What Keeps Female Entrepreneurs From Getting Their Small Businesses Funded?
According to some fairly recent statistics published on Newsweek, women own about one-quarter of US firms and are about half as likely to start a new company as men. While the entrepreneurship gender gap has slowly started to close, the keyword there is slowly. It’s not that women necessarily lack skills, education, and an entrepreneurial spirit.
However, it’s possible to argue that’s a common perception that both women and other people have, and that can make it tougher to gain all-important startup funding. Overall, women have worse credit scores and less savings than males do. Meanwhile, startup founders usually find that they need to rely upon their own personal assets and ability to obtain credit in the beginning.
Four Ways Women Can Gain Small Business Funding on a Level Playing Field
Consider some examples of ways to overcome barriers to funding for female-owned startups and small companies:
- Get help from the right places: A poor or nonexistent credit history and the lack of collateral will hurt your chances to get considered for a loan from many banks. However, local banks and credit unions, especially with SBA backing, might be somewhat more forgiving. At the same time, most lenders will want documentation to establish creditworthiness.
- Consider alternative lenders: You may or may not pay more for financing an alternative loan. It’s a good idea to research alternative and creative lending options. Some examples include crowdfunding lenders and online lending platforms. They don’t always require an owner stake or a high credit score, but some might require some evidence that the business has actually already been in business. In the meantime, some crowd lenders will just need you to present your great idea.
- Consider alternative funding besides lenders: You may not have to borrow money if you can gain enough support with other options. For instance, the donation crowdfunding site, IndieGogo, says that women-led campaigns tend to do better than those started by men. This is true even though women run less than half of the site’s campaigns. You might also seek out organizations that help connect female investors with female entrepreneurs.
- Find a mentor: Entrepreneurs have a reputation as lone riders, but you don’t have to do everything alone, stumble over the same barriers, or reinvent the wheel all the time. You may a local business owner who is excited enough about your idea to mentor you, even if they aren’t excited enough to invest. You can also search for organizations that help connect new businesses to mentors. You might look for help at a local SBA Woman’s Center, your school alumni organization, or even an organization like Project Entrepreneur.
Why Your Woman-Owned Business Needs to Find Funding Now
You might think you have the resources to get your business off the ground. However, one problem with women-owned businesses is that they tend to be under-capitalized even more than new companies that men start. You need funds to create and market your product at first, but you’ll probably also need funds to grow to the point where you can ride it out on your own profits.