Business lending is one of the main topics on the minds of business owners. Access to capital is such a huge issue that even the government has gotten involved. For one segment of business owners in particular, access to capital is a constant issue.
This segment is women-owned businesses.
Women-owned businesses are the fastest-growing segment, but they have faced some barriers in obtaining the funding they need for their companies. The National Women’s Business Council (NWBC) has reported that only 5.5% of women-owned firms have been able to obtain business loans from banks and other financial institutions. However, 11.4% of businesses owned by men have been able to obtain business loans from banks and other financial institutions. Because of this hurdle, there are some specific business-lending resources that have been developed to meet the funding needs for women-owned organizations.
Specific Options for Women
One business loan option for women-owned businesses is the Tory Burch Foundation Capital Program. The Tory Burch Foundation partnered with Bank of America to offer affordable loans to women-owned businesses. The lenders for this program are community lenders, specifically Community Development Financial Institutions (CDFIs). CDFIs are local community lenders that help those that are underserved by traditional financial institutions. In order to qualify for one of these loans, the woman-owned business must be at least two years old, and the female owner must have good credit. In addition, the business must meet the CDFI’s eligibility requirements. Interested borrowers must complete a Loan Pre-Screening Form with the foundation.
If you have a woman-owned small business located in Washington state, California, or Oregon, Union Bank has a small business loan program for women. The program offers secured and unsecured loans with fixed or variable rates. In order to qualify, the woman-owned business must have been in operation a minimum of two years with annual revenue of less than $20 million. You can borrow up to $2.5 million.
Accion is a nonprofit organization that provides microloans to small businesses. They provide loans ranging from $300 to $1 million to women-owned businesses. Although Accion partners with other organizations (such as the SBA) to provide loans, you can also apply directly with Accion to obtain a loan. Some of their general qualifications are to:
- Have a minimum credit score of 575
- Have no late rent or mortgage payments in the past 12 months
- Not be more than 30 days late on any bills
- Not have declared bankruptcy in the past 12 months
Government Loan Options
The state of New York offers a loan program for both women and minority-owned businesses through their economic development division. It’s called the Minority and Women Revolving Loan Trust Fund Program. The purpose of the program is to provide low-cost financial assistance to women-owned and minority-owned businesses that cannot obtain funding through traditional sources. Empire State Development partners with community-based economic development entities in the local areas throughout the state of New York. The local economic development entities provide the loans, and they also provide technical assistance for women-owned and minority-owned businesses.
The SBA does not have a special loan program for women-owned businesses. However, it does have an Office of Women’s Business Ownership at its headquarters in the District of Columbia. This office provides an abundance of resources for women-owned businesses. Women can even get help in person through this office. The SBA has a pretty good record of helping women-owned companies obtain business loans. According to their record, SBA business loans are more likely to go to women than business loans from traditional lenders.
There are also some nonprofit organizations that offer small grants to women-owned businesses, and you can find some angel investors that specifically invest in women-owned businesses. You definitely have to do your research and due diligence when seeking these types of funding sources for your business.
It is encouraging to see that even though women-owned businesses have faced adversity when trying to obtain business loans from traditional lenders, other organizations have stepped up to fill the gap. Women have faced tremendous challenges when trying to obtain business loans from banks and other financial institutions, but this has not slowed them down. Women continue to be the fastest-growing segment of entrepreneurs, and they have outpaced male entrepreneurs by five to seven times over the past 10 years. This just goes to show that you can’t keep a good woman down.
If you’re struggling to get approved for a loan, check out our breakdown of some of the best small business loan lenders.