If you are a single mother and you run a small
business, then you know getting the working capital you need is extremely
difficult. If you are a single mom and you want to start a business, you are probably already
painfully aware that obtaining start-up money can be even harder.
Luckily, there is a variety
of options for business and government loans for single moms that will help
you secure the funds you need to start or expand your business immediately.
Government Loans for Single Mothers
The Small Business Administration (SBA) delivers millions
of SBA loans, loan guarantees, certain
contracts, business counseling sessions and various other forms of assistance to small
businesses. The agency is a great place to find out about loans and grants for single
mothers. The SBA furnishes small businesses with a variety of financing that ranges
from micro lending (very small, short-term loans) for existing businesses to substantial
venture capital loans to start a new business. The SBA also offers Entrepreneurial
Development, which consists of education, information, training, and technical assistance
for existing and future business owners.
The SBA also offers free, individualized face-to-face and internet-based counseling for
small business owners, as well as training
to grow your business at an extremely affordable rate. The SBA has many special loan programs
for disadvantaged populations, and government loans for single mothers are
easy to qualify for under the umbrella of some of these programs.
- The Microloan
Program This SBA program awards small short-term loans to disadvantaged
small business owners such as
single mothers. It also awards funding for certain types of not-for-profit child-care
centers. The way the SBA makes the money available is by using pre-selected
intermediary lenders – nonprofit community-based organizations that have lending
experience. The lending intermediaries make loans to business owners that are eligible
for the program. The maximum microloan amount you may be awarded is $50,000, and the
average microloan amount awarded is roughly $13,000.
- 7(a) Loan Program The 7(a) loan program is an SBA-backed loan
that the agency provides through SBA-certified commercial lenders. The maximum loan amount
that you can qualify for when awarded a 7(a) loan is $2 million, and the SBA will guarantee
up to 75% of that amount. You (the borrower) and the lending institution agree upon your
interest rate. However, the SBA has pre-set maximum interest rates depending on the amount
of your loan, and the highest rate is currently set at 4.75 percent for a loan of $25,000
or less with a maturity date of seven years or more. The 7(a) loan program is extremely
flexible, so it's a great starting point for single
mothers looking to fund a new business. The program is ideally suited for both
start-ups and smaller growing businesses when other sources turn the business owners down.
You can use the money for a range of purposes, including business renovation, marketing
materials, and equipment.
Business Loans for Single Mothers
If you tried various channels for
business and government loans for single moms such as the SBA
only to be turned down, don't lose hope. You can still qualify for a small business loan through nontraditional channels.
Peer-to-Peer (P2P) lending has become quite popular in the online world. The financial
transaction (e.g. lending or borrowing) happens directly between individuals. The whole loan
process happens between people without the inter-mediation of a traditional financial
institution. This option is great for single moms who want more funding for existing businesses
or venture capital for a start-up because qualifying for a P2P loan is based on your whole
situation, not just your credit score. Some well-known P2P lending sites are:
- Lending Club