Unique Funding Challenges and Tips for Women Entrepreneurs

by Kelly Krueger

Would you believe that not too long ago, women were not allowed to obtain a business loan in the United States without a male relative co-signor? The Women’s Business Ownership Act of 1988 changed that, thereby allowing women to take out business loans in their own name.

Would you believe that not too long ago, women were not allowed to obtain a business loan in the United States without a male relative co-signor?

Since then, women-owned businesses have grown exponentially, and now female small business owners are one of the fastest-growing sectors of our economy, according to the Small Business Administration (SBA).

However, female entrepreneurs still face many funding challenges and hurdles. For example:

• Women are less likely than men to secure business loans according to the SBA. Contributing factors include more student loan debt for women, as well as the gender wage gap (latest statistics show women earn 82 cents for every dollar earned by men).

• For women who are able to secure loans, the amount is generally much less, and the terms are not as favorable as those for men.

• The SBA Office of Advocacy says women are more likely to utilize their own personal savings and credit cards to finance new business, whereas men tend to get financing through loans. This means women typically start with less capital, which is critical for long-term business success.

• Less than 3% of venture capital funding goes to women-led startups (according to Crunchbase, in 2020 the number actually decreased to 2.3% from 2.8% the prior year).

Despite these challenges, there are several resources and creative funding options available for women.

Funding Tips for Women

• Register as a woman-owned business. Doing so allows women to take advantage of various programs designed to boost access to funds and opportunities. For instance, a federal contracting program for women-owned businesses aims to create a level playing field and help agencies meet contracting goals.

• SBA loan programs are a good option for women business owners. Guaranteed by the federal government, these loans provide competitive rates and fees, lower down payments, flexible overhead requirements and, for some loans, no collateral. Additionally, the SBA zeroed out fees to borrowers on SBA-supported loans under $150,000, which helps traditionally underserved segments of the population like women.

• Grants and other types of startup business loans for women are also available. There are a variety of resources to investigate, including government programs, academic institutions and women’s organizations. Here is a list of highlighted programs by the National Women’s Business Council.

• There are many alternative and creative funding opportunities for women. For example, utilizing retirement funds to start a business, either as the sole funding method or as the capital injection for an SBA loan, is becoming more popular with women entrepreneurs.

• Women entrepreneurs have come a long way in the past 30 years. While some challenges remain, the good news is there are more funding options for women than ever before, and they continue to grow.

To learn more about how Benetrends can help your women-owned business, schedule a consultation today.

Kelly Krueger is a Senior Consultant at Benetrends Financial with over a decade of franchise and business funding experience. Benetrends has been a leader in the financial services industry for nearly 40 years, helping entrepreneurs understand their funding options and develop smart capitalization strategies. Kelly has a well-rounded, empathetic approach to assisting her clients.

Prior to her position as a Sr. Consultant, Kelly was a Financial Services Professional with Prudential where she earned the following professional licenses: Series 6, Series 63, Life & Health. She also worked as a Pharmaceutical Specialty Sales Professional for near 14 years for both Schering-Plough and Sanofi-Aventis. Contact Kelly at 267.328.1296 or kkrueger@benetrends.com.