Between 2002 and 2012, the number of women-owned firms increased at a rate 2½ times the national average (52% vs. 20%) and employment at women-owned firms grew at a rate 4½ times that of all firms (18% vs. 4%). In 2015, for the first time, the government met its goal of awarding 5% of federal contracts to women-owned small businesses.
But such gains must be put in perspective. For example:
- Women-owned firms make up about one-third of all businesses in the U.S., but they receive less than 5% of all available loan dollars, according to a 2014 report by members of the Senate Committee on Small Business and Entrepreneurship.
- Women-owned businesses are smaller than average, employing only 7% of the private-sector workforce. More than 9 out of 10 women-owned firms have no employees other than the owner.
- You know the outrage you feel when you hear that women earn 83 cents for every dollar that men earn? Well, women business owners make only 25 cents for every dollar their male counterparts earn.
Here are some places female business owners can turn to for capital:
U.S. Small Business Administration
Loans for women from the U.S. Small Business Administration were up 18% in fiscal 2015 over the previous year. Some experts consider SBA loans the best option, as they come with flexible terms and low rates. The downside is the application process can be exhausting and frustrating and take weeks, even months, to complete.
The SBA doesn't issue the loans itself, but backs loans issued by participating lenders, usually banks. The agency can guarantee up to 85% of loans under $150,000 and 75% of loans for more than $150,000.
The agency also recently set up a tool to match borrowers with approved lenders. The banks follow SBA guidelines but use their own underwriting criteria.
Money won is sweeter than money borrowed, and so before taking out a small business loan, female entrepreneurs should look into available grants. There aren't many of these, but they are worth investigating.
Grants.gov is a database of all federally sponsored grants. In addition, economic development agencies at the state level, as well as many local governments, offer services to help new and established businesses succeed.
Funds may be available, too, from private groups. Here are two to get started with:
- The Eileen Fisher Women-Owned Business Grant Program awards 10 grants annually to women-owned businesses committed to social consciousness, sustainability and innovation.
- The Amber Grant Foundation each month gives $500 to a different woman-owned business, and at the end of the year one of the dozen winners is awarded a further $1,000.
Business credit cards or your bank
Often, a woman-owned business in need of financing will have to turn to business credit cards or or a small-business loan. Choices will depend on your creditworthiness and situation. Take your time and check out your options.
The data show women-owned businesses making significant strides, which is cause for optimism. But there's still plenty of opportunity for growth.
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