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After serving in the military, many former service members find that launching a business is a natural transition. Indeed, veterans often possess the skill sets and experience that make them ideally suited for the challenges of entrepreneurship, including leadership, discipline, and the ability to perform under pressure.

But all business owners may eventually face the need for external financing, and that includes veterans. And disabled veterans who were injured in the line of duty have some additional resources to tap into, as well as more traditional forms of business financing. Read on to explore the opportunities.

Tips on Qualifying for Disabled Veteran Small Business Loans

There are many types of small business financing, including loans and grants, that you may qualify for as a disabled veteran small business owner. The U.S. Small Business Administration (SBA) Veterans Advantage Program, for instance, offers savings on fees for a variety of SBA loans.

As you explore your options, you’ll want to focus on what makes the most sense for your financing needs, looking at qualification criteria, loan amounts, rates, and repayment terms. It’s important to have a plan in place so you know how much you need and what you plan to use the money for. Then you can narrow in on the most suitable small business loans.

Recommended: Small Business Loans and Grants for Veterans

Loans Available for Disabled Veterans

There are a number of small business financing opportunities designed with veterans in mind, regardless of their disability status, as well as options for that aren’t exclusive to veterans but may appeal to them.

SBA Veterans Advantage Program

The SBA offers the Veterans Advantage Program to reduce fees associated with its popular 7(a) loan program. For 7(a) loans less than $150,000, eligible veterans (regardless of disability status) get the SBA guaranty fee waived, along with the annual service fee.

For SBA Express loans (which are less than $350,000), the program waives the guaranty fee.

Non-7(a) Express loans may also be eligible for the veteran’s program and come with a 50% reduction of the upfront guarantee fee.

Military Reservists Economic Injury Disaster Loans

The SBA also offers a Military Reservists Economic Injury Disaster Loan (MREIDL). This can be used by any eligible company that cannot meet its normal operating expenses because an essential employee is called to active duty as a reservist. While this isn’t expressly designed for disabled veterans, the MREIDL is helpful for business owners who are committed to hiring the talents of other service members who still serve in a reserve capacity.

The maximum amount for this type of veteran small business loan is $2 million and is determined by the SBA based on the actual economic injury sustained by the business.

Angel Investors

If you’re comfortable giving up equity in exchange for working capital, there are angel investors who specifically focus on veteran-owned businesses.

An angel investor is a high-net-worth, accredited investor who uses their own money to invest in a start-up with high growth potential. They typically invest very early in businesses. You can search for angel investors on LinkedIn and on sites that have a special interest in veteran-led startups such as Academy Investor Network and Vet-Biz.

Online Business Loans

You can apply for a small business loan online with any type of lender that looks like a match for your company. These online business loans are open to all business owners. Usually lending criteria include a certain amount of time in business and a minimum monthly or annual revenue. Funding is usually faster compared to other types of small business loans.

Small Business Line of Credit

A line of credit gives you access to working capital as you need it, rather than as the lump sum you’d get with a traditional business loan. It acts more like a credit card, allowing you to withdraw funds up to your credit limit. Interest accrues only on your outstanding balance.

Equipment Financing

Equipment financing is a type of funding that can help you purchase machinery and equipment. The benefit of using this as a small business loan for disabled veterans is that it uses the purchased equipment as collateral so you can minimize your responsibility for the loan. Typically, both new and used equipment is eligible for financing. Plus, you may be able to finance up to 100% of the total equipment cost, including soft costs like delivery.

Small Business Grants for Disabled Veterans

In addition to loans for disabled veterans with small businesses, you can also look for disabled veteran business grants. Here are some places to start for grants, including disabled veteran business start-up grants.

GrantWatch

You may be able to find disabled veteran business grants at GrantWatch. You can search for grants based on filters such as:

•  Interest

•  Location

•  Funding source

•  Keyword

Grants.gov

Grants.gov is a database that focuses on federal grants. You can search by keyword, eligibility, funding instrument, agency, and/or category.

Service-Disabled Veteran-Owned Small Business Program

The Service-Disabled Veteran-Owned Small Business Program through the SBA ensures that eligible businesses receive at least 3% of federal contracting dollars each year. In order to be eligible, 51% of the business must be owned by one or more service-disabled veterans.

Second Service Foundation

Another option to find disabled veteran business grants is through Second Service Foundation (formerly StreetShares Foundation), a nonprofit serving the military entrepreneurial community. The organization supports military entrepreneurs through coaching, resources, and capital, as well as a mentorship program.

Hivers and Strivers Angel Fund

Hivers and Strivers is an early-stage investment fund that focuses exclusively on providing capital to companies founded and led by U.S. military veterans. Their mission is based on the belief that veterans possess a unique set of skills—such as grit, determination, and leadership—that make them particularly successful entrepreneurs. Hivers and Strivers not only provides funding, typically ranging from $250,000 to $1 million, but also offers active support, mentorship, and access to an extensive network of experienced business leaders.

Recommended: 10 Small Business Grants for Minorities

Small Business Loans for Disabled Veterans With Bad Credit

It is possible to get a small business loan with bad credit, but you’ll probably experience some challenges. If your business has been around for more than two years, you may be more likely to get approved using your business credit rather than your personal credit score.

If either score is poor, expect to pay higher interest rates. You may also need to supply more collateral than you would if you had good credit. If possible, you might want to consider adding a cosigner to the loan to help strengthen your application.

Applying for Small Business Loans for Disabled Veterans in 6 Steps

The application process may vary depending on the lender and type of loan. Follow these steps to guide you through each decision you have to make.

1.   Create a business plan. It’s important to know how you plan to use the funds and what type of outcome you expect. A plan can capture and summarize your research on business cash management.

2.   Determine your needs. Once you know what you want to achieve, price it out so you have a specific funding request. You don’t want to get stuck with too little and not accomplish your goals. But you also don’t want to borrow (and pay for) more than you need.

3.   Research lender eligibility requirements. Find out the criteria for different loan programs you’re interested in, such as time in business and annual revenue. This way, you won’t waste time applying to lenders that aren’t a good fit.

4.   Assemble required documentation. You’ll likely need both personal and business details, including financial statements and tax returns.

5.   Compare multiple lenders. As you complete your research, narrow down your list to the top lenders that match your needs. Find out if you can get a loan quote without impacting your credit score.

6.   Choose the best loan option. Once you have rates, terms, and fees to compare, you’ll be ready to make a decision and submit your full loan application.

Tips for Improving Loan and Grant Approval Chances

To improve your chances of getting improved for either a loan or a disabled veteran business start-up grant, a small business owner should:

•  Focus on presenting a strong, well-prepared application.

•  Create a comprehensive business plan that clearly outlines your goals, market analysis, and financial projections.

•  Organize your financial documents meticulously, including tax returns, bank statements, and profit and loss statements.

•  A high personal credit score is also crucial, so work on improving it.

•  For grants, tailor your application to the specific funder’s mission and show how your business will address a community need or create jobs.

•  Demonstrate your management experience and have a solid plan for how you will use the funds to ensure success.

The Takeaway

Disabled veterans have a variety of financing resources to consider when growing a small business. In addition to taking advantage of grant programs and SBA financing discounts, you may want to consider all of your financing options.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What types of businesses are eligible for veteran small business loans and grants?

Eligibility for veteran business loans and grants is broad. Generally, a small business must be at least 51% owned and controlled by one or more U.S. military veterans, active duty service members, or their spouses. The business must be located in the U.S. and its territories.

Are there grants specifically for disabled veterans starting a business?

Yes, several organizations offer grants specifically for disabled veterans. These are often provided by nonprofits like Warrior Rising and The Second Service Foundation, or through government programs like the SBA’s Veteran Readiness and Employment (VR&E) program, which aids veterans with service-connected disabilities in starting businesses

How long does it take to receive funding after applying?

