Women entrepreneurs face a variety of challenges when it comes to financing their business. They may receive lower loan amounts than male borrowers and be required to sign personal guarantees.
Fortunately, many banks and credit unions have initiatives that support women business owners. They may offer a variety of small business loans and lines of credit. Other options include merchant cash advances and invoice financing.
SBA Loans
Women have become a dominant force in the business world, but they struggle to obtain financing for their companies. One reason for this could be a lack of information about available financing options.
The Small Business Administration offers multiple programs, including the SBA microloan program designed to help startup businesses and the SBA 7(a) loan program for established companies. Both offer below-market interest rates and long terms. In addition, the SBA offers certification programs for women-owned businesses that may allow them to compete for set-aside federal contracts.
Another source of funding for women owned businesses is equity financing, which involves giving investors a stake in your company in return for capital. VC firms and private investors often provide this type of funding to small businesses. This can be a great option for established women-owned businesses that want to grow their companies without putting personal assets on the line.
Online Lenders
Many online lenders offer small business loans for women, and they can often provide a quicker turnaround time than traditional banks or credit unions. Some also offer more flexible qualifications than credit requirements and lower fees.
Women business owners can also get financing through nonprofit and private agencies, like Small Business Development Centers (SBDC) or Women’s Business Enterprise National Council (WBENC). WBENC is a network of local organizations that can help you become certified as a woman-owned business. This certification can help you compete for set-aside contracts, where the federal government limits competition for a contract to companies that are certified as WOSB.
Another option for women business owners who are looking for financing is a grant. However, grants can have more restrictive requirements than loans and may not be available for every type of financing need.
Personal Loans
Female entrepreneurs are powering a major shift in the US economy with two of every 10 businesses being women-owned, according to the Ellevate Network. However, women face funding challenges. Whether you’re starting a business or looking to expand your existing operations, there are financing options that can help level the playing field for women entrepreneurs.
Women can find small business loans from traditional banks, credit unions and online lenders. These loans come in different sizes and range from a few thousand dollars to $1 million or more. Term loans offer a fixed amount of money for a specified time period, while lines of credit offer access to funds based on your outstanding invoices. Some online lenders can provide speed and convenience while also offering lower qualifications than many credit unions or banks. In addition, mission-based nonprofit organizations may offer microloans to entrepreneurial women in historically underserved communities. Alternatively, merchant cash advances (MCA) allow you to borrow against the value of your future credit card receipts and are typically easier to qualify for than traditional loans.
Government Contracts
Government contracts can provide a steady source of revenue for women owned businesses. However, they can also be competitive to obtain. A new initiative called ChallengeHER aims to boost the number of opportunities for women contractors. It offers business owners an online curriculum, various resources and mentorship from experienced women contracting companies. The program is the result of a recent National Defense Authorization Act that removed caps on service and manufacturing contracts for women-owned small businesses.
Federal agencies set aside some contracts for the WOSB Federal Contracting Program, which allows contracting officers to limit competition to certified women-owned businesses. These contracts are for goods and services in specific industries identified by NAICS codes. The goal of the WOSB Program is to reach a minimum of five percent of all contract dollars awarded to women-owned business each year.
Certification as a WOSB and/or WBE is an excellent marketing tool for your business, and it can lead to more contract opportunities than open competition. In addition, women-owned businesses can get valuable tips, insights and support through government programs for contracting and mentoring.women owned business loans
