There’s a well-known statistic that states women earn 82% of what their male counterparts earn. It’s probably not surprising to hear that the challenges are similar for women entrepreneurs.
Women business owners—regardless of race—have a harder time securing funding than male business owners. In fact, in 2018, 42 percent of all U.S. businesses were owned by women, but only 24 percent of businesses that accessed capital were women-owned.
What small business loans are available for women entrepreneurs, and how can we better support them for the long term? Let’s look at some statistics and special programs that can answer those questions and more.
Women-owned businesses by the numbers
According to the National Women’s Business Council’s (NWBC) report, “Understanding the Landscape: Access to Capital for Women Entrepreneurs,” women business owners continue to face funding challenges above and beyond men. Some important takeaways from the report include that:
- Women rely on personal income sources more than men
- Women raise smaller amounts of capital than men
- Women are more often perceived as “less legitimate” and “less credible”
- Women investors prefer to work with male business owners
Women business owners have also felt more negative impacts from the COVID-19 pandemic than male business owners. Per NWBC’s recent report, 38.3% of women-owned businesses saw a significant decrease in sales from the pandemic compared to 31.3% for men-owned businesses. That same report shows that in general, more women business owners seek financing to meet operating expenses, while more men apply for funding to expand their businesses.
While there are loan programs available to give women business owners the boost they need, many women entrepreneurs are reluctant to take on debt. Interestingly, as of 2019 only 28% of Small Business Administration (SBA) loans went to women-owned businesses.
What’s available to help even more women entrepreneurs get the financing they need? For one, alternative lenders like Pursuit that can offer more flexible requirements and technical assistance. Alternative lenders can offer responsible funding that doesn’t take any equity ownership like a venture capital (VC) investor may require.
Program options and small business loans for women
While these challenges exist for women-owned businesses, there are dedicated organizations that offer program options and lending opportunities to keep their ventures growing.
Community Development Financial Institution (CDFI) loan programs
CDFIs are mission-driven financial institutions that are certified by the United States Department of the Treasury. CDFIs can be banks, venture capital funds, loan funds, and credit unions. They can specialize in various sectors of the community, but all have a mission to help underserved populations get funding to grow and thrive.
CDFI lenders can offer:
- Lower interest rates
- Flexible requirements that increase your approval chances
- Straightforward loan products and transparent communications
- Technical assistance and training opportunities like consulting services and other support
If you’re looking for a CDFI that offers small business loans, the Treasury Department offers a searchable award database where you can find a CDFI lender near you. You can also talk to Pursuit to learn more about your options!
Minority- and Women-Owned Business Enterprise (MWBE) certification is available at the federal level and may also be available through your state. These programs promote equal economic opportunities and eliminate barriers to minority- and women-owned businesses in contracts with government agencies.
In New York state, the statute that established the MWBE program states that “state agencies are charged with establishing employment and business participation goals for minorities and women.” Per the law, all state contracts must award 30 percent of the funds to MWBE-certified businesses.
For your business to become MWBE-certified, it must be:
- At least 51 percent owned and operated by women and/or minority owners
- Privately owned
- A for-profit business
- Small, with fewer than 300 full-time employees
- In operation for at least one year and able to share business financials and bank records
Once your business becomes MWBE-certified in New York state, you’ll have a few important advantages that will increase your business’s exposure, give you more opportunities for contracting and subcontracting, and find better access to capital. Your business will also:
- Be listed in the public Directory of Certified Minority and Women-Owned Business Enterprises
- Be able to bid on contracting and procurement opportunities with New York State authorities and agencies
- Get access to a statewide network of services including workshops, webinars, and classes
- Have access to special loan and bonding programs
8(a) Business Development Program
The 8(a) Business Development Program is offered through the SBA, and supports its goal to award at least 5% of all federal contracting dollars to small disadvantaged businesses every year.
To qualify for this program, your woman-owned business must meet the following criteria:
- Be a small business
- Be new to the 8(a) program
- Be at least 51 percent owned and operated by economically and socially disadvantaged U.S. citizens
- Owner must have a personal net worth below $250,000
- Owner must have an average adjusted growth income below $250,000 for three years
- Owner must have less than $4 million in assets
- Owner must manage day-to-day operations and make long-term decisions
- Be able to perform successfully on contracts
- All principals must demonstrate good character
- Demonstrate a strong potential for success
Once your business is accepted into the 8(a) Business Development program and is fully certified, it can:
- Compete for set-aside and sole-source contracts
- Access a Business Opportunity Specialist for support with federal contracting
- Form joint ventures with businesses through the SBA’s mentor-protege program
- Receive business training, counseling, marketing assistance, and high-level executive development support
Women’s Business Centers
The SBA offers a national network of support centers specifically for women-owned businesses. The Women’s Business Centers (WBC) aim to level the playing field for women entrepreneurs by offering assistance and guidance to start or grow their businesses.
The centers offer training, counseling, access to funding, and more for women business owners. Find your closest WBC to learn more about what they offer. If there isn’t a WBC that’s close to your business location, many offer virtual programs that can also benefit your business.
Women’s Enterprise Development Center (WEDC)
Since 1997, The Women’s Enterprise Development Center (WEDC) has empowered women entrepreneurs to build successful small businesses in Westchester County and the Hudson Valley, including helping women find loans for their businesses.
The non-profit provides startup companies and established businesses with free and affordable tools and resources to help them grow and succeed, including:
- 60-hour comprehensive business training programs
- Individualized counseling
- Networking events
- Assistance with MWBE certifications and loan applications
If you’re a woman business owner that also has veteran status or a spouse/partner with veteran status, then you’ll want to explore Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE). This organization is operated by the Institute for Veterans and Military Families at Syracuse University in New York and offers training programs in entrepreneurship and small business management.
V-WISE is, “open to all women veterans, active duty female service members and female partners/spouses of active service members and veterans who share the goal of launching and growing a sustainable business venture.”
Here’s how you can qualify for participation in the program:
- Honorably discharged women veterans of any military brand or service era
- Active duty women service members of any military branch
- Women spouses and same-sex life partners of above (including widowed spouses and partners)
The program consists of three phases:
- 15-day online course
- 3-day entrepreneur training event
- Ongoing mentorship, support opportunities, and training for graduates
Qualified participants are responsible for paying a one-time fee of $75, the cost of transportation to-and-from the conference location, and dinner on the second night of the conference. The SBA and private-sector partners fund the rest of the program costs.
Work with a lender that understands your potential
As you can see, there are many organizations and programs that are ready and willing to help your woman-owned business reach higher and succeed. Pursuit has supported hundreds of women entrepreneurs as they start and grow their businesses, and we can help you too. Explore our 15+ business loan programs and get in touch with us if you’d like to learn more. When you’re ready to apply, you can get started through our easy online application. We look forward to working with you!