Did you know that women own more than 11.3 million businesses in the United States, and that those businesses account for 1.6 trillion in revenue? Women represent an important segment of the U.S. economy, and yet, according to a report by the U.S. Senate, it’s still more difficult for women to get a small business loan than it is for men.
According to credit bureau Experian, women are still seen as less credible and less legitimate than male business owners, and even female lenders prefer working with men. It is absolutely sexist, but knowing this will not help you get the funding you need to succeed.
If you are a female entrepreneur, it is important to know all of the financing options available to you and the impact they could have upon your business. Thankfully, there are several programs which lend specifically to women, whether you have good credit or bad credit, or whether you are just starting out or you are operating an existing business.
Be aware that traditional banks and lenders require significant documentation with business loan applications, as well as excellent credit. They are the toughest loans to get, and may not even offer the flexibility and terms that your business needs. While you should be prepared for a vigorous application process with any of the lending options below, alternative lending offers the quickest application and approval process and flexible payments, both of which could be what your business needs.
We have listed several resources as well as many of the financing opportunities available for women to help you start the process. While we cannot list every option available, we have included some funding sources specific to a particular region to help you identify a similar program in your area.
It may be more difficult for women to get business funding than men, but it’s not impossible. And by taking advantage of these resources, you definitely up your odds of success.
Before applying for any financing, it’s always smart to seek out business counseling. There are several free, helpful resources for women in business which have been set up by the government and non-profits to aid female entrepreneurs. Some provide education, others will help you find female-friendly lenders, and others will help you write and complete loan applications.
The first are women’s resources through the Small Business Administration’s website, or in-person help through local Women’s Business Centers. The SBA will help you fine-tune your business plan to make sure it appeals to lenders.
Another great online resource for women to access business tips and resources is the non-profit, Ladies Who Launch. Their organization runs a website dedicated to helping female business owners and entrepreneurs succeed in business. They also host local events where successful women business owners share their wisdom on panels and networking opportunities abound.
If you are a female veteran, V-Wise is a place where you can find valuable resources to assist you with small business management and entrepreneurship. The resources at V-Wise include training, business planning, economics and finance, marketing & social media, business law, access to capital, networking opportunities and much more. Business counseling will go a long way in helping you run a successful business and eventually acquiring the funding you need. It also serves as a resume booster to convince lenders to invest in your ideas.
Another option for business counseling is SCORE, a non-profit business mentoring service. Most of their services are free, though they do offer some premium options at a very low cost. They will help put you in touch with many of the funding options, grants, and other resources available for women business owners.
If you like networking or just want to find articles and resources about small business loans for women, grants for women, and a variety of business resources you can check out a great online community dedicated to small businesses called Women Owned. Lastly, the National Association of Women Business Owners is a great network for women business owners and entrepreneurs and their website has tools and resources for women.
If you want assistance in the process, Women Accessing Capital can be a great resource for webinars, podcasts, and training sessions to help prepare you to access capital. When borrowing money you will be entering a world of confusing language, from APR to terms to interest-only, and educating yourself as to their meaning and possible impact upon your business is crucial for success.
The more prepared you are with your paperwork, and the more educated you are about different loan types and options, the more likely you are going to get approved for some type of funding.
Start operating before you apply for financing. What many people don’t realize is that most funding opportunities are reserved exclusively for existing businesses. This means you need to start working, earn some money, acquire a small customer base, to prove you can run a business before you actually apply for a small business loan. Once you have been in operation for at least a few months you will have a much better chance of receiving business funding.
Be aware that multi-level marketing companies, such as Mary Kay, It Works!, LuLaRue and others as they generally do not qualify for traditional short term business loans. These are not considered businesses. Most participants in MLM’s make less than 70 cents an hour, which is scary when you consider that over 32% of them finance their “business” with a credit card. They do not qualify for SBA loans, and according to the FTC the failure rate is over 99%.
Gather everything you need for your loan application before submission. Banks and traditional lenders have long lists of requirements, which often include financial statements, tax returns, resumes and business plans. If your application is missing something, it could delay the loan approval process. Alternative lenders have much-less stringent requirements and are a better choice if you need money faster than the two to three months it will take for a bank’s approval to come through. Once you are prepared to apply for a small business loan the following resources are just some of the options available to you.
Most of the small business lending that occurs is either from alternative lenders or banks. Alternative lending is the easiest and most flexible source for private business loans for women even if you have bad credit. There is a reason that this segment of the lending market has grown exponentially over the past few years, with origination volumes reaching $34.5 billion in 2016. Alternative lenders fill a market need by lending to businesses that banks and traditional lenders are afraid to touch.