The timeline varies significantly depending on the type of funding and the specific program. A standard SBA loan, which is often a key option for veterans, from application to receiving funds, can take as long as six months. For grants, unlike loans, there are specific application windows, and the decision and funding process is tied to that program’s schedule. It can range from weeks to several months.

Can disabled veterans apply for both loans and grants simultaneously?

Yes, disabled veterans can apply for both loans and grants simultaneously. They are not mutually exclusive. Loans, like those from the SBA, provide capital that must be repaid. Grants, often from nonprofits or government programs like the VA’s Specially Adapted Housing grant, are non-repayable funds.

What support organizations assist with veteran business funding applications?

Key organizations that assist veterans with business funding applications include the Small Business Administration (SBA) and its Veteran Business Outreach Centers (VBOCs). Nonprofits like Warrior Rising and Bunker Labs offer mentorship, training, and sometimes grants. The Institute for Veterans and Military Families (IVMF) also provides extensive entrepreneurship programs and resources.

Photo credit: iStock/Martinns

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Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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SOSMB-Q325-008

Maintaining cash flow and covering essential expenses can be a challenge for small business owners. When faced with limited options and a pressing need for quick funding, a merchant cash advance (MCA) can be helpful.

An MCA gives a business a sum of cash upfront in exchange for a share of future receivables. The advance is repaid with a fixed percentage of each day’s credit and debit card sales or withdrawals at set intervals (daily or weekly).

Read on to learn more about merchant cash advances, their advantages and disadvantages, when businesses use them, and how to apply for one. We’ll also explore some alternative loan options in case you decide an MCA isn’t right for your business.

What Is a Merchant Cash Advance?

A merchant cash advance is a small business funding option that allows you to receive money in exchange for future sales. MCAs are technically not loans, since they offer cash upfront in return for a portion of a business’s future sales. For this reason, providers do not have to follow small business lending laws.

Since they aren’t loans, MCAs don’t require collateral, and merchant cash advance companies typically won’t look at your credit scores to determine approval. However, there is little government regulation of MCAs, which can lead to some merchant lenders engaging in practices that are costly to your business.

Key Characteristics

•  Fast funding: The cash advance for your business is often available within 48 hours.

•  Flexible repayments: The amount of each payment can fluctuate based on your sales volume.

•  No traditional interest rate: Instead of interest, the lender charges a factor rate that applies to the entire loan amount.

•  Not tied to credit score: Nearly any business that accepts credit or debit cards can qualify.

•  No collateral needed: The loan is unsecured.

Merchant Cash Advance Example

Merchant cash advances charge a factor rate instead of a traditional interest rate. A factor rate is a decimal multiplier used to calculate the total amount you’ll repay on a loan or, in this case, an advance. Most factor rates range from 1.1 to 1.5 depending on the lender and your specific business.

Let’s say you want a merchant cash advance for $75,000. Assuming a factor rate of 1.3, you’d pay a total of $97,500 over time to get that $75,000 now ($75,000 x 1.3 = $97,500). This does not include any additional fees the lender may charge.

To pay the MCA back, a portion of your daily or weekly credit card sales will be automatically withdrawn from your account. The lower your credit and debit sales are, the longer it will take you to pay back the MCA. However, the longer it takes, the lower your overall annual percentage rate (APR) will be. Keep in mind that MCAs are one of the most expensive forms of borrowing for small businesses.

Important Characteristics to Consider

When deciding whether an MCA would work for your business, there are some key aspects to bear in mind.

•  Consider whether the steep finance charges and high fees of an MCA will be manageable for your company.

•  Repayment structures that divert a fraction of each sale to the lender can cut into a business’s net income.

•  Because MCAs generally aren’t reported to credit bureaus, successfully paying back an MCA probably doesn’t build business credit.

•  Compared with traditional bank loans, there’s less regulation to protect the borrower.

How Does a Merchant Cash Advance Work?

A merchant cash advance is not a loan but a financing option that allows small businesses (“merchants”) to get a cash advance for business expenses in return for a portion of their future sales or receivables. Unlike traditional loans, an MCA involves purchasing future sales at a discount. Typically, the process looks like this:

1.    Apply for the MCA: The merchant applies for a cash advance, providing necessary business and financial information. The merchant and MCA provider agree on the terms, including the percentage of future sales or fixed payments.

2.    Application approved: The MCA provider reviews the application and approves the advance based on business performance and future sales projections.

3.    Funds received: Once approved, the merchant receives the cash advance, usually within a few days.

4.    Repayment: There are two repayment options. A percentage of daily debit and credit card sales is automatically deducted until the advance is repaid or fixed amounts are withdrawn directly from the merchant’s bank account on a predetermined schedule. The advance is fully repaid once the agreed-upon amount, plus any fees, has been collected.

This structured process ensures that small businesses can quickly obtain the funds they need while clearly understanding their repayment obligations.

Factor Rate Used for Merchant Cash Advances

So, what goes into the factor rate merchant cash advances use?

As noted earlier, a factor rate is a decimal figure that reflects the total amount to be repaid on the merchant cash advance. Rates often range from 1.1 to 1.5, depending on the terms of the advance.

Similar to how traditional lenders calculate interest, merchant cash advance companies calculate factor rates by assessing the potential risk of providing funds to your business. Items that may affect the factor rate you receive include:

•   The type of industry your business operates in

•   Your business’s financial history

•   Credit and debit card sales

•   Your number of years in business

To calculate how much you could owe on an MCA, you’d typically multiply the entire amount of the merchant cash advance by the factor rate. For example, if you’re getting a cash advance of $5,000 and your factor rate is 1.3, then the total amount you’ll owe is $6,500. Here’s the calculation:

$5,000 × 1.3 = $6,500

The factor rate does not include any additional fees that may be associated with the cash advance, so check with your merchant cash advance company to make sure you’re aware of any additional costs. This step is important, as some merchant cash advances have been known to have APRs in the triple digits.

Other Fees for Merchant Cash Advances

It’s important to be aware of the various fees that MCA lenders may charge in addition to the cost of the merchant cash advance itself. These fees can significantly impact the overall cost of the financing. They include:

•   Origination fees: MCA providers charge origination fees for processing the application and setting up the advance. This fee is typically a percentage of the total advance amount and can range from 1% to 5%. It’s a one-time fee deducted from the advance before the funds are sent to you.

•   Underwriting fees: Underwriting fees cover the cost of evaluating the risk associated with providing the advance. This process involves assessing your creditworthiness, sales volume, and business health. The fee compensates the MCA provider for the time and resources spent on this evaluation. Like origination fees, underwriting fees are often a percentage of the advance amount but may also be a flat fee, depending on the provider.

•   Administrative fees: Administrative fees cover the ongoing management of the advance. These fees can cover a range of administrative tasks, such as account maintenance, payment processing, and customer support. While some providers include these costs in the factor rate (the fee structure used to determine the total repayment amount), others may charge them separately. Administrative fees can vary widely and may be a monthly fee or a percentage of the advance.

•   Other potential fees: Merchants might also encounter electronic fund transfer fees, early repayment fees, and fees for insufficient funds if scheduled payments cannot be processed. These additional costs can add up, so review the terms and conditions of the MCA agreement carefully.

Merchant Cash Advance Repayment

Merchant cash advance repayment terms are distinct from traditional loans. Instead of fixed monthly payments, repayment is typically tied directly to sales, providing flexibility and scalability with your business’s cash flow.

Credit Card Sales

This repayment method involves the provider taking a fixed percentage of your daily credit and debit card sales. This percentage, known as the holdback rate, usually ranges between 5% and 20%. Because repayments are based on sales, the amount paid each day fluctuates with your business’s revenue.

