Women entrepreneurs often face unique challenges when it comes to running their businesses. Key among them is finding financing to help their companies thrive.
Studies have found that women do not have sufficient access to loans and venture investment compared to their male peers. A 2015 U.S. Senate Committee on Small Business and Entrepreneurship report noted that women accounted for only 16 percent of conventional small business loans and 17 percent of SBA loans.
As the number of women business owners continues to increase, so do the number of sources providing funding. Opportunities range from traditional loans, grants and bonds to alternative lending. As we prepare to celebrate Mother’s Day this weekend, we’ve put together a short list of options for women who are seeking funds to launch, sustain, or expand their businesses.
Angel Investors and Venture Capital
Angel investors have helped many big-name companies get their start, including Google, Yahoo, and Costco. Angel investors are typically high net worth individuals and savvy investors who exchange their capital for an ownership interest in a newly formed business. As successful former business owners, they can provide a tactical benefit to your company by offering experience, guidance, and valuable business contacts as well as financial support.
If your small business is well beyond the startup phase, a venture capital investment may be beneficial. Venture capital companies differ from angel investors in that they invest other people’s money in businesses with high growth potential. They get their return in the same way as angel investors, but they usually want a large ownership share as well as a say in the management and direction of the business.
Although getting a venture capital investment can be difficult, this type of financing works well if you are having trouble qualifying for a loan. A venture capital company is interested in your long-term potential, not just your current creditworthiness.
Small Business Grants
Looking for free money to help grow your business? Small business grants are non-repayable funds given to companies that meet the qualifications established by a government organization, a non-profit, or another company. When you find a grant your company is eligible for, submitting a thorough and compelling application is crucial. Grants are highly sought-after and the competition can be fierce.
The U.S. government allocates billions of dollars of grant money to businesses each year, including specific grants for businesses owned by women, minorities, veterans, and Native Americans. The comprehensive resource tool www.grants.gov provides information on government agencies and the grants they have available.
In addition, businesses and non-profits often sponsor grants as part of their charitable giving and community outreach efforts. For example, apparel company Eileen Fisher provides grants to innovative, women-owned companies that are beyond the start-up phase and ready to expand their potential for positive social and environmental impact. WomanOwned.com provides online business information and resources for setting up, running, and growing businesses, and offers members access to a database that lists thousands of business grants and state programs.
The U.S. Small Business Administration (SBA) has a large array of small business resources for women entrepreneurs and offers a variety of loan programs for specific purposes. These range from general business loans and short-term micro-loans to low-interest disaster loans. Specifics about all of the SBA’s financing options as well as requirements and application forms can be found on their website
In addition, the SBA’s Office of Women’s Business Ownership provides advocacy, outreach, education, and support for women entrepreneurs at every stage of developing and expanding their businesses.
Working Capital Financing
Women business owners often find it challenging to obtain working capital financing from traditional lenders with whom the process of applying for loans can be slow and require extensive documentation.
Summit Financial Resources is proud to be a resource for women who need financing to develop their businesses. We occupy the middle ground between easy but expensive financing and lower-cost, harder-to-get loans, and we offer custom financing solutions that use your accounts receivable and other assets as collateral. We can mix and match from a variety of product options, including invoice factoring, asset-based lending, inventory lending, and equipment financing.
Because Summit Financial Resources is not regulated like a bank, we can structure more flexible deals, take more risks, and make funding decisions quickly. Whether you are just starting out or on the fast track to growth, we are committed to helping you move beyond financial barriers on your road to continued success and provide unique funding solutions that are right for your business.
Working Capital Financing is a few clicks away.
Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.