with grant money. Organization is another trait inherent to our vets.

Tell the judges how service in the military relates to service in the community as a small business. The best veteran grant bids will be the ones that authentically show your acumen for business as well as your great personality. Be yourself!

Have Someone Look Over Your Application Before Submitting

Instead of reviewing your grant application yourself, consider letting a fellow business owner, mentor, or grant professional review your application. They may be able to provide valuable feedback that strengthens your application.

Alternatives to Grants

Investors: As seen on the resources section of this list, investors and venture capitalists are attracted to veterans for their discipline and loyalty. There are several great ways to seek investor funding as a veteran. But don’t feel restricted to veteran-only investor circles; being a veteran is an incredibly visible boon to any bid for investors. You sell your character as well as your business when seeking investors.

Crowdfunding: A successful crowdfunding campaign needs a compelling story and a tangible goal. Veterans have half of those criteria just by being themselves. A veteran small business owner with a story to tell would likely do quite well on a crowdfunding campaign with the right videos and digital assets. One of the other major benefits of crowdfunding is that your business is seen and recognized by all of the people who click on your campaign.

Financing: If you have a very specific plan for how you plan on using your funding and if that plan leads to you making more capital over time, financing is a great way to expedite those plans. Taking out a loan, of course, will have repayment terms unlike a grant. So only seek out financing if you are confident your business plan can lead to easy repayment.

Additional Resources for Veteran Small Business Owners

There are a number of resources set aside specifically for veteran small business owners. While not all these resources may lead to funding, the veteran business owner community is known for a focus on education.

SBA Boots to Business

The SBA Boots to Business program is an education and mentorship program for veterans with a focus on aiding vets at every level of small business ownership. From idea to brick-and-mortar, Boots to Business is a program that works on bringing the strengths of military ethics into the business world.

Military Reservist Economic Injury Disaster Loan

The Military Reservist Economic Injury Disaster Loan is a SBA-backed loan with a 4% interest rate that any business with an essential employee who is military reserve called up to active duty can apply for to cover operating expenses. The maximum amount for the loan is $2 million.

VetFran Franchising

Vetfran is a group that works to connect veteran business owners with a large group of franchise owners looking for new franchisees. Vetfran has a great collection of big-name sponsors and opportunities specifically for their veteran members.

Service-Disabled Veteran-Owned Small Business Certification

Businesses owned by veterans who are service disabled can self-certify with the SBA as a Service-Disabled Veteran-Owned Small Business. Once certified, these businesses have access to a specific

3% of annual federal contract dollars which are set aside for certified members.

Hivers & Strivers

Hivers & Strivers Capital is a venture capital firm with the mission of getting early-stage financing to veterans. With many vet board members and a great peer to peer network, Hivers & Strivers is one of the best ways for a veteran striving to kick off their small business to get started. Further, Hivers and Strivers has extensive staffing connections and mentorship programs.

Veteran Women Igniting the Spirit of Entrepreneurship

Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) is a program hosted by the Syracuse University D’Aniello Institute for Veterans & Military Families to teach business skills to female veterans and the spouses of vets. Funded in part by the SBA, this program is renowned for its networking sphere. With regular lectures and speeches from business experts and Fortune 500 CEOs, this program is a great way to continue your business education in a friendly environment. V-WISE events are generally in person in the Syracuse area but watch the V-WISE homepage for video and teleconference events in the future.
MORE >> 9 Best Small Business Grants for Women

Business Grants for Veterans FAQs

What Can a Business Grant Be Used For?

Specifics may vary by the grant issuer, but a business grant for veterans can typically be used for development projects, growing operations, purchasing equipment or inventory, and hiring and training employees. Check the terms and conditions of the grant to verify the specific uses of the grant funds allowed.

Will My Grant Be Taxed?

In almost every case, yes. Unless otherwise stated, grant money is subject to taxation.

Is There a Downside to Applying for As Many Grants as Possible?

Especially as a veteran, there are several grant opportunities that, even if you don’t win, could lead to lasting partnerships. Veteran grant competitions are both a way to highlight great businesses and the honor of service. Apply to as many veteran grants as you have time to; you may walk out of them with a new community of veteran business owners ready to help you in a way even more valuable than capital.

Do I Have to Pay to Apply for a Grant?

No veteran grant on this list has an application fee.

Brandon Wyson

Content Writer

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How to Check Your Business Credit Score

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by Bernadette Abel7 minutes / June 3, 2024

What’s in your business credit report? Knowing what lenders see when they’re making financing decisions about your business can help you better prepare before applying for credit.

Here are a few things to know about your business credit report. Plus, we cover seven websites that offer reports, including five where you can get a free report.

What is in a Business Credit Report?

Credit bureaus track business credit activity through your EIN (employee identification number); or, if you have one, your DUNS. number. Business credit reporting agency, Dun & Bradstreet, issues this identification number, and it’s free for businesses that have to register with the federal government to receive contracts or grants.

This information helps build your credit report, which contains details on reported past and current borrowing arrangements. These include business loans, credit lines, credit cards, and mortgages. The report may also include information on judgments, liens, and any accounts that may have gone to collections agencies. Your business credit report will also include a credit score, which generally represents how the issuing agency views your business’ ability to make payments on time and in full.

Where to Check Your Business Credit Score

Business credit reports are complied by three companies: Experian, Equifax, and Dun & Bradstreet. To get your business credit report, you need to request a report from one of these three agencies, or through a third party. When requesting your business credit report, you’ll need to provide basic information including your business name, address and contact information. Specific requirements could vary by reporting agency.

7 Business Credit Report Providers

If you’re curious about what’s in your business credit report, check out these seven providers – some of which offer reports for free!

#1. Experian

One of the better known personal credit bureaus in North America, Experian, also offers paid business credit reporting services. Experian provides a one-time business report which includes a credit summary report, credit score, and business summary for one business. Or, you can choose a monthly or annual service with the ability to check and monitor your own business credit reporting and business information in real-time. Through the service, you can also check details on other businesses, such as potential partners or customers.

#2. Equifax

Operating across the globe, Equifax offers an entire suite of business credit reporting services for businesses large and small. While they don’t currently offer a free business credit report, they do off reports for a fee. In addition, their Business Risk Monitor for Small Business service provides public record, credit, and risk score email alerts to notify customers of activities and inquiries impacting their business credit in these areas.

#3. Dun & Bradstreet

D&B Credit Insights lets you monitor changes to your Dun & Bradstreet business scores and ratings; and can notify you – either through email notifications, or via an app – when someone else requests access to your business score. They have three subscription options ranging in cost from free to $149 per month. Take note – while your Paydex score is available through all three subscription options, if you are looking to specifically access your D&B rating, you’ll need to opt for one of the paid subscriptions.

#4. Nav

Credit monitoring system, Nav, gives both individuals and businesses access to free credit summaries. Check your business report summaries from Experian and Dun & Bradstreet — you don’t even need to provide a credit card number to do so. Yet, bear in mind that these are only summaries. If you want access to more detailed business credit information, you’ll need the paid service.

#5. Data Axle

Data Axle (formerly Credit.net) provides purchases of one-off credit reports as well as two credit monitoring subscription options – a monthly plan or an annual plan. With the subscription options you receive unlimited searches and downloads of credit reports. If you opt for purchasing a single report, upon your first purchase you will receive a second report for free.

#6. CreditSafe

Here’s another online option that lets you access a free report before committing to a longer-term paid arrangement. With a CreditSafe free trial, you’ll have access to credit scores and limits, company financials, adverse credit insights and more for not only your own business, but other businesses as well. With your free trial you’ll be given access to view up to five domestic credit reports.

#7. Tillful

Tillful is on a mission to help small businesses reach their full potential by giving them free access to their credit score so owners know where they stand when it’s time to get business financing. With the Tillfull business credit reporting ecosystem, you can access your credit score and learn how it’s measured. You can also connect as many bank and business credit accounts that you want to get a holistic view of business credit. You can access this system as often as you’d like and you can even sign up for email monitoring alerts to let you know in real-time when a change has been made.

How Lenders Use a Business Credit Report

Lenders use the information in your business credit report to help inform financing decisions for credit applications from businesses. They may take into account your business credit score, payment history, length of credit history, and any derogatory or negative information.

Why You Should Check Your Business Credit Report

It’s important to review the information on your business credit report for accuracy. If you find that it is not, contact the reporting agencies to have it corrected as Incorrect information could negatively impact a number of areas of your business including the ability to secure a business loan or other business financing

Knowing what lenders will see on your report can also give you the opportunity to prepare to explain any unusual or less-than-desirable information on your business credit report. And it also gives you an idea of areas for improvement, such as paying bills on time or keeping credit card balances within limit. These steps could make it easier to qualify for business financial vehicles like a term loan or business line of credit.

Why You Should Check Your Business Credit Report with Multiple Bureaus

Business credit reporting bureaus develop calculations to measure your business credit score. However, these calculations vary from bureau to bureau, so your business credit report may be slightly different with each bureau. Checking your report with different bureaus can help you determine your business’ creditworthiness while also letting you review each report for accuracy.

Business Credit Report FAQs

How long does information stay on my business credit report?

The length of time information stays on your business credit report varies. According to Experian, trade data and leasing data can stay for up to 36 months, while negative information like judgments, tax liens and collections can last for over six years. Bankruptcies can stay on business credit reports even longer, lasting 7-10 years. The long-lasting effect of negative information o n business credit scores is one reason why regularly checking your report for errors is so important.

How accurate is a business credit report?

The accuracy of a business credit report depends on the reporting agencies and the information provided by creditors. Because mistakes and errors happen, you should regularly review your business credit report through multiple bureaus to verify the information listed is correct.

Bernadette Abel

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What is a Non-Recourse Commercial Loan

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by Brandon Wyson6 minutes / June 2, 2024

An effective means to expedite a business’s growth is tactical commercial financing. A factor that may dissuade businesses from finalizing a loan agreement, however, is fear of default and the subsequent recourse from lenders. There are actually several types of loans where lenders will agree to not seek recourse after borrower default, which are known as non-recourse commercial loans.

What is Non-Recourse Loan Financing?

A non-recourse commercial loan is an agreement between a lender and a borrowing business where the borrower is not personally liable if they default on the loan. In the case a borrower defaults, lenders may not repossess any of the borrower’s property that was not originally put up for collateral. Lenders may seize profits from the business, but the business owner’s personal assets may not be taken.