For example, suppose your business receives an MCA of $50,000 with a holdback rate of 10%. On a day the business makes $1,000 in credit card sales, $100 (10% of $1,000) would go toward repaying the advance. If sales drop to $500 the next day, only $50 would be deducted. This structure provides a cushion during slower periods because payments are reduced as sales decrease.

Fixed Withdrawals

Some MCAs use fixed daily or weekly withdrawals from your bank account. This method provides predictability in repayment amounts but lacks the flexibility of being linked to sales volume. The fixed amount is determined based on the advance size, the factor rate (the fee structure used to calculate the total repayment amount), and the anticipated repayment term.

For example, say you take out a $30,000 MCA with a total repayment amount of $39,000 over 12 months. If the provider opts for daily fixed withdrawals, the repayment might be calculated as follows: $39,000 divided by 260 business days (assuming a five-day workweek), resulting in a daily repayment of approximately $150.

Alternatively, for weekly repayments, $39,000 divided by 52 weeks equals about $750 per week. While this method provides consistency, it can strain cash flow during slower periods.

What If You Default on an MCA?

Defaulting on a merchant cash advance happens when you can no longer make your daily or weekly payments. If this happens, the MCA lender can file a lawsuit against you, possibly freeze your personal and/or business bank accounts, or even contact your vendors to try and collect payments directly.

If you think you may struggle with making your MCA payments, it’s best to stay one step ahead and apply for a small business loan to pay off the MCA. You can also contact the MCA lender directly to see if you can negotiate new terms.

Small Business Loan vs Merchant Cash Advance

Merchant cash advance is the most common term used for such financing, but you may also see MCAs referred to as credit card processing loans, business cash advance loans, merchant loans, or merchant advance loans. Just remember, these aren’t true loans. That means they come with little federal oversight and require you, the borrower, to do your due diligence when researching your options.

Traditional small business loans are different from MCAs because they provide merchants with a sum of money, typically for a specific purpose, which is then repaid in regular installments. Small business loans tend to have longer repayment terms and stricter approval requirements than MCAs. Whereas a traditional lender like a bank or online loan provider may look at your credit scores and require collateral, merchant cash advance companies usually do not.

Small business loans come with fixed or variable interest rates, which are applied to the principal balance. Interest rates on small business loans can vary depending on the loan type and borrower but may be lower than the factor rate you’d encounter on a merchant cash advance.

While there may be fees associated with a small business loan, APRs are typically lower than those of MCAs. This means that small business loans tend to be more affordable than merchant cash advance loans. Some lending options that could be workable alternatives to MCAs include:

•  Equipment financing

•  Invoice factoring

•  SBA loans

•  Small business loans

•  Working capital loans

•  Online business loans

4 Common Uses for a Merchant Cash Advance

One of the most common reasons a small business owner would choose a merchant cash advance is to access quick funding for short-term business expenses.

Businesses of any size can use merchant cash advances, but they are particularly helpful for startups with little to no business history, businesses with poor or no credit that don’t want to apply for a bad credit business loan, small business owners without collateral, and businesses unable to qualify for loans from traditional lenders.

Here are some of the most common reasons that businesses use MCAs.

1. Fill Cash Flow Gaps

If a small business has fluctuating cash flow that prevents it from making bill payments or payroll, a merchant loan can act as supplementary funding until cash flow returns.

2. Emergency/Unexpected Expenses

If short-term business loans aren’t accessible to cover unexpected expenses, small business owners can opt for merchant cash advances that could get them cash within a couple of days.

3. Inventory

Small businesses with consistent credit and debit card sales can use MCAs to purchase inventory and then repay the advance with a percentage of the revenue from inventory sales.

4. Seasonal Fluctuations

Some businesses experience significant revenue variation depending on the season. To ensure there’s always cash on hand, owners of small companies can get business cash advance loans to cover expected losses during slow times.

Benefits and Risks of Merchant Cash Advances

Like any source of business financing, a merchant cash advance has advantages and disadvantages. Generally, MCAs are a last resort due to their high cost, but there could be times when it’s the right choice for your business. Let’s look at some of the pros and cons so you can make the best decision for your business.

Pros of Using MCAs

•   Quick funding: Unlike a traditional loan, MCAs often provide you with funds in a matter of days.

•   Minimal paperwork: Merchant lenders offering cash advances typically require a simple application and only need to see basic financial information about your business, like a record of recent credit card transactions.

•   Unsecured: Business owners do not need to offer collateral to obtain a merchant cash advance.

•   Payments may change with sales: If the merchant cash advance is based on a percentage of sales, the repayment amount might adjust depending on the success of your business.

•   Don’t need perfect credit: If you have low credit scores, haven’t established business credit, or are struggling to get a short- or long-term business loan, a merchant cash advance can help supplement, as it is one of the few no-credit check business funding options.

Cons of Using MCAs

•   Expensive: Factor rates are typically 1.1 to 1.5, depending on the terms and conditions of the MCA. When you consider additional fees and APRs possibly in the triple digits, a merchant cash advance can be significantly more costly than a traditional loan.

•   No advantage to early repayment: With a merchant cash advance, you typically pay a set amount regardless of how much of the balance you’ve paid off. Merchant cash advances do not amortize like a loan, in which case you could pay less interest when you pay off the balance early.

•   Lack of government oversight: Because MCAs are considered commercial transactions, merchant cash advance companies can offer cash advances to those who otherwise may not qualify for a small business loan. However, the lack of specific government regulation can also lead to questionable financing practices and less protection for your business.

•   Don’t promote good credit: Merchant cash advance companies are not required to report to credit agencies. If you’re trying to build good business credit, using an MCA is unlikely to help the same way a loan would.

•   Hard to get out of debt: If you struggle to get loans, relying on high-APR merchant cash advances has the potential to keep you in a debt cycle that can be hard to get out of.

•   Cash flow restriction: While using an MCA can help secure funding in the short term, it could hurt cash flow in the long term. If you agree to give your merchant lender a high percentage of your daily credit/debit card transactions, for example, cash flow may run leaner during the MCA repayment period, especially if your sales are high.

Applying for a Merchant Cash Advance

Merchant cash advance companies make it fairly simple to apply for financing. The process typically involves the following steps:

•   Fill out an application: A merchant lender may ask for basic identification like your Social Security number, business tax ID (EIN), and contact information.

•   Collect and provide necessary documentation: This can vary depending on the MCA company, but you may need records of credit card transactions, business banking statements, lease agreements, gross revenue, and tax returns.

•   Approval: A decision can take as little as 24 hours or as much as a few days, depending on the company.

•   Set up credit card processing: Your business may be required to set up credit card processing with a specific partner of the MCA provider. If you’re applying for the advance through a payments platform that you already use, the process may be even easier, as the platform already has data about your sales.

After you’ve been through the application and approval process, you’ll have funds deposited into your small business account. Payments are typically deducted automatically from this account until the entire merchant cash advance is paid off.

What Lenders Look For in MCA Applications

Exactly what business benchmarks MCA providers lenders look for in applications can vary depending on the company. In almost all cases, sales volume is key.

When applying for a merchant cash advance loan, you may also need to present several months’ records of business bank statements, credit and debit card transaction statements, lease agreements, gross revenue figures, and tax returns.

Tips to Improve Your Approval Odds

MCAs are typically easier to qualify for than many other types of business loans. Still, there are ways to increase your chances of approval and possibly secure better terms and lower fees.

•  Having a strong business credit score can improve your odds. Merchant cash advance providers tend to be comparatively lenient about credit requirements, but a high score confirms your creditworthiness.

•  Providing ample documentation will help lenders assess the ebb and flow of your revenue and demonstrate how reliably you pay your suppliers and vendors. Evidence of your financial responsibility could help you get a lower factor rate.

