The Best Funding Options for Women Business Owners
The truth is out. Female entrepreneurs impact the economy favorably. According to The Women’s Business Enterprise National Council, in 2018 “women-owned businesses generated $1.8 trillion in revenue.” In fact, employment rose by 21% from 2007-2018 for companies owned by women.
As impressive as that is, these business owners face real-life obstacles and challenges to keep their businesses flourishing. If you’ve already started a business or are about too, you know the importance of juggling work and home schedules. Your passion for what you do and the independence that comes with being a business owner are primary reasons women launch businesses. They are enterprising individuals who excel on the job whether at home or work. They care for children and parents while running a business full time giving them freedom and flexibility.
Those tangible perks come with a common obstacle encountered by women business owners. Many women struggle to finance their businesses. In this article by Camino Financial about business loans for women, you’ll find out there are numerous financial institutions and organizations that help women succeed. Depending on the nature of your business, you can combine one or more loans and grants to secure funding. You work with professionals who know how to maximize your business’s potential without jeopardizing its future. By having access to finances, women contribute to the workforce specializing as engineers, real estate agents, web designers, and in other vocations.
As a women entrepreneur what’s the best financing option for you?
The following scenarios portray situations women face daily and what they can do to overcome financial conundrums. Your situation may be very similar to one of these women entrepreneurs:
An SBA Loan – Candace’s choice
Candace provides consultation services to women owning startup and established businesses. She coaches them on pitfalls to avoid and how to structure their businesses to make a profit. Many rely on her to prepare them for what’s next in various stages of their businesses.
She’s been operating her business for two years but lately, she feels overwhelmed and pulled in multiple directions. She believes now is the time to add two employees because her business is growing exponentially. Even though adding more staff will increase her expenses, it’s the right decision for her business.
Because both her personal and business credit scores are high, she feels a government-guaranteed term loan is one of her best options. She should qualify for a lower rate and can choose a long-term repayment schedule which suits her growing budget.
Since her business has a proven history of success and growth, Candace plans also to look into a Cartier Women’s Initiative Award which would help her achieve her financial goals and business plans. Plus, she won’t be required to repay the grant. She would also receive training she can pass on to her clients. It’s a win-win opportunity Candace doesn’t feel she can overlook.
Equipment financing and Microloan – Marian’s choice
Marian runs a bakery offering delicacies and fresh bread as well as gourmet and specialty beverages. In her small but busy store, she generates about $500,000 in annual revenue. Marian could expand her business in very little time by purchasing more equipment and adding space to the existing building.
Marian discovers there are two loans she should qualify for: an equipment loan microloan and a microloan. With an equipment loan, she can use the equipment as collateral and access cash without having to wait. She plans to purchase a larger oven and add more coffee machines. With these loan proceeds, she can purchase bakeware, sheet pan racks, and buy another bread slicer and dough proofer.
Because she has sufficient working capital and revenue, a microloan would allow her to construct a 15′ x 30′ area to seat more customers. She may also hire additional part-time employees to handle an expected influx of new customers. Marian has an excellent credit score and her banker assures her she’ll have no trouble getting the needed funds. She’s been relying on a business credit card and savings account so this is the first time she’s applied for a loan. Marian feels getting these loans is a risk she should take at this stage of her business.
A Grant – Elizabeth’s choice
Elizabeth struggles to keep her design business afloat. Not only does she design clothes, but she has several employees working as seamstresses to make the tailored and sought-after clothing. Elizabeth must meet payroll weekly, pay a building lease and other expenses, and purchase supplies frequently.
A friend recommended that she looks into Innovate HER Challenge, an organization that offers grants to deserving entrepreneurs. Because she regularly creates spectacular designs known throughout her industry, Elizabeth feels she would have an excellent chance to receive the award.
In the meantime, she plans to find out more about purchase order loans. She understands she can fill orders for her clothing quicker since the lender pays suppliers directly. Elizabeth expects this will be a short-term solution until her cash flow stabilizes. As part of the purchase order loan agreement, she wants to find a lender willing to give her a 90-day trial. If the purchase order loan doesn’t work out, she has substantial funds in her 401(k). Since she won’t retire for at least 30 years, this option is appealing. Elizabeth is excited about these funding possibilities to get her through a rough patch.
Women’s business loans are viable funding options
As you can see, business loans for women as well as grants take the pressure off when your business experiences financial peaks and valleys. In addition to having enough money on hand, you build up your credit when paying back the loan in a timely manner. Depending on how your business is structured, you can purchase real estate, beef up your product inventories, or have more working capital for day-to-day operations.
Since 4 out of 10 businesses are women-owned and about 1,800 new businesses are started each day by women, female entrepreneurs like you don’t intend to back down. As a businesswoman, a lack of funds won’t stop you from succeeding when there are so many funding options available.