What is The Difference Between a Recourse Loan Versus Non-Recourse Loan

Traditional recourse loans require borrowers to make a personal guarantee that they default on their business loan, the lender may seize bank accounts and other assets until the original debt is covered. In the case of a non-recourse loan, lenders may only seize agreed upon collateral in the event of borrower default. Even if the collateral does not sufficiently cover the full value of the loan, the lender cannot seize the borrower’s personal assets to recover losses from the original loan.

Benefits 0f a Non-Recourse Commercial Loan

Non-recourse commercial loans come with various benefits for small business owners, including:

Limited personal liability in the event of a default as the loan is typically backed by collateral
Asset protection for businesses outside of assets used to back the non-recourse commercial loan
Relatively low financial risk while still securing financing

Carve-Outs and the “Bad Boy Guaranty”

Most non-recourse financing agreements have exceptions where the lender may collect beyond collateral in the case of borrower default. Exceptions to non-recourse agreements are called “carve outs,” or “Bad Boy Guarantees.” Most carve outs protect lenders in the case a borrower either misrepresented their intentions or committed a crime. Several common carve outs in non-recourse financing agreements allow the lender to seek recourse outside of collateral, including:

Borrower files for bankruptcy
Borrower commits fraud or other criminal activity
Borrower fails to pay property taxes
Borrower fails to maintain required insurance

If a borrower commits any of the acts specified in an agreement’s carveout clause, the non-recourse protections of the original agreement are nullified.

Qualifying for Non-Recourse Financing

Since non-recourse commercial loans are much riskier for lenders, conditions for approval are generally much more strict. Among traditional qualifications of positive balance sheets, a good business credit score and sufficient collateral, applicants must also meet the terms of a non-recourse guarantee. Similar to carve outs, the non-recourse guarantee specifies that the borrower, or the guarantor, must maintain certain obligations to retain non-recourse status.

A non-recourse lender may require that the borrower sign a guarantee of performance, meaning that certain goals remain on schedule, or a guarantee of payment. Guarantees of payment stipulate that any profits made from the project financed by the original loan must be routed back to pay the accrued debt.

Since lenders face significantly more risk when making a non-recourse loan, non-recourse agreements are generally reserved for exceedingly low risk-of-default borrowers taking on long-term projects.

Types of Non-Recourse Commercial Loans

Real Estate

The most common type of non-recourse financing is non-recourse real estate loans. In the case of real estate loans, non-recourse deals commonly stipulate that the borrower must pay back the loans with profits made after selling the real estate – which is a guarantee of payment. If the property is developed, but does not sell or does not make a profit, the real estate itself is often considered sufficient collateral.

SBA

Non-recourse loans secured by the SBA are traditionally used to help small businesses secure financing for fixed assets such as real estate, office facilities and sometimes equipment. To decrease the direct risk for lenders, the SBA assumes a portion of the risk for the loan and guarantees to cover a percentage of a loan’s full amount in the case of borrower default. If a borrower defaults on a SBA-secured non-recourse commercial loan, the government, not the lender, is liable for the guaranteed portion of the loan.

Development

Another common type of non-recourse commercial loan are non-recourse development loans. Development loans are specifically for developing commercial property and often finance a project through its entire process. Development loan agreements usually state that the borrower must begin repayment once they have started earning a profit. If a project is not profitable or does not complete development, then the loan will often be considered defaulted. When a non-recourse development loan defaults, the property which was financed will then be seized as collateral.

Non-Recourse Factoring

Similar to non-recourse loans, non-recourse factoring agreements stipulate that in the event an invoice cannot be paid, the factor is liable for the losses, not the customer. Non-recourse factoring agreements, however, tend to have higher fees and/or more restrictive terms because the risk is much higher for the factor. Factors are more likely to offer non-recourse invoice factoring services to customers who handle a large and constant flow of invoices and whose clients have good credit. Depending on a company’s size and invoice capacity, recourse and non-recourse factoring are both viable options. Lenders also may consider the size and volume of a customer’s invoices before offering non-recourse factoring options.

Non-Recourse Overview and Considerations

Non-recourse financing may be a misleading name for this kind of financing, as almost every type of non-recourse deal still allows lenders to seek recourse of some kind. Non-recourse agreements are almost always reserved for deals where lenders can recoup their losses without additional recourse. However, semantics aside, if you’re able to qualify for non-recourse financing it can be a great way to keep your business on the growth track.

Non-Recourse Commercial Loan FAQs

What are the disadvantages of a non-recourse loan?

Because non-recourse commercial loans can saddle the lender with higher risk, the lender will usually offer lower loan amounts or require higher interest rates for these types of loans. Compare rate and terms of non-recourse and recourse commercial loans before choosing a type of financing.

How hard is it to get a non-recourse commercial loan?

Qualifying for a non-recourse commercial loan could be more difficult than qualifying for other types of small business financing. This could include higher business and personal credit score requirements.

Brandon Wyson

Content Writer

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Small Business Loans for Veterans

Manage Your Money

by Brandon Wyson16 minutes / May 31, 2024

A guide to small business loans for veterans

Veteran small business owners are a strong community of achievers with a background in determined hard work. It’s no wonder so many veterans shift into starting and running a business when they rejoin civilian life. However, while time spent as an active duty service member can be an advantage when dealing with the demands of day-to-day business operations, it can also impede veteran business owners’ chances of obtaining business financing – with service-related gaps in financial history making it more challenging (and more complicated) for veterans to get business loans than their non-military counterparts. There are still great options out there, though. It just may take a little more time and a little more paperwork to put your hands on some funds. Let’s explore the most popular loan options for veteran small business owners.

Small Business Loan Options for Veterans

Veteran entrepreneurs can choose from a large selection of business loans and financing options provided by traditional banks and alternative lenders, along with loans that are backed by the federal government through the Small Business Administration (SBA). Loan options vary by lender and will have their own set requirements laid forth by each lender. Depending on your specific situation, one loan type will likely serve you better than another so fully researching each option to select the best financing for your business is critical.

Personal Loans for Veteran-owned Businesses

Let’s begin with one that you may not expect: It is more than possible to take out a personal loan to boost your small business. While business loans are frequently based on the overall financial standings of your enterprise itself, the terms of personal loans will be based on your personal creditworthiness and financial health. Using personal loans for your business, however, has its own set of rules and considerations.

Pros of Using a Personal Loan for Your Business

While there are options for secured personal loans, the majority typically do not require collateral, which means you’re less likely to be risking any of your personal assets to finance your business with this option.
For new and very small businesses, it can be much easier to qualify for a personal loan than a traditional business loan. In addition, you can use the funds from your personal loan for virtually any expense.
You can get access to funds quickly – usually within a few days after you are approved, though some personal loans offer same-day funding. And personal loans typically come with very reasonable terms, ranging anywhere from two to seven years (though some lenders will go out as far as 10-12 years for much larger personal loans.)

Cons of Using a Personal Loan for Your Business

You will have access to less money with a personal loan. In rare situations, some lenders do offer personal loans up to $100,000; but, typically, most lenders will only go up to $50,000 for very qualified candidates.
APRs tend to be much higher with personal loans, with the average being about 11.05% in 2023, according to Bankrate. In addition, interest on a personal loan isn’t tax-deductible, unlike interest paid on a business loan.
Regardless of whether you go for a secured or unsecured personal loan, you will be putting your personal credit on the line. If you do opt for a secured loan, you will also be putting personal assets at risk if you are unable to pay the loan.

Taking all of the positives and negatives into account, veteran business owners should be cautious when they decide to leverage a personal loan for business use. The scenario is best applied for new or very, very small businesses that aren’t likely to be approved for business-specific financing.

Loans from Family & Friends

Depending on your circumstances, taking out a loan directly from friends or family may be one of the best options available to small businesses – especially startups. While traditional financing will uniformly lay out terms and conditions (with the expectation of prompt payment), loaning money on a personal level requires a level of trust and understanding between both parties that extends beyond a pen-and-paper contract.

Pros of Friends & Family Loans

Friends & Family loans can be much more affordable for business owners, as individuals with this personal relationship often won’t charge as much in interest. In fact, they can waive interest overall for other benefits, such as a stake in ownership, royalties/revenue share, or even a lifetime discount for your products.
This type of loan also has the potential to add more flexibility than “official” lenders. If you need to delay payment or you want to pay off the loan early, friends and family are more accommodating and less likely to charge you additional fees for these types of scenarios.
These loans are a particularly great option for veterans who have a limited credit history that precludes them from accessing financing elsewhere.

Cons of Friends & Family Loans

You’re making business personal which could negatively impact your relationships. Missed payments, disputes over a loan agreement, or a sense of general awkwardness if your business isn’t making money as quickly as you’d hoped, could all lead to a damaged personal relationship.
While these loans are great options for those with limited credit, they can also be a detriment to your credit profile since they will not be helping you to build or improve your credit standing – which is something that you will need if you want to get more financing from a traditional lender down the line.

Like personal loans, friends and family loans can be a great option for new and very small businesses. They can also be a viable loan option for business owners with limited or bad credit. However, make sure you have a strong agreement – that both parties are happy with – in place to help insulate your relationship from any potential damage.

Term Loans

Term loans are what most business owners think of when they hear the word “business loan”.Term loans are one of the most straightforward ways to get a lump sum of working capital for your small business. Interest rates on military business loans like these can be fixed or floating and they are available as both short-term and long-term loans. Business term loans can be used for virtually any business purpose, but some lenders do have restrictions on how you use the funds.

Pros of Using a Term Loan for Your Business

With business term loans you don’t have to give away any ownership of your business to get access to funds like you would with some other types of financing
There are many types of business loans available so finding one to suit your exact needs and business situation is relatively easy so long as you qualify.
Unlike other kinds of financing, interest payable on a term loan is sometimes tax deductible. You should always check with your accountant prior to signing a loan contract to determine if you can take advantage of this tax deduction.

Cons of Using a Term Loan for Your Business

Business term loans tend to have stricter requirements than other types of business financing (especially when it comes to credit scores) and they typically require quite a bit of paperwork – from bank statements and tax returns to financial statements and a business plan
If you own a newer or very small business, term loans typically aren’t a great option as it can be difficult to meet business and revenue qualifications set by lenders.
If you need money quickly, you may want to consider other financing options. Business loans tend to take longer – from several days to several weeks – to get a decision on whether or not you were approved. In addition, once you are approved, it can take another several days to weeks to get the funds in your account.