•  Make sure your application is complete, current, and accurate. Omissions or errors can delay processing of your application or disqualify it altogether.

Alternatives to Merchant Cash Advances

Because of their lack of regulation and incredibly high APRs, merchant cash advances are usually considered a last resort. Before taking on an MCA, consider these small business lending options.

Invoice Factoring

Invoice factoring uses unpaid invoices as collateral in exchange for a cash advance from a lender. This is different from an MCA, which is based on projected sales. Invoice factoring also typically has a lower APR than MCAs, generally falling between 15% to 35%.

Inventory Financing

Inventory financing is an asset-based loan provided to pay for products that will be sold at some time in the future. The inventory acts as collateral for the loan.

Equipment Financing

Equipment financing is a secured loan to purchase machinery, vehicles, or other business-related equipment.

Recommended: Leasing vs Purchasing Equipment for Businesses

SBA Loans

SBA loans are backed by the U.S. Small Business Administration (SBA) and offered by banks and other approved lenders. They typically come with competitive rates and terms, but the approval process is lengthier than it is for other small business financing options.

Personal Loans

Personal loans are typically unsecured and based on your personal credit history (not business credit) and income. Personal loans can be used for almost any purpose, including business expenses.

Commercial Real Estate Loans

Commercial real estate loans provide funds to purchase business-related real estate, such as an office space or retail shop.

Business Credit Cards

Like a business line of credit, business credit cards can be used for short-term business needs. Business credit cards use a revolving line of credit, with interest charged only on unpaid balances from previous billing cycles.

Online Small Business Loans

Some online business lenders offer loan options similar to those of a traditional bank. They typically have a faster approval process and may offer more options (albeit usually at higher interest rates) for people with lower credit scores.

Business Lines of Credit

Business lines of credit are a flexible, revolving form of financing that allows you to use the funds as you need them, pay them back, and use them again. Interest is only charged on the amount you borrow.

The Takeaway

A merchant cash advance gives a business a lump sum of cash upfront in exchange for a percentage of its future income, typically from daily credit and debit card sales. MCAs can be helpful for companies with subpar credit and even startups with brief business histories. But high factor rates and extra fees can make this an expensive form of funding, so it’s worth investigating other options, such as invoice factoring or working capital loans.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What is a merchant cash advance?

A merchant cash advance (MCA) provides a lump sum to a business in exchange for a percentage of future sales or fixed daily or weekly withdrawals.

How much is a merchant cash advance fee?

MCA fees, typically represented by a factor rate, can range from 1.1 to 1.5 times the advance amount, depending on the provider and risk assessment.

What is the difference between an MCA and a loan?

An MCA is repaid through a percentage of daily sales or fixed payments, offering flexibility, whereas a loan requires fixed monthly payments with interest, regardless of business revenue fluctuations.

How do you qualify for a merchant cash advance?

For some companies, it can be easier to qualify for an MCA than for a traditional business loan. Providers are likely to consider traditional credit history requirements, but may pay more attention to your business revenue, especially debit and credit card transactions. Physical collateral is generally not required, but a personal guarantee may be.

Are MCAs available for startups?

Yes, a startup business can qualify for a merchant cash advance, but provider requirements vary. A startup should have been in operation for at least six months so that there’s a track record of card sales. Ideally the business processes most of its sales through credit or debit cards, making repayment easier. Also, lenders generally look for a minimum monthly revenue (typically starting at $5,000 to $10,000) to ensure steady repayment.

Photo credit: iStock/mapodile

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-018

Tax time can be stressful for small business owners. If your company hasn’t made any money yet, do you even need to file this year? Or, if you’re already turning profits, you may wonder how much you can make before you have to start paying business taxes.

The answers to these (and many other) small company tax questions will depend on how your business is structured, how much it has earned, and what deductions and credits you’re able to take.

Below, we break it all down to help you figure out how much you may owe in taxes for business income earned in 2025.

How to Calculate Your Small Business’s Taxable Income

Whether or not you need to file business income tax returns and how much you need to earn before you pay taxes will depend on your business structure.

Small Corporate Businesses

C corporations in the United States are subject to a flat 21% corporate tax rate. Generally there is no minimum income you have to meet before your small corporation is taxed. Every dollar it earns (after deductions and credits are factored in) will be taxed at 21%. Even if your business operated at a loss, you still have to file a return.

Corporate tax rates also apply to limited liability companies (LLCs) that have elected to be taxed as corporations.

Pass-Through Businesses

If your business is structured as a sole proprietorship, partnership, LLC, or S corporation, it will likely be considered a “pass-through” business. That means the income it makes is “passed through” to you and is reported on your personal tax return.

This business income will be combined with any other income (such as wages from a part- or full-time job, rental income, or investment income) on your tax return.

Your filing status, potential itemized deductions, and other allowable deductions will all serve to determine your taxable income and resulting tax bracket. Your choice of accounting method — GAAP or tax-based — will also have an effect.

A tax professional can help you consider all of these factors to estimate what your tax liability might be based upon your estimated business profit. But the following table can help you get a sense of your pass-through income tax rate in 2025.

💡 Recommended: Business Legal Fees and Taxes

How Much Can a Small Business Make Before Paying Taxes?

If you operate your business as a pass-through, meaning the income is taxed as part of your personal income, then the tax-free threshold (also called the standard deduction) for 2025 income is $15,000 for single filers and $30,000 for married couples filing jointly.

There is no tax-free threshold for corporations — you need to pay tax on every dollar the company earns. Note that small business loans are not considered taxable income.

Zero Taxable Income

If your small business’s taxable income and business expenses were equal for the year — or if your business didn’t generate any revenues at all — you may have no income tax liability.

Here’s an example. Let’s say you started a small enterprise in 2025 that earned $5,000 in annual sales revenue. However, you also had $5,000 in annual expenses, which included buying a new computer, advertising, and office supplies. Because these two cancel each other out, no income taxes are owed.

Net Income Formula

Net income (also sometimes referred to as net earnings or net profit) is your company’s total profits after deducting all business expenses.

To find your net income, which is the amount that’s considered taxable, you can use a simple formula:

Net Income = Total Revenues – Total Expenses

Let’s say you made $65,000 in annual sales and total expenses were $17,000 for the year. Your net income would be:

$65,000 – $17,000 = $48,000

To lower your net income (which will lower how much you pay in taxes), it’s a good idea to track and categorize business expenses throughout the year. Your business expenses might include expenses related to a home office or work space, the cost of tools or supplies, car or truck expenses, advertising costs, and legal and accounting costs.

Net income can be positive or negative. When your company has more revenues than expenses, you have a positive net income. If your self-employed tax deductions are more than your revenues, you have a negative net income, also known as a net loss. You won’t have to pay taxes on your business income if you have a net loss.

Self-Employment Tax

If your business is not incorporated, you may need to file a tax return and pay the self-employment tax if your net income is $400 or more.

Self-employment tax is the equivalent of the FICA payroll taxes (Medicare and Social Security) that you would normally share with your employer if you worked for someone else. Your employer would pay half and you would pay half, but you are the employer if you own a pass-through small business, so you must pay both halves.

Qualified Business Income (QBI) Deduction

In addition to small company tax deductions, the IRS has another little gift for owners of pass-through businesses: the qualified business income, or QBI, deduction. The QBI deduction allows you to deduct up to 20% of your qualified business income on your taxes. Note that sole proprietors, S corporations, and partnerships can’t claim the QBI deduction after 2025 unless Congress extends Section 199A of the federal tax code.

Tax Credit

Another tax tip for small businesses is to look for tax credits you might qualify for. Tax credits are different from tax deductions. Tax credits directly reduce how much tax a business owes dollar for dollar. Tax deductions, on the other hand, are business expenses that decrease how much of a business’s income is taxable. Translation: Tax credits are worth more.

