According to the 2015 State of Women-Owned Businesses Report, women own 30 percent of all businesses, generating $1.5 trillion in revenue and employing more than 7.9 million people.
Although the data may appear impressive, in reality, women-owned businesses remain small in size and revenue in comparison to their male counterparts. Some argue that this disparity stems from lack of access to funds. Whatever the reasoning, the good news is that the Small Business Administration (SBA) has created several ways for women to gain greater access to funding. Below you will find several resources that can help you secure funding for your business.
SBA Loan Opportunities
There are different loan opportunities available through the SBA that women can tap into. It’s worthwhile to note that the SBA doesn’t actually fund the loan – they guarantee a portion of the loan. The guarantee protects the lender’s interests by promising to pay a portion of the loan back if the business owner defaults on the loan. This allows the lender to take a greater risk.
The SBA loan opportunities include:
7(a) Loan Program – This program is the most popular loan program that the SBA offers. It is considered a general small business loan, and it allows a business owner to seek funding for specific reasons. The eligibility for this loan program depends on what the business does to receive income, the character of the ownership and where the business is located. You can view additional specifications at sba.gov.
Microloan Program – This loan program provides loans up to $50,000 to assist small businesses and certain not-for-profit child care centers in their endeavor to start and grow. Although the cap amount is $50,000, the average loan amount is $13,000. The guidelines stipulate that the loan can be used for:
- Working capital
- Inventory or supplies
- Furniture or fixtures
- Machinery or equipment
The Real Estate & Equipment Loans: CDC/504 – The purpose of this program is to fund business expenses that are fixed assets, including equipment and real estate. Certified Development Companies are nonprofit companies that work with lenders to help small business gain funding. You can access CDS in your area by using the SBA local assistance tool.
Disaster Loans – The SBA provides low-interest disaster loans to businesses and non-profit organizations to repair or replace the following items damaged or destroyed in a declared disaster:
- Real estate
- Machinery and equipment
- Business assets
In addition to the loan programs that are guaranteed by the SBA, there are other funding sources that women can tap into. Below are just a few examples of alternative funding options:
Traditional Banks – It’s true that both men and women-owned businesses struggle when it comes to obtaining funding from traditional banks. However, it’s also true that women are turned down by banks more than men. Some of the reasons include:
- Lack of Collateral
- Strict Banking Requirements
- Perceived Risk
- Low or Negative Cash Flow and Revenues
- Lack of Preparation
Platform Lenders – The emergence of platform lenders like Kabbage has provided a much-needed solution for women-owned businesses. The prospect of applying for a business loan once seemed daunting to women entrepreneurs, but with platform lenders, it’s now a simple, quick process. For instance, Kabbage borrowers can have access to funding within minutes because of Kabbage’s innovative, automate