SBA Loans

For honorably discharged veterans, service disabled veterans, active duty military members who are eligible for the TAP program, active reservists, and National Guard members, the SBA formerly offered loan programs designed to help you get access to the capital you need to start, grow and manage your business. These programs are no longer active and the SBA has not commented on whether or not they plan to restore them the future.

SBA 7(a) Loan

7(a) loans are the most well-known and the most common type of SBA loans, which actually represent an entire class of loans with limited fees, capped interest rates, and a partial guarantee of the total capital offered in the loan. Standard 7(a) loans can offer up to $5 million in capital. The terms of a 7(a) loan are typically determined by your use of the funds. For example, if you plan to use the loan for real estate, terms can go out as far as 25 years but if you plan to use the loan to purchase equipment, for example, terms are capped at 10 years.

Under the Veteran’s Advantage program guaranty fees for standard 7(a) loans were discounted by 50%. This program ended in 2018.

SBA Express Loans for Veterans

SBA Express loans are a type of 7(a) loan that boasts an accelerated review turn time of 36 hours by the SBA. These loans can go up to $500,000 and have terms that can extend up to 10 years. Under the Veteran’s Advantage Program, your up-front guaranty fee for an express loan is 0%. This program also ended in 2018.

SBA Microloans

SBA microloans are only offered up to $50,000 and are generally considered the best option for veteran small businesses still in the early stages of business. According to the SBA, interest rates will always depend on the intermediary lender, but generally range from 8 to 13 percent. Further, the maximum repayment term possible is six years.

Military Reservist Economic Injury Disaster Loan (MREIDL)

While not specifically for veterans, this is a helpful loan if you have an essential employee who is a reservist that was called up to active duty. MREIDLs provide funds to assist eligible small businesses to meet their ordinary and necessary operating expenses that have been severely impacted due to the absence of the now-active reservist employee. Loan amounts can go up to $2 Million, but the actual amount will be determined based on SBA calculations of the actual economic injury to the business.

Pros of SBA Loans for Veterans

SBA loans tend to be the most cost-friendly loans available to all small business owners. They were formerly even more so for Veterans through the Veteran’s Advantage Program fee reductions.
There is a variety of loan types that are backed by the SBA that come with favorable interest rates and longer payment terms making it easy to find a loan that can fit your current business needs

Cons of SBA Loans for Veterans

There is a ton of paperwork involved when applying for an SBA loan and there are many strict requirements for qualification, including the fact that you need to exhaust all other forms of financing first. In addition, collateral may be required for approval.
While there are a variety of loans available, you are limited on how you can use the funds based on each loan type. It’s important that you nail down exactly how you plan to use your funding to ensure that you apply for the appropriate type of SBA loan.

Who Qualifies for a Veteran Small Business Loan?

To qualify for a loan under the SBA’s Veterans Advantage Guaranteed Loans program, at least 51% of the small business applying must be owned by:

an honorably discharged veteran
an active service member who is eligible for the military TAP Program
a service-disabled veteran
a reservist
National Guard members
the current spouse of a veteran, active duty service member or National Guard Member
widowed spouse of a soldier who died in the line of duty or as the result of an injury connected to their service
Business loan eligibility depends on multiple factors including business credit score and average annual revenue

Businesses will also be required to meet minimum qualifications including credit score, annual revenue, and time in business.

How to Get a Small Business Loan for Veterans

Getting a business loan can be a complex and time-consuming process. Each lender and each loan type comes with its own requirements, risks, and rewards so it’s important for you to do extensive research before even applying. From understanding your own business needs to breaking down the total cost of financing for each loan type, there are multiple steps you should take when going through the process of getting a business loan.

Step 1: Determine your financing needs

First, look at your business’s financial requirements to determine how much financing you need. Outline the purpose of the loan, making sure to consider working capital, equipment purchases or other planned growth. Not only is this often required during your application, but it also shows lenders that you’ve done your due diligence.

Step 2: Choose the best loan program for your business

Compare loans available to veterans and choose the option that fits your business and needs best. Double check terms, interest rates, loan amounts, and application requirements

Step 3: Gather the necessary documents

During the application process, you’ll be asked to submit information about your, along with details on your veteran status. Application requirements will vary but be prepared to provide at least the following:

proof of veteran status
at least three recent business bank statements
both personal and business financial statements
a business plan
recent tax returns.

Step 4: Apply

Once you’ve determined which small business loan program is best for your business, it’s time to fill out and submit your application. Next, wait to hear back from your lender to find out if you’ve been approved.

Additional Financing Options for Veteran Business Owners

While there are several great veteran business loan programs out there, loans luckily aren’t the only financing option available for veterans. Here are some alternative financing options that veterans should consider based on their needs:

Revenue-Based Financing

Revenue-based financing is a type of financing that allows businesses access to working capital through a pre-purchase of future revenue. Essentially, a financing partner or lender will provide you with a lump sum of cash based on expected future sales. You “sell” this future revenue at a discounted rate to get money to run your business today. This is a short-term type of financing with terms averaging around 6-12 months. Payments are typically made daily, though some lenders allow for weekly or monthly payments and payment amounts are based on a pre-determined percentage of that day’s revenue. This percentage is fixed, so if you make less in sales on any given day, your payment to your lender will be less that day. If you make more sales, your daily payment is larger.

Equipment Financing & Leasing

If you’re looking for financing to add or upgrade business equipment, equipment financing or leasing may be the way to go. Depending on the lender you choose, you may be able to finance 100% of the cost of the equipment and the asset that you are purchasing typically acts as collateral.

Business Line of Credit

A line of credit is one of the most flexible forms of financing available to small business owners. This revolving form of financing allows you to draw on funds when needed and you only pay interest on the amount you use. Businesses can draw and repay multiple times throughout the term of the line. Lines of credit tend to suit the veteran business owner either looking to keep more working capital on hand during slow seasons or those who are expecting a repeating and predictable expense that would make too large of a dent in available cash flow.

Alternative Financial Resources for Veterans

If formal financing arrangements aren’t in the cards for you right now, there are still several great ways for veteran small business owners to connect with the capital they need.

Grants for Veteran-owned Businesses

There is a robust collection of organizations that offer grants specifically for veteran business owners, like the Military Entrepreneur Challenge and the Texas Woman’s University Veteran Woman Entrepreneur Grant. Beyond simply offering grants, several of these organizations offer additional resources for veterans, doubling as mentorship organizations and offering a great community for the veterans who join up. And at that, many also have connections for picking government contracting work or special resources for disabled veterans.

Crowdfunding

Americans love their troops and any veteran business owner with an interesting business plan or a charismatic screen presence ought to consider bringing their business to crowdfunding. Crowdfunding is a way to raise capital for your business by tapping into your extended network, whether that be family, friends, customers, and/or individual investors. There are two primary forms of crowdfunding – rewards (where you offer something non-money related to those who contribute money) and equity (where you offer equity in your business in exchange for monetary contributions). While the main purpose of crowdfunding is to raise capital, there are additional benefits as well including brand awareness, growing your customer base, and potential partnerships.

Business Credit Cards

A business credit card is a great resource, especially for filling small gaps in your operations or giving yourself a small cushion for your working capital. When choosing a business credit card, however, be certain to weigh as many options as possible as the sign-on deal of your card is likely the most lucrative benefit you can take advantage of.

Veteran Business Loan FAQs

Does the VA offer small business loans?

No, the Department of Veterans Affairs (VA) does not offer business loans. However, there are many small business financing options available to veterans, including SBA loans, term loans and personal loans.

How much can a veteran borrow through a small business loan?

Small business loan amounts for veterans can vary depending on the type of business, annual revenue, and both business and personal credit scores. Many loans also set limits on how much any applicant can borrow, including veterans. Review different financing options to find one that meets the needs of your small business.

Brandon Wyson

Content Writer

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9 Best Small Business Grants for Women

Manage Your Money

by Brandon Wyson11 minutes / May 22, 2024

Being a woman small business owner comes with its own collection of challenges. Those women who rise above and make their mark in the business world ought to be celebrated, and that’s part of the reason there is such a robust list of grants for women business owners. Going into 2024, there are several great opportunities for grant-based funding specifically set aside for women small business owners.

These grants see the value of female entrepreneurship and want to see what you are capable of. Following this list, start your applications early, as several of the biggest grants this year have already opened for applications.

9 Top Private Business Grants for Women

1. SoGal Black Founder Startup Grant

The SoGal group are a collective with the sole goal of reducing the funding gap that negatively affects women and specifically women in the BIPOC community. Beyond awarding funds, the SoGal group also offers a robust connection network for mentorship and consulting for grant recipients.

Deadline: 2024 TBA

Amount: From $5,000 to $10,000

Where to Apply: Apply for the grant directly from SoGal’s website

Key Requirements: Applicants must self-identify as a Black woman or Black nonbinary entrepreneur, must have a legally registered business, and have a well-thought-out solution or idea worth presenting.

Application Difficulty Level: Easy

2. WomensNet Amber Grant for Women

The WomensNet Amber Grants are some of the most well-known and consistently delivered grants for women in the business world. Given out at the end of each month, these grants celebrate the variety of women-owned businesses through maximum giving. At the end of every year, WomensNet gives two $25,000 grants.

Deadline: Rolling Applications

Amount: $10,000 per month and $25,000 at year’s end

Where to Apply: Check out the application form on the Amber Grant website.

Key Requirements: Written personal statement about your business and your plans for the grant money. Also, Amber Grants requires a $15 application fee with your entry.

Application Difficulty Level: Easy

3. digitalundivided BREAKTHROUGH Program

Backed by several big-name corporate entities, the BREAKTHROUGH program from digitalundivided is a women’s’ group celebrating the power of community in women’s entrepreneurship. The group is also known for their strong circle of mentors and support group.

Deadline: 2024 TBA

Amount: $5,000

Where to Apply: Apply for the grant from the digitalundivided grant page

Key Requirements: Identify as both a woman and a member of the BIPOC and/or Latina community, be at least 18 years old, have a business registered for at least a year in which you have majority ownership, have a website or mobile app for your business, generate at least $50,000 in revenue annually.

Application Difficulty Level: Medium

4. Tory Burch Fellows Program

Deadline: Expected Q4 2024

Amount: $5,000

Where to Apply: Apply from the Tory Burch webpage

Key Requirements: The applicant must be a woman with at least 51% ownership of the company they are applying on behalf of. The applicant must be 21 years old at the time of the application due date. The applicant must be proficient in English and live in the United States and/or territories.