There are a variety of tax credits available for businesses to take advantage of, ranging from providing employees with paid family and medical leave, to increasing access for people with disabilities. You can claim business tax credits by filling out the appropriate forms for the credits for which your business qualifies.

If you’re filing as a pass-through business, it’s also key to look into any and all personal tax credits you may qualify for, such as the Child Tax Credit.

Recommended: How Much Do I Have to Make to File Taxes?

Federal vs. State Tax Thresholds for Small Business Taxable Income

States impose business taxes as well, and each has its own threshold and set of tax brackets. State tax is paid alongside federal tax, but in some cases, corporations’ state income tax is deductible from the income that’s federally taxable.

Rates and thresholds range widely. California, for example, taxes every dollar of corporate income at 8.84%, while Florida’s 5.50% corporate income tax doesn’t kick in until your income exceeds $50,000. And two states — South Dakota and Wyoming — have no tax on corporate income or receipts.

How to File Income Tax With a “Doing Business As” (DBA) Name

When choosing a business structure, you may also decide to create a business name that’s different from your legal name. If that’s the case, you may need to file a “doing business as” form with your city or state to register your DBA trade name, also known as a fictitious business name or assumed business name.

You can identify your legal name and DBA in the appropriate fields when filing tax returns. A sole proprietorship on Schedule C, for example, may need to include the name of the proprietor, the proprietor’s Social Security number, the business trade name (if applicable), and the employer identification number.

Recommended: Advantages and Disadvantages of Sole Proprietorship

Penalties for Failing to File Corporate Tax Return

No matter how your small business is structured, if you do not file your tax return by the date it’s due, the IRS may enforce a penalty fee. This fee is typically 5% of the taxes you did not pay on time for each month or partial month that your return is late. Generally, this fee will not exceed 25% of your unpaid taxes.

The IRS may also charge interest on penalties, which increases the amount you owe until you pay your balance in full.

5 Tax Breaks for Small Businesses

Here are some small business tax breaks you can explore.

1. Business Loan Interest Tax Deduction

When filing taxes, you can check whether your business qualifies for a business loan interest tax deduction. If you’ve borrowed money for business purposes through short-term loans, lines of credit, mortgages on business real estate, or business credit cards, the interest you pay on those liabilities may be tax-deductible.

2. Charitable Contribution Tax Deduction

Small business owners who donate money to a qualified charitable organization may qualify for a tax deduction. To claim a deduction for charitable donations on your taxes, you must have donated to an IRS-recognized charity and received nothing in return for your gift.

3. Small Business Cell Phone Deduction

If you use a cell phone for business purposes, you may qualify for a deduction of your cell phone expenses when filing your tax returns. This can include expenses related to making domestic and international phone calls for business purposes.

4. Business Travel Tax Deduction

Small business owners who travel as part of their work duties may deduct eligible travel expenses from their taxable income. This can include business-related transportation expenses, such as flights, rental cars, train fare, parking rates, and tolls.

5. Advertising and Marketing Tax Deduction

Ordinary advertising and marketing costs your business incurs may qualify for an income tax deduction. This can include expenses related to optimizing your company’s website or sponsoring an event.

The Takeaway

How much your small business can make before paying taxes will depend on whether your business is structured as a pass-through entity or a corporation. Your business’s earnings and expenses during the year can also affect the equation. If you’re a small business owner, you may qualify for certain tax breaks that can reduce your tax burden.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How much money does a small business have to make before filing taxes?

If your small business is not incorporated, you may need to file a tax return and pay the self-employment tax if your net income is $400 or more.

What is taxable income for a small business?

Taxable income for a small business can include any revenue the business collects, such as fees collected from selling goods or services. In addition to gross receipts or sales, the revenue you collect from interest, rent, royalties, and capital gains may also qualify as taxable income.

How much can a side business make before paying taxes?

Individuals who have cleared at least $400 in a year from side hustle income generally have to report that income to the IRS on Schedule SE. Self-employment taxes may apply if you’ve had net earnings of at least $400 from self-employment during the 2025 tax year.

Do small businesses always have to file taxes, even if they don’t make a profit?

Your obligation to file a tax return depends on the business structure of your company, not the amount of profit. Both C and S corporations (and some LLCs) must file returns in almost all cases. Partnerships must file an information return on Form 1065, “U.S. Return of Partnership Income.” Income from a sole proprietorship or other pass-through entity is reported on the business owner’s individual return, often using Schedule C.

What taxes does a sole proprietorship have to pay?

For a sole proprietor — that is, someone who owns an unincorporated business by themselves — there are multiple types of federal tax to pay if the year’s net earnings exceed $400. (State tax rules will vary.) Federal obligations include income tax and self-employment tax. If you have employees, you’ll probably also have to pay federal unemployment tax (FUTA) on their wages and file the employer’s federal return (Form 941 or 943).

Photo credit: iStock/amenic181

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-022

Annual business revenue refers to the income generated by a business over the course of one year before any expenses are deducted. This is a key number for business owners to know because it tells you how well your company is doing.

Knowing your annual revenue also allows you to track your company’s performance against itself in previous years, as well as against competitors.

Read on to learn how to quickly calculate your business’s annual revenue, plus how you can use this metric to monitor and grow your small business.

What Is Annual Business Revenue?

Annual revenue means the total amount a business made in sales over 12 months, whether that’s for products, services, or both. This number is also often referred to as the “top line,” since it’s at the top of a business’s income statement. Annual revenue does not account for any of your expenses, such as payroll, operating costs, and rent.

How does annual business revenue differ from profits? Profit is the amount you have after you subtract annual expenses from annual revenue.

What Is Annual Revenue Used For?

Knowing your annual revenue is the first step in determining the health of your business. Keeping tabs on exactly how much your business is bringing in each year helps you assess whether your business is growing or stagnant, as well as calculate whether it has healthy profit margins. You’ll also need to know your annual business revenue when you file your taxes and when you apply for a business credit card, line of credit, or small business loan.

When calculating business revenue, you’ll include money you earn from your main business activities, such as sales of your products or services, as well as revenue you earn from activities not directly related to your business, such as interest from investments or renting out a floor of your building to another company.

There are also two different periods for calculating annual revenue: It can be over a fiscal year, which runs from whatever day of the year you start calculating, like July 1, to the same date the following year. Or it can be a calendar year, which would start on January 1. Some businesses prefer to use one timeframe over the other.

Either way, it’s important to calculate and track your annual revenue. Doing so helps you determine if your business is making a profit and growing. It can also assist you in preparing to pitch to investors, applying for small business loans, and planning and strategizing for future growth.

Types of Revenue

When determining your annual business revenue, you’ll want to be sure you include the two main types of business revenue.

Operating Revenue

Operating revenue includes sales from products or services you regularly sell. In other words, it is money earned from the core activities of the business. In the example below, revenue from jewelry sales falls under operating revenue. If you are a graphic designer, the logo or website design packages you sell fall into this category.

Non-Operating Revenue

Not all revenue that comes into your business is from your primary business activity or considered operating revenue. Non-operating revenue is the income your company brings in outside of its primary business activity. It tends to be sporadic and is not expected to be part of your business’s income on a regular basis.

Some common types of non-operating revenue that could still impact your business’s finances include:

•   Interest: If your company offers financing to customers or invests in the stock market, the interest you gain from these transactions falls under non-operating revenue.

•   Dividends: If your business invests in shares of another company, the profits you earn from this investment are part of your company’s annual non-operating revenue.

•   Rent income: If you rent property or equipment to others, the money you receive from these rentals is part of your annual non-operating revenue.

