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Women Business Owners – How to Expand Your Sources of Capital and Get Outside Financing

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Updated: Wednesday, March 5, 2014 - 21:42
Created: Monday, March 26, 2012 - 13:10

Back in 2010, SBA guest blogger Susan Solovic shared some statistics about the self-perpetuating challenges that female business owners have when it comes to growing their businesses and accessing capital:

  • Less than three percent of women-owned businesses cross over the million dollar threshold in revenue.
  • Access to growth capital (a critical factor in growing a successful, sustainable business) is a challenge for women business owners. However, research by the former Center for Women's Business Research – now the Global Initiative for Women’s Entrepreneurship Research (GIWER) at Babson College – shows that historically, women have not had equal access to financial markets – much of it due to the systemic bias against women business owners.
  • Another important reason women don't obtain the funding they need for their businesses is because they may not understand the process, which frequently means they often don't ask. In 2009, the Center for Women’s Business Research found that nearly half of women business owners don’t seek outside sources of money for their businesses!

Solovic went on to note that “education is critical for women business owners who want to enhance their opportunity to access capital for their businesses.”

Understanding the Financing Options for Women Business Owners

So what steps can women business owners take to understand the business financing options available to them? Through its Office of Women’s Business Ownership, the Small Business Administration offers a combination of online tools, in-person assistance, and training that can help women apply for the much needed capital. In fact, women who take advantage of these resources are proven to be more likely to succeed in business!

Here are just a few resources that can help women business owners explore, learn more, and apply for business financing.

1. SBA.gov Loan Programs and Online Loan Search Tool

While there aren’t any government loan programs specifically for women business owners, the SBA is one of the largest loan guarantors in the country and offers a variety of loan programs to small businesses.

The SBA doesn’t lend the money. Instead, it provides a guarantee to banks and lenders for the money they lend to small businesses owners (and you’ll find information here on what the SBA officially considers “small”). This guarantee protects the lender's interests by promising to pay a portion (the percentage varies by the type of loan) if the business owner defaults on the loan, thus encouraging the lender to take a greater risk than it would have otherwise.

SBA does not discriminate against any group and therefore does not provide funding specific to only one demographic.  

FACT: SBA loans are three to five times more likely to go to women than non-SBA loans. SBA’s flagship loans programs include 7(a) and 504, but women-owned businesses often need small-scale financing, so SBA microloans are another option to consider. In Fiscal Year 2011, approximately 54% of all microloans made went to businesses owned in whole, or in the majority, by women. 

You can explore loan programs based on your business profile and needs using BusinessUSA.gov’s Loans and Grants Search Wizard, or navigate your way around SBA’s Small Business Loans and Grants home page. Alternatively, you can take one of these free online courses that explain SBA’s loan programs: Online Courses for Financing Your Business.

2. Women’s Business Centers

With 110 offices nationwide, Women’s Business Centers (WBCs) are overseen by the SBA’s Office of Women’s Business Ownership and provide training and counseling on a variety of topics that help women business owners start and grow. Specifically, they can help guide women through the process of finding and applying for an SBA loan and offer regular training seminars on financing topics. Some also provide access to alternative capital financing programs.

FACT: SBA dataa has shown that businesses that receive assistance from WBCs have significantly better survival rates than those that don’t receive similar support.

3. SBA Local Offices

Another in-community go-to resource for business counseling, training and loan information is your local SBA office. These offices oversee the delivery of SBA’s programs, including loans, nationwide. You can also locate your office on Twitter and Facebook here.

Additional Resources

 

Type: Community Blog