Application Difficulty Level: Easy

5. IFundWomen Grants Series

We have decided to include all IFundWomen grants as one major category since applicants can apply for one of several IFundWomen grants at once. This includes the Jane Walker grant and the Visa Global Hub.

Deadline: Rolling and varied

Amount: $5,000 to $100,000

Where to Apply: Regard the collection of IFW grants at their website

Key Requirements: IFW grants vary requirements slightly but have one major throughline: applicants must identify as a woman and have majority ownership of the company they are applying on behalf of.

Application Difficulty Level: Medium

6. Fearless Fund Strivers Grant Program

The Fearless Fund Strivers Grant offers monthly grants as well as special one-on-one mentorship for chosen grant recipients. The program is open to all Black women business owners.

Deadline: Monthly grants for 2024 TBA

Amount: $10,000

Where to Apply: Apply for the grant from the Fearless Fund’s application page when it goes live. For now, use the Fearless Fund main page.

Key Requirements: Applicants must be Black woman business owner legally residing in the United States. Applicants must also be 18 years old or the “age of majority” for their state of residence. Applying businesses must have an annual revenue less than $3,000,000 for 2021.

Application Difficulty Level: Medium

7. Women Founders Network Fast Pitch Competition

The Women Founders Network Fast Pitch Competition is an in-person pitch competition held in October at UCLA in Los Angeles that allowed women-owned businesses to perfect the best pitch for their business. Winning businesses at the pitch completion cane take home a variety of grant prizes; the highest prize is $25,000.

Deadline: 2024 TBA

Amount: $5,000 – $25,000

Where to Apply: Business owners can apply for selection for the in-person pitch competition on the Women Founders Network website.

Key Requirements: Applicants should address a “real market need,” have a “sizable market opportunity,” and a “sustainable source of differentiation,” according to the Women Founders Network application info page. Further, applying businesses must address a 23-question questionnaire found on the company’s website.

Application Difficulty Level: Hard

8. Boston Women’s Fund

The Boston Women’s Fund is a cooperation of advocates enabling women-owned businesses with community value in the Greater Boston area. The BWF offers several grants year-round with several of which geared toward businesses that support their local community.

Deadline: Accepting at various times for various grants.

Amount: To meet demonstrated need

Where to Apply: The Boston Women’s Fund compiles all their active grants at this list.

Key Requirements: Applicants must be a woman and own a small business operating in the Greater Boston area (everything on the MBTA except the Purple Line!). Further, many of BWF’s grants ask that applicants demonstrate how their business is an aide to their greater community.

Application Difficulty Level: Easy

9. The Girlboss Foundation

The Girlboss Foundation is a grant competition highlighting innovative and game changing women business owners in the arts fields. Girlboss grants are awarded bi-annually.

Deadline: 2024 dates TBA

Amount: $15,000

Where to Apply: When applications go live, you can apply directly from the Girlboss Foundation website.

Key Requirements: Applicants must be women small business owners operating in the industries of fashion, design, music, or the arts.

Application Difficulty Level: Easy

A Note on Government Grants

The government offers several thousand grants in one way or another, but most government grants don’t operate in the same way as grants in the private sector. While private grants are usually B2B, government grants tend to be F2S2M2B, or Federal to State to Municipality to Business. And further, applying for a government grant is such a far cry from applying for a private grant that the two ought not be treated as one.
MORE >> Government Grants for Small Businesses

Tips for Making the Best Grant Bid

Making the best bid on a grant is about more than following application instructions and deadlines. Grant issuers want to see their funds go toward a promising business that could make the most of the funds. Here are tips to help you strengthen your grant applications.

Look at Past Grant Winners

It may not be worth applying to grants that aren’t a perfect fit. When researching grants, take a look at past winners to see how your business compares. You may notice a theme among previous winners. If your business fits this theme, then start moving forward with your application. If not, your time and effort might be better used toward another application.

Share Your Experience

Most of the major grants for women want a variety of one thing: they want to hear your new idea and how you are going to make it work. Of course, industry specific grants will have more specific expectations but the root of their wants are all quite similar. Major grants get thousands of applications every year so the grants that stand out and ultimately win are those that do something new or offer to do something extraordinary. Further, those with well thought out plans for how they will spend their grant money are seen as prudent and deserving.

Talk specifically about how being a woman has influenced your SMB life or talk about any women role models who inspired you to take up ownership. None of these grants ask for video applications, but those with in-person elements will also ask for you to command a memorable stage presence.

Choose the Right Grants for Your Business

Choosing the right grant is much more involved than simply choosing the amount of funds your business needs. Applying to grants takes time, and crafting a winning application takes even longer. When looking over the grants you want to apply for, find the organizations who will best resonate with your business’s story. Remember that each grant application is likely read by another business owner or someone especially keen on the struggles of running a small business.

Try to choose grants that give you more than a month to put your application together. Try to choose grants that are specifically geared toward your industry – when this isn’t possible, try to find a way to make your business especially relevant to the organization awarding grants.

Additional Resources for Female Small Business Owners

Grants for Women

Grants for Women is a great resource that compiles grant opportunities for women as they appear. Check this page regularly, as it is updated year-round. Further, subscribing to this page is a great way to stay in tune with SMB trends that may be relevant to your own business.

SBA Office of Women’s Business Ownership

This is the SBA’s main page compiling all resources for women small business owners. While this website does show some grant opportunities for women, this is also a great way to get involved in your local community, as the SBA compiles local resources for women SMB owners here as well. There are also several training programs from the SBA available from this page.

Alternatives to Grants

Crowdsourcing: Crowdsourcing websites like Kickstarter and Indiegogo are great places for businesses with style and memorable pitches to get funding. These sites let individuals donate to your cause, usually in exchange for a perk or bonus. The most successful crowdfunding initiatives take advantage of how big the Internet is; even if someone may not be able to visit your business, it’s more than possible to grab their attention and get their donation.
Financing: If your business plans on using grant money to expand or fund growth, it may pay off to look into financing options viable for your business. Financing gives your business the chance to expedite growth and start new projects with confidence.
Investors: If you have a sellable idea that has the potential to make big returns, you may want to look at running a circuit of investor funding. Investors who believe in your idea are essentially P2B grant givers. There are several pros and cons to taking on private investors as a small business, namely, investors tend to like explosive and expansive ideas: humble businesses beware!

Women-Owned Business Grants FAQs

Will My Grant Be Taxed?

Usually, yes. In nearly every case possible, the dollar amount attached to a grant is the pretax total for the grant.

Is There a Downside to Applying for As Many Grants as Possible?

The only real downside to applying to grants is lost time. Some grants require a real dedication of time and effort to make a compelling application. A business owner could fill a work week just filling out grant applications, so choosing your battles is key. Another potential downside is entering your secure info on a website that is a façade of a real grant. Double check all pages that you enter personally identifying information on.

Do I Have to Pay to Apply for a Grant?

Most grants are free to enter, but those that have an entry fee won’t let you forget it. There are also several grants that only allow members of their organization to enter; consider those membership fees their own entry fees.

Brandon Wyson

Content Writer

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Private Small Business Grants in 2024

Manage Your Money

by Vince Calio14 minutes / May 22, 2024

Small businesses had a moderate bounce back this year as interest rates and inflation somewhat stabilized in the 3rd and 4th quarters, but 2024 is still expected to be a tough year. The good news is that a plethora of public and private grants are or will be available this year. That means small businesses in virtually every industry will have chances to get much-needed free money.

Knowing which grants to apply for, how best to compete for them and finding a way to win can be a monumentally tough challenge, however. Some grants are difficult to find, while others may require a mountain of paperwork and other requirements to apply. This year, Kapitus has compiled a list of grants, issued by both the public and private sectors, in an easy-to-follow format to help you easily find the best grant opportunities for your business.

Top Private Sector Grants

Many large companies, especially those in the financial services sector, offer annual grants as a way of giving back to the small business community that uses their services. Private grants come in all forms and sizes, and in many cases, any small business can apply and compete for them. The top private grants in 2024, in no particular order, are:

1.Venmo Small Business Grants

Every summer Venmo, an online direct payment application, grants $20,000 apiece to 20 small businesses based on their stories and history of overcoming challenges.

Key Information:

Award Amounts:$20,000 apiece to 20 winners.

Launch Date: Summer

Deadline: TBA

Where to Apply: Continually visit Venmo’s small business grant site as information on its 2024 grant program will be announced in late spring.

Requirements: Your business must have a Venmo profile, but does not have to be a customer of its sister company, PayPal. Eligible small businesses must have 10 or fewer employees and $50,000 or less in annual sales.

Application Difficulty Level: Medium

2.National Association for the Self-Employed (NASE) Small Grants Program

Every year the NASE offers its members a chance to win $4,000 in grant money to grow their business through new marketing and advertising initiatives, hiring additional employees and expanding their facilities.

Key Information:

Award Amounts:$4,000 awarded to 10 chosen applicants on a rolling basis.

Deadline: Applications can be submitted by November 30, 2023, with monthly winners announced on a rolling basis. Application period will reopen on Feb. 1, 2024.

Where to Apply: Small businesses should check NASE’s grants website for updated information.

Requirements: Must be a member of NASE in good standing for at least three months prior to application. Winners are selected based on information given in their applications.

Application Difficulty Level: High

3.Small Business Growth Fund

Hello Alice is teaming up with Progressive, Etsy and the Global Entrepreneurship Fund to provide grants in varying amounts to small businesses still in their infancy.

Key Information:

Award Amounts: Grant amounts will vary between $5,000 and $25,000 based on scoring factors.

Deadline: TBA, application period usually begins at the beginning of every year.

Where to Apply: Visit Hello Alice’s website to apply.

Requirements: Must sign up to Hello Alice, an online community of entrepreneurs and small business owners. Membership is free. Applying businesses must have $1 million or less in gross annual revenue in 2023. Small business owners must also clearly explain how they would use grant money to grow their businesses as part of the application process.

Application Difficulty Level: Easy

4.Skip Monthly Business Grant

Skip is a California-based social media company that helps both people and businesses get access to government-related services and information and is part of YoGov.org. Every month since March 2020, Skip uses revenues from its YouTube channel which awards $1,000 grants to small business owners as well as free services and information.

Key Information:

Award Amounts:$1000 per month, but the amounts can vary based on Skip’s YouTube monthly income.