•   Asset and capital sales: If you sell a piece of equipment to another company, then the sale price is part of your non-operating revenue.

•   Contra revenue: Unlike the other non-operating revenue, contra revenue has a negative value. Contra revenue, which can include returned goods, unpaid invoices, and unsold inventory, is a deduction from gross revenue.

The Importance of Annual Business Revenue

Annual revenue is one of the most important financial metrics for any business. As a business owner, knowing your annual revenue provides insight into whether your firm is generating enough earnings to not only cover its expenses but also invest in opportunities for growth.

Annual business revenue also has meaning to potential investors and lenders. Investors will use annual revenue (among other metrics) to assess whether or not a company is worth investing in. They will often look at a company’s revenue growth rate and compare it to their competitors’ to determine if it’s a good investment opportunity. A review of the business owner’s cash management will help them figure out if the owner is financially prudent while growing the company.

Lenders will look at a company’s annual revenue to assess its creditworthiness. A higher annual revenue indicates that the business has the ability to repay its debts, representing a low risk to the lender. Revenue can be particularly important to lenders when assessing no-documentation business loan applications.

How to Calculate Annual Business Revenue

To calculate annual business revenue, you’ll need to determine your firm’s different revenue streams. To start, compile information on the selling price and quantity the company sold for each product or service. To calculate the total revenue of each product or service, use this simple formula:

Annual Revenue of Product or Service = Number of Units Sold x Sale Price

If you sell different products and services at different prices, you would use the above formula to calculate the revenue for each product or service, and then add each total together to get your total revenue from your business’s operations.

Next, you’ll want to add any other income (including investment income or sales of any assets) that your business earned during the year to come up with your total annual business revenue.

Annual Business Revenue Example

For this example, let’s say you sell jewelry. For simplicity’s sake, let’s say you only have three products:

•  Necklaces: $200

•  Rings: $100

•  Bracelets: $75

Last year, you sold 500 necklaces, 750 rings, and 1,000 bracelets. We start our calculations by figuring out your revenue for each.

•  Necklaces: $200 x 500 = $100,000

•  Rings: $100 x 750 = $75,000

•  Bracelets: $75 x 1,000 = $75,000

Now we add each of these together to calculate total revenue.

100,000 + 75,000 + 75,000 = $250,000

Assuming you didn’t have any other sources of income, your annual business revenue would be $250,000. Remember, this is before taking any expenses into account. Your profit will be whatever remains after you subtract the expenses involved in making the jewelry, as well as operating expenses, from your total revenue.

What Is Considered Good Annual Small Business Revenue?

What’s considered a good annual revenue for a small business depends on the size of the business. Census figures show that the average annual revenue for a small business with a single owner and no employees is $57,600 per year. As the number of employees starts to rise, so does the average revenue.

The average revenue for companies with one to four employees is about $526,600, while the average revenue for businesses with up to nine employees is around $782,400.

Recommended: EBITDA Fully Explained

Is Including Annual Recurring Revenue Worthwhile?

Annual recurring revenue (ARR) is a metric primarily used by businesses operating on a subscription-based model. ARR tells you the normalized annual revenue that a company expects to receive from its subscribers in return for its products and services. In other words, it is the predictable and recurring revenue generated by customers within a one-year period.

ARR is similar to monthly recurring revenue (MRR) — the key difference is that ARR is normalized to a year rather than a month.

For some businesses, annual recurring revenue is a valuable metric that can help owners quantify a company’s growth, evaluate its subscription model, and forecast its revenue.

Recommended: Startup Business Loans With Bad Credit and No Collateral

Annual Revenue vs Income vs Profit

While looking at your annual business revenue is helpful for understanding how your business is doing at generating sales, it’s not the full picture. If you’re spending more than you’re making, your business will struggle to stay afloat.

That’s why it’s important to determine both your annual business revenue (also known as gross revenue), as well as your net business income.

Net business income is the amount of profit your company has left over after paying all its expenses. Also called net profit, net income is the “bottom line” of a spreadsheet.

There are other types of profit, such as operating profit, which is gross profit minus operating expenses. Another way to assess your profits is to compare operating income vs. EBITDA (earnings before interest, taxes, depreciation and amortization).

Operating income suggests how much profit can be gained from operating revenue if operating expenses are lowered. EBITDA suggests a company’s income potential if certain variables like interest or taxes can be mitigated.

But net profit is usually most important, since it shows how well you’re doing at keeping expenses lower than revenues and maintaining a decent profit margin.

You can look at your small business income statement to see both revenues and expenses to help you strategize how to increase net income.

Here’s a quick snapshot of gross annual revenue vs. net business income.

The Takeaway

One of the most important metrics for a small business owner to track is annual business revenue. This number refers to the total amount of money your company makes during a year from the sale of products and services, plus any other additional income.

Annual revenue is the starting point from which you can determine your net revenue. This tells you whether your company’s sales are indeed exceeding its costs such that the business is making a profit.

Calculating your annual revenue also allows you to track your company’s growth over time and compare its performance to industry peers. You’ll also need to know your annual revenue if you’re looking to bring in an investor or apply for any type of business financing.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What is business revenue vs. income vs. profit?

Revenue is the total amount of money that a business receives from its sales and services. Income is the amount of money a company makes minus the cost of running a business. Profit is the amount of money a business receives after it accounts for the cost of goods sold (COGS). Unlike income, profit doesn’t account for other operational costs like salaries or taxes.

How can you find your annual business revenue?

Annual revenue is defined as the total income your business generates in one year, before expenses are subtracted. To calculate annual revenue, you’ll need to multiply the quantity of goods and services sold by the sales price for each item. This gives you your operating revenue. Next, add up your non-operating revenue — this is how much you earn from activities not directly related to your business (such as renting your building to other companies). You’ll need to combine operating and nonoperating revenue to calculate your annual business revenue.

Why is annual business revenue important to know?

You need to know your annual business revenue to file taxes for your business, determine your profit, and track your company’s performance year to year. If you decide to pursue business financing, you’ll need to have your revenue numbers ready for the application.

How do you calculate business revenue?

A simple way to calculate business sales revenue is to multiply the number of sales by the sales price. To calculate total business revenue, you’ll also need to add in income from other sources (such as investments or renting out equipment).

What is the difference between gross revenue and net revenue?

Gross revenue is the total amount of cash that a business generates. This calculation ignores expenses — it simply indicates how successful a business is at making sales. Net revenue is gross revenue after all expenses have been accounted for. This figure represents a business’s level of financial health.

Photo credit: iStock/CentralITAlliance

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-017

Small business grants provide money that, unlike loans, doesn’t typically have to be paid back. Business owners can use this money to take their companies to the next level. And if you’re a woman, you may qualify for woman-owned business grants that provide capital you can use to launch a venture or expand it to a new location.

Below, you’ll find a list of 30 small business grants for women, with tips on how to apply and various uses for a grant.

What Are Small Business Grants for Women?

Small business grants are lump sums of money you can use to do things like launch a business, buy equipment, hire staff, or grow your company. Unlike small business loans, however, you do not have to pay back grants.

While there are small business grants for anyone who owns a business, some grants are specifically for woman-owned businesses. Why? Women sometimes don’t have the same opportunities that men do in the business world, so companies and government organizations want to provide them with a leg up.

There are many grants for women entrepreneurs. However, small business grants for women are frequently reserved for established businesses. So if you’re just starting, it’s a good idea to look for grants that are specifically for startups.

Recommended: Mompreneurs: Generational Wealth and Real-Life Struggles

Small Business Grants for Women

After extensive research, we narrowed our list to these grants for women owned businesses. However, new ones pop up all the time, so this list is not exhaustive.

Here are our top small business grants for women.