Alternative lending firms that are easily found online don’t require good credit with their bad credit small business loans as long as you have an existing business, but they also offer lower rate short term business loans for borrowers with good credit. They will typically lend up to $1,000,000 without asking for collateral, and their quick application processes, sometimes as fast as 24 hours, ensure that you get the capital you need as quickly as possible.
In contrast, traditional lenders such as banks can take three months or more to approve a loan. Also, traditional lenders are not an available option for businesses that are just starting out. Those businesses can’t meet the requirements for length of time in business, monthly revenues, and more.
If you are in business and do not have meet the requirements of many of the traditional lenders listed below, alternative lending can be a great way to access small business loans for women.
State Loan Financing Programs are available in each state. They establish various economic programs to help women in business. After typing in your zip code on the website and answering a few basic questions, this government resource will display a variety of local resources for financing. Each state also has SBA resources, some of which we have listed below, but we also recommend taking this SBA-provided 45-minute business financing course here to help prepare you to apply with many of the SBA-backed sources you will find below.
There are two main types of grants; those offered by the government and those offered by individuals or private organizations. Government grants can be a great resource to fund an existing project if your business operates within a certain industry or is a certain type of organization. You will need to meet very stringent compliance and reporting requirements to qualify for them.
Tax dollars fund government grants so it is important to point out that they are generally not available for starting or expanding a business. They are notoriously difficult to come by, and typically only made available to non-profits and non-commercial entities such as education, scientific research, technology development or medicine, or if your entity contributes to the community in specific areas.
If you feel you might be able to meet the requirements from the government here are some excellent resources.
Some individuals and organizations offer small business grants. Private grants for women are typically small dollar amounts, but can be a good option for growing or expanding a business. Many do not disqualify small business owners with bad credit. Look into alumni organizations, particularly if you attended a woman’s-only college, or inquire with local corporations.
Here are some resources to get started.
Some organizations and banks offer small business loans specially tailored to women. Many of the options listed below were created for women, however, there may be more out there.
Programs established for particular regions will give you a starting point to search for something similar in your area. When trying to find a similar program in your region search with the same features, keywords and phrases discussed on the first program’s website.
Generally speaking women are eligible for business loans in any bank, but many local community banks offer business loans for women which include access to helpful business and financial planning resources.
While geographically-based loans and grants are often offered in economically-depressed areas, and are sometimes only available minorities, you might be able to find one in your area. Loan amounts vary, but many also lend at below-market rates and provide training and resources along with their loans.
The local and national banks below are meant to show you that these programs exist and you can probably find one near you.
Each state and many local governments have resources dedicated to help new and established businesses grow and become successful. To find resources in your state, the SBA has a platform where you can search state by state for your local Economic Development Agency.
Community Development Financial Institutions, or CDFIs, are financial institutions that were established to provide affordable loans to low-income or disadvantaged communities. To qualify for their programs you must meet certain criteria, such as operating your business in a disadvantaged community, being a member of a minority group, or income requirements. Below you will find some sample CDFIs as well as some of the main resources to find local CDFIs in your area.
Angel investors or venture funding can be a great option to find start-up capital or secondary funding for small businesses in the early stages. Venture Capitalists are extremely picky and have a very stringent vetting process but if you have a great idea or business model it may be wise to consider. Many have been started to work with and fund women-owned businesses.
The SBA offers a great resource to learn what venture capital and angel investing is all about. Below is a list of a few venture capital funds which work primarily work, or seek to work with more, women.
Crowdfunding is a process where an individual or borrower attempts to raise funding by requesting small amounts of money from a large pool of people. Funds are often donations and contributors do not expect to be paid back, though some crowdfunding campaigns offer donor incentives and gifts. Those incentives can take the form of gifting products or offering services at a discount. Some crowdfunding platforms today even allow investors to lend in a type of angel funding or venture capital equity framework.
Most of the crowdfunding options are done via the internet. For detailed information on Crowdfunding for women check out this report from the National Women’s Business Council. There are some crowdfunding websites set up for women-owned ventures, or who support searches for female borrowers.
Microloans are typically loans which only give a small sum of money, too small to interest a bank. Although some microloans can range up to $100,000, most are capped at $35,000 with the average being about $13,000 according to a recent senate report.
At Shield Funding we believe in assisting women in business. We believe that an educated borrower is an empowered borrower, and want you to know all of your options for small business funding. We also suggest learning about your borrower’s rights before taking out a loan.
If you have any questions, please give us a call. We would be happy to help guide you to the right choice when it comes to financing your business.