Deadline: The winner is announced on its YouTube channel on the third Wednesday of every month.

Where to Apply: Detailed instructions on how to apply can be found on Skip’s website.

Requirements: Open to all small businesses as defined by the US Small Business Administration.

Application Difficulty Level: Low

7.Small Business Digital Ready Program

Small business consultant National ACE and Verizon are offering an online course for small businesses on how to succeed in a digitalized world. Those who sign up for the course and attend two sessions are automatically eligible for a $10,000 grant.

Key Information:

Award Amount:$10,000

Deadline: The two companies have a rolling deadline throughout the year, and a winner will be chosen once per quarter.

Where to Apply: The sign-up sheet for the course can be found on National Ace’s website.

Requirement: Open toall small businesses that sign up for the course.

Grants to Mark on Your Calendar for Later This Year

The following grants are great opportunities for small business owners; however their submission deadlines have already passed for 2023. Be sure to mark your calendars so you don’t miss out in 2024!

8.US Chamber of Commerce Dream Big Award

Every year the US Chamber of Commerce awards a $25,000 grant to an exceptional small business, plus tertiary prizes for small businesses in several categories, including women-, veteran- and minority-owned small businesses.

Key Information:

Award Amount: $25,000 for first place winner, while small businesses chosen in each category will receive a one-year paid membership in the US Chamber of Commerce, as well as a profile in the Chamber’s online small business news publication, CO.

Deadline: Contest usually begins in October, with winners announced in January.

Where to Apply: Hopeful applicants can sign up for CO’s newsletter here to get updates on exactly when the 2023 competition will begin. See last year’s winners here to learn more about the competition.

Requirements: Must be a US-based for-profit business that fits the SBA’s definition of a small business.

Application Difficulty Level: Medium

9.Fast Break for Small Businesses

This annual grant program is the result of a combined effort by the NBA, WNBA, NBA G League, and online law advisor LegalZoom. It offers $6 million in grants and legal services, and is managed by the Accion Opportunity Fund.

Key Information:

Award Amounts: TBA

Deadline: TBA

Where to Apply: The grant program is expected to start taking applications before the NBA season ends in early summer, but those wishing to participate can click here to sign up for email alerts on when the 2023 competition will begin.

Requirements: Must be a registered small business in existence for at least 6 months prior to application, and have an annual revenue of less than $1 million.

Application Difficulty Level: Medium.

10.Barclays Small Business Big Wins Contest

Every year Barclays US Consumer Bank division hands out $255,000 in prizes to 60 small businesses that share their stories and what drives them via essays and photographs.

Key Information:

Award Amounts:$60,000 for one first-place winner. $40,000 for one second-place winner, $20,000 for one third-place winner, and $5,000 apiece for seven runners-up. Barclays will also award $2,000 apiece for 50 sweepstakes winners.

Deadline: TBA

Where to Apply: Click here to keep checking the registration page for when the contest will begin in 2024. It is usually launched at the beginning of every year.

Requirements: Go to the application site and fill out the basic information. Additionally, write a passionate essay detailing your small business’ story and what drives you as a small business owner, while including compelling photographs of your business.

Application Difficulty Level: Easy

11. FedEx Small Business Grant Contest

Every year, FedEx awards $30,000 each to 10 small businesses for its grant contest. Entrants must be customers of FedEx and submit essays and videos telling the stories of their businesses.

Key Information:

Award Amounts: FedEx will choose 10 winners that will each receive $30,000. Winners will be selected by public voting.

Launch Date: TBD

Deadline: TBD

Where to Apply: Click here to find out further information and enter once the grant competition begins.

Requirements: Entrants must open a FedEx account, write a short company biography and submit photos and a video telling the stories of their businesses and why they deserve to win.

Application Difficulty Level: Medium.

Other Private Grants to Consider

The following grants may set more application requirements than other options on this list, but if you’re eligible then they’re certainly worth considering.

12. digitalundivided BREAKTHROUGH Program

The BREATKTHROUGH program from digitalundivided is a corporate-backed grant that helps women who own small businesses. Along with providing awards, digitalundivided is also an excellent resource for professional connections and support.

Key Information:

Award Amount:$5,000

Deadline:2024 TBA

Where to Apply: Apply for the grant from the digitalundivided grant page

Requirements: Identify as both a woman and a member of the BIPOC and/or Latina community, be at least 18 years old, have a business registered for at least a year in which you have majority ownership, have a website or mobile app for your business, generate at least $50,000 in revenue annually.

Application Difficulty Level: Medium

13.Main Street America’s Backing Small Businesses Grant Program

Main Street America and American Express work together to award grants to minority-owned small businesses. In total, Main Street American and American Express award 350 grants each year.

Key Information:

Award Amounts: The program will award $5,000 grants each to 350 small business owners, plus $25,000 in enhancement grants will be awarded to 25 winners based on their stories.

Deadline: April 7, 2023

Where to Apply: Click here for information about the program as well as an application form.

Requirements: The grant is available to minority and women-owned small businesses, as well as veteran-owned small businesses and businesses owned by people disabilities. Applicants must have a brick-and-mortar location and employ 20 or fewer full-time employees.

Application Difficulty Level: Easy

Tips for Applying to Private Grants

Before you begin applying to private grants, consider following these tips to strengthen your application and focus your time and effort on grants you could win.

Make Sure You Meet All Requirements

From double-checking your eligibility to making sure you have all the materials required to apply, your best bet is to go through each grant’s website to see if your business qualifies.

Some grant competitions seek small businesses that operate in certain industries, while others may have a set definition on what a small business is that’s different from the definition given by the SBA. Some may require a certain number of employees, while others may set a limit on a contestant’s net revenue. It’s especially important to read the fine print for each individual grant. Checking previous winners could also shed some light on the types of businesses that tend to win the award, too.

Set Your Small Business Apart

Before you consider applying for a private grant, make sure you put your company in the best position to compete. While there are many grant competitions out there with different requirements, they all have some common threads in terms of what they are seeking, so here are some general steps you can take to prepare your small business:

Have a compelling story to tell. Almost every grant competition will require you to tell the story of your business – what your passions were that motivated you to start your business and what initial obstacles you had to overcome. Create a unique, interesting story beforehand that both judges and the public can relate to.
Explain how you overcame adversity. If there’s one characteristic that successful small business owners have in common, it’s resiliency. There are plenty of deterrents right now for small businesses, including soaring inflation, a tight labor market, and supply chain disruptions. Creating a story beforehand about the creative ways your business has overcome challenges will go a long way in readying your business for a grant competition.
Line up testimonials. Many grant competitions allow for customer testimonials, so it’s important you ask your best customers if they would be willing to give you either a written or video testimonial for your business. Lining these up beforehand can give you the competitive edge you need to win.
Learn how to create compelling videos and photos. Many grant competitions require entries in the form of videos of the business owners and employees telling the story of their businesses and operations. You want your videos and photos to be compelling, colorful, and action-oriented.

Private Grant Alternatives

If you enter a grant competition and don’t win, don’t fret – there are other ways to get funding for your business. Although most funding sources don’t give away free money, they often come in the form of flexible deals that can be great for your business. Some other ways to get money:

Crowdfunding

Crowdfunding is popular among startups as it is a way to garner funds through popular crowdfunding websites. Generally, a business owner takes money in exchange for discounts or some form of profit sharing in your business.

Strategic Loans

There are several lending products offered by both commercial and alternative lenders that are specifically designed to help your business grow and meet expenses.

Taking on Investors

If you are confident that your business is in a unique position to significantly grow soon, you might want to try to entice outside investors in your business. There are several types of investors, including venture cap and angel investors. Typically, however, this will mean sharing your profits or even giving up pieces of ownership in your business, so consider this option carefully.

More Grant Resources

Beyond national grants, there are also grants for particular small business owners that may be disadvantaged. These include:

Grants tailored for veterans who are seeking to start own small business after they’ve been discharged.
Grants for minority owned businesses that may be disadvantaged.
Grants for women run their own small businesses, and
Government grants for small businesses mostly specializing in technology or are operating in rural areas.

For a summary of the different types of grants for small businesses, read here.

. Looking to apply to grants beyond those offered by private institutions? Check out our ultimate list of small business grants to get started!

Frequently Asked Questions About Private Grants

Some of the most frequently asked questions from small business owners regarding grants:

Do I Need to Pay to Enter a Grant Competition?

Typically, entities that sponsor grant competitions do not require an upfront payment. Some trade organizations that offer grants, however, may require paid membership, and that could be costly. Read the requirements of each grant competition carefully.

Can I Apply for More Than One Grant?

Yes, you can compete in as many grant contests as you like, however, some grant competitions will not allow you to apply twice for the same grant.

Are Private Grants Easy to Win?

The short answer is no. Private grants are highly competitive, as most grant competitions have hundreds – if not thousands – of entries. Most grant competitions do post video submissions or written entries of past winners on their websites, so you should carefully go over those to see what gave them the competitive edge.

If I Win Grant Money, are There Strings Attached?

Grant competitions give away free money, but there are often conditions on how the winner can spend that money. Some grants require you to spend the money on expansion, while others may require you to spend the winnings on economic development in your area. Most grant sponsors will check up on you throughout the following year to see if you are spending the winnings on what you said you would spend them on. Read the rules carefully before entering a grant competition.

Do I Have to Pay Taxes on Grant Money?

Unfortunately, yes. If you’re fortunate enough to win grant money, in almost every case it will be up to you to report those winnings to the IRS and figure out how much you owe on them. It would be best to consult with your accountant if you’re one of the lucky winners of a grant.

Vince Calio

Content Writer

Vince Calio has been a writer for Kapitus since 2021. Before that, he spent three years operating a dry-cleaning store in Rahway, NJ that he inherited before selling the business, so he’s familiar with the challenges of operating a small business. Prior to that, Vince spent 14 years as both a financial journalist and content writer, most notably with Institutional Investor News and Crain Communications.

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7 Grants for Minority-Owned Small Businesses

Manage Your Money

by Brandon Wyson10 minutes / May 22, 2024

Minority-owned businesses could use a break this year, and new rounds of small business grants targeting businesses owned by people of color are welcome news. Did you know that minorities own nearly one-in-five small businesses in the US, yet data shows that those businesses continuously feel more of the brunt of the current economic challenges and the continued fallout from the COVID-19 pandemic, according to data compiled by Small Business Majority? Add to that the fact that many have a more difficult time getting financing from traditional banks, and it’s easy to see why relief is needed.