1. Amber Grant for Women

The Amber Grant, provided by WomensNet, honors the memory of a young woman, Amber Wigdahl, who died at 19 before realizing her business dreams. The grant awards $10,000 to female entrepreneurs each month. One $25,000 winner will be selected from the monthly winners each year.

Qualifications:

•  You must have a business or business idea. The Amber Grant is unique because it’s not limited to women who already have an established business. If you’re able to explain how you plan to start and grow a new business, you can apply for this grant.

•  Requires a $15 application fee

2. Cartier Women’s Initiative

The Cartier Women’s Initiative offers female-owned business grants of either $30,000 or $100,000 to women looking to make a difference in the world. In addition to the funds, winners also receive business and financial coaching.

The Cartier Women’s Initiative currently offers two grants for women business owners:

The Science and Technology Pioneer Award: Awarded to women entrepreneurs who are leaders and innovators in science and technology. This grant is open to any woman in any sector and country. The winner will receive $100,000, and the two runners-up will each receive $30,000.

The qualifications for the Science and Technology Pioneer Award are as follows.

A woman must be the…

•  primary leader at the company

•  founder and majority shareholder of founder equity

The business must be…

•  developing a new technology, process, or scientific discovery

•  a for-profit business

•  an early-stage business with a proof of concept or prototype that’s already in existence or currently in the works. The final product must not have been commercialized for more than five years.

•  meeting at least one of the United Nations’ Sustainable Development Goals

The applicant must…

•  be at least 18 years of age by the application deadline

•  have a good command of the English language; the grant requires Level B2 and above per the Common European Framework of Reference

•  commit to participating in the fellowship program

Regional Awards: This small business grant is awarded to 21 women across the globe with early-stage companies that are generating revenue. Cartier is looking for women entrepreneurs who leverage an existing technology, model, or process in an innovative way. The seven winners will each receive $100,000 and 14 runners-up will receive $30,000.

The qualifications for the Regional Awards are:

A woman must be:

•  primary leader at the company

•  founder and majority shareholder of founder equity

The business must:

•  be for-profit

•  be in the early stages with a proven business model, in operation between one and five years

•  have generated revenue for at least one year

•  not have raised more than $2 million in dilutive funding

•  meet at least one of the United Nations Sustainable Development Goals (SDGs)

The applicant must:

•  have a good command of the English language; the grant requires Level B2 and above per the Common European Framework of Reference

•  be at least 18 years of age

•  be able to commit to the fellowship program

3. Jane Walker First Women Grant Program

Jane Walker, a part of the Johnnie Walker whisky company, works with the First Women Campaign and IFundWomen to provide small business grants for women. The grant provides $10,000 and a year-long coaching membership through IFundWomen.

Qualifications:

•  A person who identifies as a woman must have at least half ownership in the company

•  The person applying must be at least 21 years

The business must:

•  have been in operation for at least two years and make at least $25,000 in revenue annually

•  be willing to push boundaries and fight for diversity

•  be in one of the following categories:

◦  entertainment and film

◦  hospitality

◦  journalism

◦  music

◦  science, technology, engineering, and math (STEM)

◦  sports

4. Tory Burch Foundation Fellows Program

This Fellows Program, sponsored by the Tory Burch Foundation, provides women running early-stage businesses with a one-year fellowship, a $5,000 grant, workshops at the Tory Burch offices, and the opportunity to pitch their businesses.

Qualifications:

The business must:

•  be a for-profit organization in early stage (one to five years of operations preferred)

•  generate revenues of at least $75,000 in the past 12 months

The applicant must:

•  identify as a woman

•  be 21 years of age or older and a legal resident of the U.S.

•  own the biggest or equal stake in a business that is owned or controlled by women

•  be proficient in English

5. Small Business Administration

The Small Business Administration (SBA) offers government contracts to two types of businesses: Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs). This removes additional competition for contracts by limiting eligibility to a small but highly qualified group.

WOSB Qualifications:

•  Be certified as a WOSB

•  Meet SBA size standards

•  At least 51% of the business is owned by U.S. citizens who are women

•  Women manage daily operations and long-term decision making

EDWOSB Qualifications:

•  Meet all WOSB qualifications

•  Be run by one or more women who independently have net worths of less than $750,000

•  Be run by one or more women with $350,000 or less in adjusted gross income over the past three years

•  Be run by one or more women with no more than $6 million in personal assets

6. FoundHer Program

The FoundHer Program is specifically geared toward women-owned businesses in Hawaii. Resources include small business grants, weekly educational workshops, a network of business mentors, and monthly retreats.

Qualifications:

•  For-profit business in its early stages

•  Based in Hawaii

•  50% AANHPI women-led

7. SoGal Black Founder Startup Grant

Created by the SoGal Foundation, the Black Founder Startup Grant provides grants ranging from $5,000 to $10,000 to Black and multiracial women. Applications are accepted on a rolling basis.

Qualifications:

•  Identify as a Black woman or Black nonbinary entrepreneur

•  Have a registered business

8. Atomic Grant Program

The Atomic Grant program by Passion Collective gives four women entrepreneurs $1,500 cash and business coaching.

Qualifications:

•  Identify as a woman

•  21 or older

•  Passionate about making change happen

•  Sign up to Passion Collective

9. Freed Fellowship Grant

The Freed Fellowship Grant gives one business owner $500 a month and the chance to earn $2,500 at the end of the year. Winners also receive constructive feedback on their businesses and a two-month membership to the Freed Fellowship community.

While there are no specific qualifications to apply, you will need to answer questions about your business regarding context, content, community, chemistry, and commerce (known as the 5C Framework).

10. AT&T She’s Connected

She’s Connected by AT&T is a $20,000 grant offered to women-owned small business owners. In addition to the grant, the winner will also receive one year free of AT&T service, plus a new device.

Qualifications:

•  18 years or older

•  Sole or majority owner of a woman-owned small business

•  50 or fewer employees

11. Publish Her Business Impact Grant

The Publish Her Business Impact Grant is for women of color business owners who are making a difference in the lives of others. The grant is worth $5,000, and the top 10 entries are voted by the public to determine the winner.

Qualifications:

•  21 or older

•  Legal resident of the U.S.

•  Woman of color business owner

•  Business must be 100% women-owned

•  Must generate $50,000 or more in annual revenue

12. High Five Grant for Moms

If you’re an entrepreneur and a mom, check out the High Five Grant for Moms by The Mama Ladder. Judges determine the finalists based on your story and your business, and then the public votes on the top three winners. First place receives $10,000, second place $5,000, and third place $2,500.

Qualifications:

•  Must be a mom, which includes mothers of adult children, first-time expecting moms, stepmoms, and foster moms

•  Own a for-profit or service-based business with at least 51% ownership

•  Must have earned revenue for at least one year

13. The Kitty Fund Mother-Led Business Grant

The Kitty Fund Mother-Led Business Grant is open to all entrepreneurs who identify as a mother. Founded in 2020, the grant awards 25 business owners a $1,000 grant.

Qualifications:

•  Business owner must identify as a mother

•  Annual revenue may not exceed $5 million

•  Based in the U.S.

•  Have between two and 50 employees

14. FedEx E-commerce Learning Lab

The FedEx E-commerce Learning Lab is designed for women entrepreneurs and entrepreneurs of color looking to improve their e-commerce business. Created by Accion Opportunity Fund, the FedEx E-commerce Learning Lab is a five-month program consisting of courses and workshops, coaching, networking, online sales support, and a $5,000 grant to support your business’ growth plans.

Qualifications:

•  Own at least 51% of a U.S.-based small business

•  Have been in business at least six months

•  Produce and sell a packaged product

•  Earn less than $500,000 annually

15. Women Founders Network Fast Pitch Competition

The Women Founders Network Fast Pitch Competition allows women business owners to pitch their business in-person for a chance of receiving a grant worth $25,000.

