As a female business owner, you know that the key to growth is having access to funding. But what you may not realize is that financing for women entrepreneurs comes in many forms, from crowdfunding to equity investments. There are also debt and non-divisional options like grants, microloans, and specialty loans for women-owned businesses. The best financing option for your business depends on your specific needs and situation, so take some time to explore the funding opportunities that are available to you.
A small business loan is one of the most common financing options for women-owned businesses. These loans can be a great way to help smooth fluctuating cash flow, increase inventory, or make larger purchases such as a point-of-sale system. There are short-term business loans with fixed interest rates, as well as longer-term business loans that offer a line of credit that you can draw from when needed.
Depending on the size of your business and your financial health, you could be eligible for a loan with terms that range from a few thousand dollars to a million dollars or more. You can find women-owned business loans through traditional banks, online lenders, credit unions, and alternative lenders. These alternative lenders often have looser requirements for credit and income, but they typically have higher interest rates.
In addition to loans, there are a number of other resources for women-owned businesses that can provide support and guidance. The federal government’s Office of Women’s Business Ownership oversees more than 100 Women’s Business Centers, which provide training and counseling on topics such as entrepreneurship, finance and marketing. There are also state and local programs that focus on providing support to women-owned businesses.
There is a gender gap when it comes to business lending, with women-owned businesses receiving less financing from the banking sector than male-owned businesses. Some lenders have even reported that female-owned businesses are denied Covid-19 relief funds two to three times more than male-owned businesses. In 2021, only 12% of women-owned businesses were approved for the full amount they requested from lenders.
Although there is a gap in business loans for women, it is possible to secure business funding, even with bad credit. In fact, women-owned businesses are more likely to qualify for a small business loan when they apply with lenders that offer resources and programs specifically geared towards female entrepreneurs.
These resources are offered through nonprofit organizations, local government and specialty lending institutions that target businesses in underserved communities. For example, Accion Opportunity Fund offers microloans up to $50,000 for qualified women-owned small businesses with at least one year in business and minimum annual revenues of $50,000. You may also be able to secure business funding through community development companies or SBA community Advantage lenders. Other funding and financing options include crowdsourcing, angel investors, and venture capitalists. Some of these options require an equity stake in your company, so be sure to research the options that are available before making a decision.