Private Sector Grants for Minority-Owned Businesses

The good news is that free money is available to minority-owned businesses this year through several national grant programs in the private sector. Finding the right grants for your business and knowing how to apply for them can be a challenge, however, so Kapitus has compiled a list of national grant programs to try and make it as easy as possible to find the grants that are suitable for your small business.

1. Main Street America’s Backing Small Businesses Grant Program

Main Street America and American Express are once again awarding grants to minority-owned small businesses. The program will award 350 $5,000 grants by the end of the year.

Key Information:

Award Amounts: The program will award $5,000 grants each to 350 small business owners, plus $25,000 in enhancement grants will be awarded to 25 winners based on their stories.

Deadline: April 7, 2023

Where to Apply: Click here for information about the program as well as an application form.

Requirements: The grant is available to minority and women-owned small businesses, as well as veteran-owned small businesses and businesses owned by people disabilities. Applicants must have a brick-and-mortar location and employ 20 or fewer full-time employees.

Application Difficulty Level: Easy

2. Coalition to Back Black Businesses Grant Program

The Coalition is composed of both corporate sponsors and industry trade groups including American Express, Shopify and the National Black Chamber of Commerce.

Key Information:

Award Amounts: The Coalition will award $5,000 grants to several black-owned businesses, with a select few receiving $25,000.

Launch Date: Early autumn, 2024

Deadline: TBA

Where to Apply: Keep checking the Coalition’s website for updated information.

Requirements: Must be a black-owned business that employs 3-20 workers, and operate in an underserved area identified by the Distressed Communities Index.

Application Difficulty Level: Easy.

Minority-Owned Business Grants Coming in 2024

3. Southern Restaurants for Racial Justice (SRRJ)

This grant is a combined effort by the Lee Initiative, Heinz and SRRJ to provide grants to African American-owned restaurants south of the Mason Dixon line. Originally created in 2021 to help minority-owned restaurants in the Southeast get through the COVID-19 pandemic, it has become an annual grant program.

Key Information:

Award Amounts: TBA. In 2022, $20,000 grants were awarded to 60 restaurants in the South.

Launch Date: TBA. Last year’s program began in mid-summer.

Deadline: TBA

Where to Apply: Keep checking SRRJ’s website for updates on the 2023 program.

Requirements: This program is offered to black-owned businesses in the food industry operating in the South, defined by any state below Maryland, Pennsylvania and Ohio.

Application Difficulty Level: Easy

4. Lenovo Evolve Small Initiative

Every year since 2021, Lenovo has given away roughly $1,000,000 in grants and small business consultancy services to women- and minority-owned businesses in both the US and Canada. In 2022, Lenovo partnered with actor and musician Queen Latifah, as well as Microsoft and AMD to administer the program. As part of the grant contest, 10 small businesses each won $5,000 in grants to help their businesses. The program typically kicks off in October.

Key Information:

Award Amounts: TBA. Last year, 10 winners each received $5,000 while many more were awarded free consulting services and technology upgrades.

Launch Date: TBA

Deadline: TBA

Where to Apply: Keep checking the Lenovo Evolve Small website for updated information. New information should be released towards the end of the summer, 2023.

Requirements: Must be a woman- or minority-owned for-profit small business operating in the US or Canada.

Application Level of Difficulty: Easy

5. Comcast Rise

Comcast awards hundreds of minority-owned small businesses hit hard by the COVID-19 pandemic with monetary grants as well as free business consultations. Last November, it awarded 500 small businesses with $10,000 each, as well as free business consulting, media, and creative production services. The 2023 phase of the grants program is expected to launch in the third quarter of 2023, so keep your eyes peeled for an announcement.

Key Information:

Award Amounts: TBA. The company awarded $10,000 grants each to 500 minority-owned small businesses in 2022.

Launch Date: TBA. Last year’s grant competition was kicked off at the beginning of autumn.

Deadline: TBA

Where to Apply: Check the Comcast Rise website during the summer for an announcement.

Requirements: Must be at least 51% owned by a minority, including Latinx, African American, Asian American, Pacific Islander, or other people of color.

Application Difficulty Level: Easy

6. The Boss Network and Sage’s Invest in Progress Grant

This grant program is administered by business consultancy Hello Alice and is offered to African American women entrepreneurs.

Key Information:

Award Amount: This grant program provides $10,000 each to 25 African American women entrepreneurs, plus one-year free membership in Boss Business University.

Launch Date: January 3rd, 2023

Deadline: February 24, 2023, at 6:00pm EST.

Where to Apply: Applications can be found on Hello Alice’s Website.

Requirements: Must be an African American woman entrepreneur, have a demonstrated need for funds and willing to participate in Boss Business University’s mentorship program. Winners will be chosen based on their stories and how they plan to use the funds if they win.

Application Difficulty Level: Easy.

Government Grant Programs for Minority-Owned Businesses

The federal government does not administer to or fund individual grants, rather, there are federal agencies that fund grant programs that are administered by state and local governments, individual municipalities, or other local government departments. That said, applying for government grants can be a time-consuming and convoluted process.

Still, free money is free money, so if you’re willing to put some time into doing research and the paperwork involved, this government grant program and other federal resources may be worth checking out:

7. The Minority Business Development Agency (MBDA) Grant Program

The MBDA is a federal agency that funds grants of all sizes to minority-owned small businesses. The grants are administered by MBDA’s business centers in various states. Interested business owners can apply for the grant by visiting www.grants.gov. Obtaining a MBDA grant involves extensive paperwork and registering your business with the MBDA.

For more information on the MBDA’s grant program, click here.

Where to Find Government Grants for Minority-Owned Businesses

There are several websites dedicated to helping you find the best government grants for your business and guide you through the application process. These sites also help in applying for government grants for minority-owned small businesses.

Grants.gov

This website provides a searchable database for government grants and information on how to access federal grants for minority-owned businesses.

USA Grants

This website will guide you to available state grants in specific categories, such as women- and minority-owned businesses, and is a bit more user friendly than grants.gov.

Candid Learning

This website offers state-by-state directories of departments that offer federally funded state grants for minority-owned businesses.

Minority-Owned Business Grant Alternatives

Grants generally are tough to win, so if you’re relying on grant funding to add to your cash flow and don’t win, don’t worry – there are other ways to get the funding that you need to keep your business running smoothly or to expand:

CDC/504 Loans

These loans are backed by the US Small Business Administration and are administered by community development corporations across the country. They are given to small businesses seeking to purchase new equipment, renovate their store front, make new hires or contribute to the economic development of their community in some way. The good thing about these loans is that the requirements for getting them are not as stringent as SBA 7(a) loans.

SBA Microloan Program

The SBA funds small business loans of up to $50,000 to any small business seeking to improve or enhance their businesses. The loans can be obtained through non-profit intermediaries throughout the country and, like the CDC/504 loan program, carry far less rigid lending requirements than most traditional loans.

Alternative Small Business Lenders

Alternative lenders are non-traditional lending institutions that offer most of the that traditional banks do but with less paperwork and often less rigid requirements and. Alternative lenders also can provide a quicker turnaround time in terms of when you receive funds after you’ve been approved.

Tips When Applying to Small Business Grants for Minorities

Grants for minority-owned small businesses are not easy to win, as you’re going to have to compete with many other applicants and go through a lot of paperwork to qualify. To give yourself a leg up, you probably want to make sure you are prepared to compete for a grant by taking a few steps beforehand so that you can compete in multiple competitions.

#1 Think about what makes your business unique. Be prepared to tell the story of your business and answer questions such as, what passions led you to start your own business? What needs do you fulfill for your customers? How do you contribute to your community in terms of giving back or enhancing the community in which your business resides? Having these answers ready when you apply for a minority-owned small business grant will give you an edge.

#2 Recall challenges you had to overcome to run your business. If you’re applying for a minority-owned small business grant, be prepared to demonstrate how you overcame the challenge of being a minority and starting your own business. Did you have to face any social biases? Were there barriers in your community that you had to face in terms of your ethnicity, religion, etc.?

#3 Be prepared to get creative. Most grant competitions want responses to their questions either in writing or in video, so be prepared. If creative essay writing is not your strong suit, you may want to hire a freelancer to write your answers. For videos, follow these tips to make sure you submit a high quality, lively video to give yourself the advantage.

MORE >> Tips on Making the Perfect Video for Your Small Business

Grants for Minority-Owned Businesses FAQs

Applying for grants can be a tricky business. Here are some of the most common questions applicants for minority-owned small business grants have.

Do I qualify for a minority-owned small business grant?

Many grant competitions use the SBA’s definition of a minority-owned business as a qualifier, while some grant competitions have other requirements such as a limited amount of annual revenue or a certain number of employees. Read the rules of each grant competition carefully.

Can I compete in other grant competitions?

Of course. You can compete in as many grant competitions as you like, including ones that are for small businesses in general. Participating in a grant competition for minority-owned small businesses would not preclude you from other grant competitions.

Can I get a grant if my business is new?

Getting funding for a startup business often isn’t easy. There are some private and government-based grant competitions that do offer programs for entrepreneurs, so it’s imperative that you do your research.

Brandon Wyson

Content Writer

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Government Grants for Small Businesses

Manage Your Money

by Vince Calio9 minutes / May 22, 2024

Are you wondering how to get your hands on small business grants offered by the federal government? Well, the good news is that the money’s out there, but the bad news is that applying for federally funded grants will often involve going through a complicated and time-consuming process.

While the federal government does not directly give out specific grants, various federal agencies do fund lucrative grant programs for small businesses that are overseen by state and local entities, as well as other federal agencies. In short, finding federal small business grant programs and learning how to apply can be a confusing and harrowing process.

Still, in today’s bumpy economy, any chance at getting free money may be worth looking into. So, if you have the time and patience to apply, here are some of the top government grant programs for small businesses this year.

Federal Government Grant Programs for Small Businesses

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBIT)

This grant program funds substantial grants to small businesses in the science and technology fields that are engaging the Federal Research/Research and Development Agency on new products that have the potential for commercialization. The purpose of these programs is to assist new and existing science and technology firms in various industries in commercializing new, innovative technology products and services.

The grants are awarded through 11 federal partner agencies such as the Dept. of Agriculture, Dept. of Commerce and the Dept. of Defense. The US Small Business Administration serves as the coordinator of the program.