Qualifications:

•  Founder must be a woman, or business must be majority-owned by a woman

•  Must be able to attend in-person event

•  Must have raised no more than $750,000 in funding

•  Based in the U.S.

Recommended: How Much Does It Cost to Start a Business?

16. StartHER Grant

The StartHER Grant is offered by Texas Woman’s University and awards 25 $5,000 grants annually to women-owned businesses in Texas.

Qualifications:

•  At least 51% women-owned

•  Five or fewer employees

•  Owned and operated in Texas

•  For-profit

17. InnovateHER Challenge

Offered by the U.S. Small Business Administration, InnovateHER is an annual competition between small business owners with a product or service that positively affects women’s lives. First place receives $40,000, second place $20,000, and third place $10,000.

Qualifications:

•  18 years old

•  Product or service must have a measurable impact on the lives of women and families

•  Must have potential for commercialization and fill a need in the marketplace

18. Visa She’s Next Grant Program

The Visa She’s Next Grant Program, in collaboration with IFundWomen, gives women business owners throughout the world access to funding and education. Applications are currently closed, but check back regularly for upcoming programs.

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Additional Private Small Business Grants

In addition to the grants mentioned above, there are other small business grants for women to explore.

💡 Recommended: Minority Business Loans

19. National Association for the Self-Employed Growth Grant

The National Association for the Self-Employed (NASE) offers a quarterly Growth Grant to four small businesses up to $4,000. To be eligible to apply, you must be a member of NASE and in good standing for at least three months.

20. Incfile Fresh Start Business Grant

Incfile offers a Fresh Start Business Grant to new and aspiring entrepreneurs. The winner receives $2,500 to use for startup costs for their business, plus free services from Incfile. Dates for 2025 haven’t been announced yet, so check back regularly for updates.

21. Fast Break for Small Businesses

Supported by LegalZoom and the National Basketball Association, Fast Break for Small Businesses seeks to help Black-owned businesses, women business owners, and low- to moderate-income small business owners gain access to funding. Businesses that are selected will receive a $10,000 grant.

Qualifications:

•  Black-owned business

•  U.S.-based

•  In business at least six months

•  Annual revenue cannot exceed $1 million

22. Halstead Grant

The Halstead Grant is specifically for entrepreneurs in the silver jewelry industry. Applicants must submit their design portfolio and answer 15 business-related questions. The winner receives $7,500 to put toward their business and a $1,000 Halstead gift card.

23. Comcast RISE

Comcast RISE was created to help small businesses recover from COVID-19, and now focuses on helping businesses expand and grow. In 2023, 500 businesses in five cities received grants and other benefits from Comcast RISE. While Comcast focuses on diversity inclusion, the grant is available to all small businesses.

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What About Federal Grants for Women Business Owners?

According to the Minority Business Development Agency (MBDA), part of the U.S. Department of Commerce, “Despite what the late-night infomercials want you to believe, the federal government does not provide grants for business expansion and growth. There is no ‘free’ money for you to start or grow a business.”

Though Grants.gov does exist, it’s simply a database. Additionally, it only focuses on government-funded programs, not personal business or projects.

However, some states, such as California, offer small business grants and other types of funding. You may also be able to find assistance through your local Small Business Development Center (SBDC).

Recommended: 10 Small Business Grants for Minorities

4 Databases of Resources and Grants for Women Business Owners

We not only looked for individual grants but also for resource databases for female small business owners. Below are an additional four resources for finding funding.

•  37 Angels: While 37 Angels is an investment company, they have compiled a list of other funding and development options. This list includes bootcamps, venture capitalist firms, and other organizations assisting female entrepreneurs.

•  GrantsforWomen.org: This site provides a database of grants and other types of funding for women, not just those in business but also those attending school or in need of funds for different reasons.

•  IFundWomen: IFundWomen offers many crowdfunding resources, grants, coaching, and networking opportunities. They also provide unique opportunities within specific fields and AAPI-, Black-, Latinx and Hispanic-, and queer-owned businesses. In addition, they offer a universal application, so one 20-minute application qualifies you for most of their grants.

•  National Women’s Business Council: The NWBC offers a list of resources female business owners may find helpful, including grant opportunities for women entrepreneurs.

Recommended: Small Business Loans for Women

What Can You Do With Small Business Grants for Women?

What you can do with a female-owned business grant is determined by the organization offering the grant.

Some grants may stipulate funds be used for specific projects or purposes. For example, a tech-focused grant provider may want the money to be used for research and development to solve a particular technology-related problem. Other grant providers allow you to use them for any business expenses, including:

•  Adding a new product line

•  Buying equipment like a computer, commercial mixer, or cash register

•  Covering inventory

•  Creating a product prototype

•  Expanding into larger commercial real estate

•  Hiring employees

•  Investing in marketing

•  Launching a business

Tips for Applying for a Female-Owned Business Grant

Grants are notoriously difficult to receive, primarily because there is so much competition for them. Here are five tips to get you started on your grant application journey.

1. Get Organized

When considering applying for grants, the first thing to do is get all your ducks in a row. Some best practices for this are:

•  Read through all qualifications and deadlines upfront.

•  Keep a spreadsheet of grants, requirements, and deadlines so you can stay on top of filling out applications on time.

•  Allow plenty of time for research, putting together a budget, and filling out paperwork.

Note: Very few grant-giving organizations require an application fee. If the one you’re interested in is asking for such a fee, do some additional digging to ensure the grant is legitimate. For instance, Amber Grants for Women requires a small fee to help keep the grant active; however, you can contact them to ask about waiving your fee.

You may use some of this compiled information for future grant applications, so keep it handy in a folder to speed up subsequent applications.

2. Don’t Ignore Small Grants

Small grants can add up quickly. For instance, a $1,000 grant could allow you to get a new computer; $500 could fund a ticket to a networking event where you meet other business owners and investors; $250 is enough for an email marketing software subscription.

3. Write a Grant Proposal

While some grant applications are as simple as filling out an online form, much of the time, you need to create a full grant proposal. This isn’t necessarily an intuitive process and can take some time, so taking a grant writing class or hiring a grant writer may be advisable.

Generally, a grant-giving organization wants to see your business plan and understand what you will do with the funds to start or grow your business.

Often, your proposal should tell your business’ story, including the challenge you’re looking to overcome and why you’re so passionate about it.

Remember to tailor each grant proposal to the funding organization. While some of your information (such as your budget) may be reusable, parts of it may not. Read all the fine print before applying.

4. Share What’s Great About Your Business

This is your chance to show why your company shines and why it’s deserving of this grant.

It can be helpful to look at past grant winners to see what types of businesses have been awarded grants in the past.

5. Review Your Application for Perfection

Have at least one person proofread, whether you hire a grant writer or fill out the application yourself. When all other things are equal, would you choose a job applicant who had a typo over one who didn’t? It’s the same with grant applications!

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Grants Can Provide Women Entrepreneurs With Necessary Capital

Having an influx of “free” cash could help you take your business to new heights.

Consider what limits you currently have in your business. For example, maybe you would like to invest in a new product. Or perhaps you have been doing everything in your business and know a second set of hands would let you better focus on running your business.

Whatever your dream, a small business grant for women can help you realize it.

The Takeaway

If you don’t find the right small business grant for women, you still have other financing options. There are small business loans for women that may offer low interest rates and favorable terms to female entrepreneurs that qualify.

Keep in mind that sometimes applying for and getting a small business loan can take weeks or months to process. If you need funds faster, you could try a business credit card or an alternative loan with a quicker turnaround. Still, be aware that those options may come with downsides, like higher interest rates.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

Photo credit: iStock/andresr

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