The U.S. is home to 12.3 million women-owned businesses, which generate $1.8 trillion per year. America also leads the way in growth for female businesses globally! But how do these entrepreneurs find the best loans for women owned businesses?
Despite great accomplishment, female business owners still experience many forms of inequity when it comes to financing their women owned businesses. Many may know about the “wage gap,” or that female employees earn less than men, but a lesser-known statistic is that women acquire less business and grant funding from investors, business loans, and government even when they have good credit. In a recent year venture capitalists invested $130 billion in U.S. startups, but only a tiny fraction of that – 2.2% – went to female business owners.
“Only 25% of women are likely to pursue financing for their businesses vs. 34% of male entrepreneurs. The loans female business owners receive are generally one-third less than their male counterparts – a significant and unsettling discrepancy,” says Emily Larsen Doxford, vice president of marketing and strategic communications at Loan Mantra. “That’s why Loan Mantra is working hard to democratize the lending process and make financing easy, equitable, and accessible for everyone.”
In addition, Emily offers female entrepreneurs the following advice when seeking financing or to complete their funding circle:
Explore online loans from trusted lenders
With online lending, decision-makers consider quantitative data first. Funding is largely objective, based on numbers and analytics, and isn’t biased by the applicants’ gender, appearance, race, age or any other potentially discriminatory factor. A recent policy analysis from the World Bank found that 35% of loan officers hold a bias against female, SME borrowers, citing gender as evidence for risk. However, good online lenders will have efficient underwriting processes, as well as term flexibility. Loan Mantra uses a lender match tool and robust platform that ensures all borrowers are receiving prudent capital without predatory rates or terms.
Do your research
Because there are still many barriers for women to secure loans and startup expenses, the Small Business Administration (SBA) prioritizes female business owners getting funding. An SBA loan can makes financing more accessible, affordable, and attainable for female business owners. Working with SBA lenders--and female SBA lenders at that--will streamline the process further. But this isn’t the only option – do some research (or consult with a financial professional) to find the best small business loans for women.
Consider an SBA microloan
The SBA microloan program can be a good fit for female business owners who need a small, short-term financing solution or a small capital injection to start their business. Microloans are generally easier to qualify for than other types of loans. Entrepreneurs don’t need strong credit to apply, and applicants don’t have to be established business owners with a history of high revenue.
Leverage loans and programs designed specifically for female entrepreneurs
Certain business loans are designed for women, including The Tory Burch Foundation’s Capital Program, which provides “mentorship and networking, entrepreneurial education, and access to capital” between $500 and $100,000. And non-profit Grameen Foundation provides microloans for female entrepreneurs, starting at $1,500, to support their training, education and networking. The Cartier Women’s Initiative is open to women-run and women-owned businesses from any country and sector that aim to have a strong and sustainable social or environmental impact.
Be clear about the terms of the loan
Review the qualifications for the loan before you commit to it. Understand the amount you can borrow, repayment terms, interest rates, and associated fees.
Determine what capital you need
What do you need money for? If you need a backup method to pay expenses when cash flow is tight, you might simply need a business credit card instead of a loan. Also, a business line of credit, which works like a credit card and is available to businesses with lower credit ratings, can be a great solution for short-term financing needs, ongoing operating expenses, business emergencies, etc.
Consider a grant
The beauty of grants is that they don’t need to be paid back. Visit grants.gov to explore the options and apply for a federal grant. The site provides resources and instructions to help people navigate the application process and determine which grants are most appropriate for their specific situation. “It’s incredibly fruitful for female entrepreneurs to understand their unique value-add or perspective and to find grants that aim to leverage these unique lenses,” says Doxford. She urges female and minority entrepreneurs to look into offerings, including seed funding from the Fearless Fund or capital from a SoGal startup grant.
Work with an expert
While the process of finding business funding might seem overwhelming, it doesn’t have to be. The financial professionals at Loan Mantra excel at helping people find and secure the most appropriate loans, overcome obstacles, and achieve their business goals.“Loan Mantra is proud to support female entrepreneurs and to provide exceptional service for women seeking optimal funding options for a secure financial future,” Doxford also said, “It’s about helping entrepreneurs fund their dreams and build success.”
About Loan Mantra
Loan Mantra is a one-stop FinTech business portal that democratizes the loan process by providing corporate sized services and access to new entrepreneurs, small and medium sized businesses. Small business owners identify two obstacles to their success: access to capital and financial education. At Loan Mantra, we remove these hurdles. We believe borrowers of all sizes should have equitable access to the $5.4 trillion marketplace of SMB financial products, lenders, government programs, and services.
As a minority-owned business, Loan Mantra understands the challenges facing underserved borrowers. Our mantra? To improve the future of human entrepreneurship through best-in-class technology, financial literacy, and commitment to equitable market access. Reach out today at www.loanmantra.com.
By the Numbers:
- While 40% of US businesses are women-owned, only 25% of women business owners seek business financing.
- Men secure loans averaging $43,916 while women receive loans averaging only $38,942 – almost $5,000 less.
- Venture capitalists invested $130 billion in U.S. startups in one year, but only a tiny fraction of that – 2.2% – went to female business owners