The application process is arduous and complex, and the awards come in three phases:

Phase 1: Small businesses are judged on technical merit and the potential for commercialization of their projects. The award amount varies between $50,000 and $250,000.
Phase 2: Small businesses are judged on the continuation of their efforts from phase 1, and the award is $750,000 spread over two years.
Phase 3: There is no dollar award, the goal is for the chosen small businesses to commercialize their product or service.

For more information on the SBIR and SBTT programs and to apply, review the SBIR Website.

USDA Rural Business Development Grants Program

Every year, the US Dept. of Agriculture awards grants of varying sizes to small businesses operating in rural and underserved communities to encourage the economic development of those communities. Through this program, grants are awarded for the following usage categories:

Training and technical assistance, such as project planning, business counselling and training, market research, feasibility studies, professional or technical reports, or producer service improvements.
Acquisition or development of land, easements, or rights of way; construction, conversion, and renovation of buildings; plants, machinery, equipment, access for streets and roads; parking areas and utilities.
Pollution control and abatement.
The capitalization of revolving loan funds, including funds that will make loans for start-ups and working capital.
Rural distance learning for job training and advancement for adult students.
Rural transportation improvement.
Community economic development.
Technology-based economic development.
Feasibility studies and business plans.
Leadership and entrepreneur training.
Rural business incubators.
Long-term business strategic planning.

Interested small business owners can see which grants apply to their businesses through the USDA’s state offices. The USDA defines a rural area as “areas or towns outside the urbanized periphery of any city with a population of 50,000 or more.” To see if your community qualifies as an official rural area, check the USDA’s directory here.

For more information on the Rural Business Development Grant Program, check out the USDA’s website.

US Economic Development Administration (EDA) Small Business Grants

Every month, the EDA administers small business grants in individual states of varying sizes in various categories to contribute to the economic development within various state, local and municipal regions. In addition to grants, state EDA offices can also award generous tax benefits to small businesses engaging in economic development activities such as job creation and building renovations.

The process of finding these grant opportunities can sometimes be confusing, but the place you should start your search is the directory of local EDA offices, as these are the offices that actually award grants. For the types of grants available in your area, visit your local EDA office or check out the US EDA’s website where you can find monthly national grant opportunities.

State Trade Expansion Program (STEP)

Every year, the US SBA funds millions of dollars in grant money to small businesses starting out or expanding into the import/export business through its STEP grant program. Since 2011, the agency has awarded over $200 million to support US small businesses in:

learning to export products,
participating in foreign trade missions,
designing international marketing campaigns,
developing website globalization and eCommerce capabilities,
paying for subscriptions provided by the US Dept. of Commerce and other federal agencies, and
participating in export trade shows and training workshops.

Like most federal small business grant programs, the SBA does not directly provide grants, rather, state and local affiliate offices do. The grant amounts vary in size. To find out if your business is eligible, check out the SBA’s website page on the STEP program. Interested small business owners can also watch the SBA’s Global Expansion Webinar to see if they qualify.

Government Grant Resources

If you’re confused about where to start looking for government grants, there are public and private websites that can make the process less confusing. These sites allow you to search for government grants by category and funding amount and put you on the right path. These include:

gov. Grants.gov provides education on government grants and several clickable portals that will lead you to state and local government grants that may pertain to your business.
USA Grants. USA Grants will guide you to available state grants in specific categories, such as women- and minority-owned businesses.
Candid Learning. Candid Learning offers state-by-state directories of departments that can lead you to federally funded state grants.
Grantify gives you step-by-step instructions on how to navigate your way through the complicated task of applying for government grants.
gov. The US SBA offers several grant programs, and it’s best to search its website to see if there is one you qualify for.

Tips When Applying for Government Grants

Government grant programs are typically very specific in the types of small businesses that they allow to compete. Government grants are also much more difficult to find, and the application processes are usually far more complex than they are for private grants. These grants are very competitive, so if you are willing to apply, make sure you try to differentiate yourself and your business when and where you can during the application process. Here are tips small businesses should follow when applying for government grants.

Confirm your eligibility. Government grants can have long application processes, so you could save yourself a lot of time by double-checking whether or not your small business is eligible for any specific grant. Doing this also gives you more time to focus on grants you’re qualified for.
Have your required documents ready. From business licenses to tax returns, make sure you have all your required documents handy while applying to make things easier on yourself. By having all your materials ready, you won’t get partway through the application only to realize you don’t have a required document.
Consider contacting a professional. Individuals or organizations could help you with the application process, providing guidance or steering you toward grants or resources that you might find useful.
Follow up after applying. Once you send your application, follow up with the grant agency to check that they’ve received it. They may provide feedback or point out if you forgot to submit materials.
Stay patient. Grant applications take time and effort, but don’t lose your patience! Government grants are tremendous resources for small businesses, so think about your goals to help keep you focused.

Government Grant Alternatives

Winning grant money, especially from the government, is no easy task. There are other ways, however, to get the funding that you need to help your business grow:

National Private Grants

If you don’t want the extended paperwork of applying for a government grant, you should know that national private small business grants are typically easier to apply to. For a list of private small business grants, click here.

SBA Loans

The SBA guarantees billions of dollars in small business loans every year for just about every type of small business and for every type of need. Some of these loans, such as SBA 7(a) loans, do have stringent requirements, while others, such as the CDC/504 loan, do not. These loans are offered through intermediaries, private banks and alternative lenders. Carefully examine the SBA’s website to learn more about its loan programs.

Small Business Loans

There are several lending products offered by both commercial banks and alternative lenders that are specifically designed to help your business grow and manage cash flows.

Government Grant FAQs

Where Can I Find Government Grant Opportunities?

As mentioned above, your best bet is to first examine the websites of federal agencies that offer grant programs. These sites often will lead you to a directory of state or local agencies that actually administer the grant, so finding them can sometimes be a confusing process. It’s important that you do your research carefully.

If I Win a Government Grant, Do I Have to Pay it Back?

No, you don’t have to pay back the money you were awarded through a government grant program. You may, however, have to pay taxes on it and be required to spend that money in certain ways according to the rules of the specific grant program, so read the fine print carefully.

Are Government Grants More Difficult to Apply for than Private Grants?

In general, grant programs offered by federal agencies are far more difficult to apply to than private grants. One of the reasons for this is that you have to find out which local or state agency in your area is actually administering the grant. Additionally, this is the government we’re talking about, so the paperwork involved in applying for a government grant is often far more complex (and sometimes confusing) than one for a private grant. It is imperative that you make sure your business meets all of the qualifications for a grant application so that your time and effort aren’t wasted.

Vince Calio

Content Writer

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Are There Small Business Loans for Women?

Manage Your Money

by Brandon Wyson12 minutes / June 11, 2024

It’s been noted time and time again that female entrepreneurs begin in the business world with a social impediment that their male counterparts don’t. But at the same time, today there are more female business owners than ever before. However, women are still statistically less likely to be approved for financing than men.

While there technically are no programs reserved specifically for supplying loans for female business owners, there are a number of resources available to women business owners to help them run and grow their businesses. Let’s discuss the state of women and the small business world on three levels:

Why women are less likely to get approved for financing
The top financing options available today, and how to better set yourself up for an approval
Grants and other development programs created specifically for the benefit of women-owned businesses

Why Are Women Being Approved Less for Business Loans?

Even though women make up a growing percentage of today’s small business owners, there is still a large funding gap when you compare business financing secured by women with that secured by men. While there are many reasons for this gap, one of the largest is being unable to meet the basic qualifications set forth by most lenders. Below are some of the primary reasons women have more difficulty securing business loans than men:

Industry

Every lender considers the industry of a business when reviewing a loan package. Why? Because some industries are inherently riskier than others. One of these risky industries is retail which tends to have higher expenses and lower profit margins. Many women-owned businesses are in the retail sector.

What can you do about this?
Completely changing the industry of your business is likely not an option, but there are a few things you can do – regardless of the industry you’re in – to help improve your options for the future including:

Figuring out ways to lower your business overhead
Building a plan to increase your revenue
Start by borrowing smaller amounts of money and ensuring that you pay them off on time

Time in Business

Regardless of who owns a business, if the business is in its early stages of operation (typically under two years in business), many lenders will not provide financing because the business does not have enough history to show it can maintain profitability and meet payment obligations. The number of women-owned businesses has been picking up significantly over the past couple of years, so many of them simply haven’t been in business long enough to qualify for conventional financing.

What can you do about this?
If you’re able to, you can opt to wait out this two-year period. But, in order to keep a business running – especially in its early years – financing is needed. Fortunately, there are some alternative lenders who are willing to be more lenient about this requirement if you show both good credit and at least six months of very strong revenue and consistent positive cash flow.

More Risk-Averse

There are a number of studies out there showing that women are more averse to taking risks than their male counterparts. This can show itself on many fronts in a business – including women being less like to bring in outside investors (they don’t want to have to run decisions by others) and being less likely to take on capital that comes with a higher cost, which limits their ability to take advantage of opportunities to grow their business.

What can you do about this?
Ultimately, being risk-averse can be a good thing – but in business, taking on some risk is necessary. If you have a legitimate growth opportunity in front of you, it could be to your advantage to reconsider what financing options you are willing to use. Absolutely still consider it as a risk, but be strategic in that consideration. Run all of the numbers. Determine if paying higher rates is worth the cost because, ultimately, your new endeavor will cover that cost of financing and give you additional profit at the same time. Truly consider if bringing in investors will impede your decision-making processes as much as you think. Only you can answer these questions and make the final call, but it is definitely something that you should research and consider strategically before making that call.

At the end of the day, it’s all a numbers game when it comes to lenders AND running your business. Improve your numbers and you improve your chances of being approved and growing your business.

Best Small Business Loans for Women

Let’s break down the types of loans that are available today, covering those that are not just popular but also attainable for many of today’s women business owners. There are several ways to connect your business with a business loan – from online lenders to traditional financial institutions. But before partnering your business with a lender, it’s key to consider each type of small business loan on the table and which may be best for you.

SBA Loans

The Small Business Administration (SBA) doesn’t technically offer loans themselves but instead guarantees loans carried out by partner lenders and traditional banks. Because of this guarantee by the Federal Government, the interest rate of SBA loans tends to be much lower – following the Prime Rate (this is the interest rate benchmark set by the Federal Reserve System on a nightly basis). Lower rates and a federally-backed guarantee make SBA loans a great option for reducing risk for both the lender and business owners.

SBA 7(a) Loan

The SBA 7(a) loan is often called the most popular of the SBA loans for women business owners. And for good reason: the SBA 7(a) loan is versatile. Business owners can finance up to $5 million with the 7(a) program. From real estate to payroll, an SBA 7(a) loan can meet just about any reasonable business need.

SBA Express Loans

SBA Express loans fall within the 7(a) loan program. They come with lower loan amounts than the standard 7(a), capping out at $500,000 but they also come with an expedited review by the SBA. Express Loans can be used for a wide range of business needs – from purchasing equipment or real estate or for basic working capital. If you are a female veteran business owner, this is an excellent option for you to consider as the Veterans Advantage Program allows for significantly reduced fees with the SBA Express Loan.

SBA Microloans

Microloans from the SBA generally have smaller payouts and shorter repayment terms, as the name would imply. Specifically, SBA-guaranteed microloans are offered up to $50,000. The most notable difference between a 7(a) and a microloan, however, is that microloans cannot be used for refinancing or buying real estate. SBA Microloans are a great loan option for women with businesses in the startup phase because they come with fewer requirements than the popular 7a loans

Term Loans

Term loans are one of the most widely used types of financing available to businesses today. Term loans are generally what most people think of when they hear the word ‘loan’. Term loans are an agreement between a business owner and a financial institution to give an approved loan amount with a set repayment schedule. That repayment schedule is the ‘term’ in term loans.

Term loans generally give the full principle of a loan upfront. Because of this, term loans can be very helpful for getting more cash flow into your coffers. Depending on what you are looking to finance, term loans can last either a fairly short amount of time or several years. Of course, term loans with longer terms and more capital at stake will generally require a higher credit score, more time in business, and a strong history of positive financial statements.

Learn About Your Financing Options

Let’s figure out the best loan for your woman-owned business.

Connect with a Kapitus financing specialist to see what type of business loan, or other financing options, can help you meet your goals.

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Personal Loans for Business

If you’re in a pinch, it is entirely possible to take out a personal loan and use the funds as capital to better your business as long as your lender has no restrictions. If you have decent credit, a personal loan could end up providing you with better interest rates than a business loan, which is always a win. However, there are some drawbacks: personal loans typically come with much lower amounts than traditional business loans. In addition, you are potentially putting personal assets on the line if you fail to meet your payment obligations. When used responsibly, this can be a great option for women-owned businesses, particularly those in the beginning stages of the business journey.

Loans from Family & Friends

Taking out a loan from friends or family rather than a financial institution has a whole different set of rules. Rather than your financial record being the biggest indicator of your trustworthiness, you’ll functionally be relying on your social record. This is, once again, a rather common option for female entrepreneurs in the beginning of their business journey.

And while there are several big-name success stories of today’s Fortune 500 who started their way with capital from a friend or family, the main rule of financing remains here: only borrow the money you are certain you can pay back. Instead of just affecting your credit, you risk breaking the ties that bind.

Steps for Women to Get Small Business Loans

Female loan applicants ought to start by laying out a plan that considers every step of the loan journey – from completing an application all the way through to how you plan on spending your capital if you’re approved AND how to recover if you’re declined for a business loan.

Step 1: Determine how Much Capital you Need

Before even looking at your loan options, sit down and find a firm figure as to how much capital you want and, further, how quickly you would like to get it. You should list out all of the items/services your business needs and then research the estimated cost for each. Once you have the list fully compiled, you need to prioritize them. From there you can gauge a range of financing amounts that will help you accomplish your goals.

Step 2: Look into Your Prequalification Options

Several online lenders offer full prequalification at no cost to you. Using pre-qualification is a great way to learn how lenders see your business. It can also help you determine just how much loan you can afford. Once you’ve got your prequalification numbers, it’s time to go back to your list of needs and shuffle as necessary.

Step 3: Select your lender

Choosing your lender should not just be based on interest rates. Choosing a financial institution or online lender is a mutual recognition of value and trust. Remember that your lender is pitching themselves to you just as much as you are pitching your business to them. Look closely at their reviews to see how they treat customers. Ask questions to see if their business practices will meet your needs, including:

Will they work with you to come up with the right payment plan for your business?
Do they allow early pay-off without any penalties or fees?
Do they provide support to their customers even after they are funded?

There’s a variety of ways to determine if a lender is the right financing partner for you – it all just depends on what, as the customer, would like to see in that relationship and then finding the best lender to fit that wish list.

Step 4: Gather paperwork

The best lenders are generally quite upfront about their paperwork requirements but the most common paperwork to expect and have handy are:

Six most recent bank statements.
Two years of business tax returns
Business Plan
Financial statements, including your income statement and balance sheet
Budget and cash flow projections
Government documents including all business licenses, your business registration and your EIN

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Not all lenders will require all of these documents, but some will, so the specific paperwork you need will be determined by the lender you select. Your chosen lender will be able to provide you with the full list that they require for underwriting and approval.

Step 5: Apply for your loan

This is the easy part. If you have a good financing partner, application processes ought to be smooth and straightforward.

Step 6: Compare offers

Lenders will often give you multiple term options, some lenders, like Kapitus, even have the ability to offer you different financing products based on your single application. The best lending partners will consider your business structure and guide you toward the terms that make the most sense for you. But it is also essential to do your own research and confer with all those who are involved with your business’s finances.

Step 7: Read the Fine Print

We all know it. But let’s say it again for the sake of how serious this is: always read the fine print of your loan agreement and make sure you understand everything in your BEFORE you sign on the dotted line.

Additional Financing Options Women Business Owners Should Consider

Beyond small business loans, there are several other types of financing that are worth considering depending on your needs and current situation.

Revenue-Based Financing

Instead of paying central attention to your credit score and personal financial reputation, revenue-based financing approvals are based more heavily on exactly what you would expect: your revenue. While there are still minimum credit score requirements to be aware of, revenue-based financing generally allows the strength of a business to speak for itself.

Revenue-based financing is not a loan. Instead, a lender will purchase a percentage of your future sales. This gives you cash on hand today for sales you wouldn’t make until tomorrow (or over the next couple of months). Because revenue-based financing is not a loan, there is no actual interest rate. Instead, there is a factor rate that will not change throughout your agreement with the lender. Repayment is made by paying a percentage of your daily, weekly, or monthly sales (depending on the contract terms with your lender) until the entire amount provided, plus the factor and any fees are paid back. Revenue-based financing can be extremely expensive, so it should only be used very strategically and is ideal for opportunities that would generate a large enough return to both cover the cost of the financing and put profit in your account.

Business Line of Credit

A business line of credit is functionally a borrowing limit that allows your business to take out capital until a predefined upper cap. You pay interest only on the portion of the line you’ve used. And, once you pay back what you’ve used, you can use it again, making one of the biggest advantages of a business line of credit is its flexibility.

For example, if you take out a line of credit with an upper cap of $50,000 and you only use $5,000 in a billing period, you would only pay interest on that $5,000 and not the entire $50,000. Further, if you pay the full balance of your line before the end of the month, you won’t pay any interest.

Lines of credit can be used for almost any business purpose, so it is a great way to cushion your bottom line and cover unexpected expenses.

Equipment Financing

Equipment financing is a great way to get expensive or timely machinery for your business. The logic goes that you approach a financial institution with the specifics on a piece of equipment you need for your business.

The institution can agree to pay either a percentage or the entire price of the machinery on the agreement that you will pay back the principal with the assistance of that machinery. The equipment in question also tends to act as collateral or in some cases the lender may demand to take out a lien on the equipment in the place of collateral.

Alternative Financing Resources for Female Business Owners

There are even more alternatives out there for women entrepreneurs who are looking for more ways to boost their business’ cash flow. If a loan isn’t right for you at the moment or if you’re simply looking to diversify cash flow sources, consider these options.

Business Credit Cards

There are several well-known financial institutions that offer credit cards tied to the credit score and creditworthiness of your business rather than you personally. Choosing the right business credit card, of course, has its own key considerations, so be sure to thoroughly research all options.

Crowdfunding

If your business has a fascinating plan for expansion or you’ve faced extraordinary hardship, you may want to consider creating a crowdfunding campaign. There are several women business owners who have found tremendous success through the help of others.

Consider the success story of Hannah Kromminga and her company Silfir. Kromminga caught the attention of the crowdfunding public because of the unique style and quality of her workwear made with sustainable materials. Because of some snappy videos and effective marketing, Silfir more than exceeded her funding goal.

And crowdfunding is a great way to get the capital your business needs while spreading the word about your business.

Grants for Women-owned Businesses

There are luckily plenty of small business grants reserved specifically for women business owners, minority-owned businesses, or female veterans. While loans will always expect repayment, grants are often obligation-free. Among the most reputable small business grants for women is the WomensNet amber grant which gives monthly small business grants to female business owners and has built an impressively active community of female business leaders.

Looking for a Business Grant?

Check Out These Grants for Women-Owned Businesses

There are several great opportunities for grant-based funding specifically set asidefor women small business owners. Find one that’s right for your business.

Small Business Financing and Becoming a Certified Woman-Owned Small Business (WOSB)

To take advantage of programs like the SBA and to improve your odds of qualifying and getting approved for small business financing, becoming a certified WOSB is essential. Becoming a WOSB also provides access to education programs and can help extend your professional and support networks.

To become a certified WOSB, you need to meet specific eligibility criteria outlined by the SBA. Here are the key requirements:

Your business must be at least 51% owned and controlled by one or more women.
Your business must qualify as a small business according to the SBA’s size standards for your specific industry.
Size standards are based on factors like average annual receipts or number of employees.
The woman or women owning and controlling the business must be responsible for the day-to-day management and operations of the business.

You’ll also need to provide various documents to support your application, including:

Articles of incorporation or organization
Business tax returns
Personal tax returns of the woman business owners
Operating agreements or bylaws

Finally, before applying for WOSB certification, your business must be registered in the System for Award Management (SAM) database.

Choosing the Right Loans for Your Business

Considering the world of lending options available for women-owned businesses, it is essential to weigh the value – along with the cons – of each financing option available to determine which is best for your current business needs.

It is no small thing being a female business owner. In fact, each small business success from women today further opens doors for future generations of women business owners. So, don’t give up. Keep learning. Keep doing. Keep growing. Keep succeeding!

Business Loans for Women FAQs

Brandon Wyson

Content Writer

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