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Financial advisory: 3 Business funding options for female entrepreneurs

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Women of modern times are capable of running their own show and don’t necessarily need guys to take care of home expenses, pay the bills, and or run a business. Females nowadays are very determined and headstrong when it comes to proving themselves to society that — like men — they can also handle the work of being entrepreneurs.

In fact, according to the National Association of Women Business Owners, there are more than 11.6 million women-owned businesses in the U.S in 2019 and are making a significant impact on the American small business landscape. However, female entrepreneurs are most likely to go through hoops than men in trying to get funds to start up a small company or to generate working capital to survive past a few years in business.

If you are one of those businesswomen and the odds are still against you in getting funds for your business, here are three of the best business funding options that might help you.

Small Business Administration (SBA) loans

Small Business Administration (SBA) Loans are one of the most popular lending options for women in the world of small business financing. This type of funding can be a great help for women entrepreneurs to finance their start-up ideas or grow their existing business. They can make use of SBA loans to renovate their office, buy the things they need for their business, and or pay for their marketing.

Here are some of the popular Small Business Administration loans available to help women entrepreneurs:

  • 7(a)Guaranteed Loan Program. 7(a) is the primary loan program of the Small Business Administration. Women can basically use it to meet the needs of their businesses, including working capital, equipment purchase, inventory, real estate purchase, or leasehold improvements. The SBA 7(a) loans are guaranteed up to $750,000. On top of that, it has a guarantee rate of 75 percent on loans of $100,000 or more and higher as 80 percent on loans that are less than $100,000.
  • 504 Local Development Company Program. Administered by Certified Development Companies (CDCs) through commercial lending institutions, this SBA loan program provides fixed-rate, long-term financing to small businesses to acquire equipment, machinery, or real estate. 504 loan ranges into millions and sometimes repaid more than a decade. It is also generally financed 40 percent by CDC, 10 percent by the business, and 50 percent by the bank.
  • SBA Microloans. This program offers loans from $100 to $50,000 for working capital or the purchase of supplies, inventory, furniture, equipment, and or fixtures to a business that failed to apply in traditional lenders. However, SBA microloan’s funds are distributed through community lenders, many of which are looking at new companies owned by veterans, women, minors, and other disadvantaged entrepreneurs.

Online lending

In today’s digital world,  online transactions related to finance are getting more and more popular. Through the applications and helpful websites on the internet, women entrepreneurs are more aware of the financing opportunities available and the ways on how to avoid NSF fees, prevent getting debts additional charges and other relevant tips that will help them with their finances.

When talking about funding options available for women, one of those is online lending.  This type of loan is a great help for women entrepreneurs with either poor or strong credit scores who need to raise money for their business within a short period of time.

Online lenders can provide short-term loans that range from 3 to 18 months for working capital and medium-term loans that range from 2 to 5 years for women who fail to qualify for bank loans and other traditional financings.

Crowdfunding

Refer to the practice of raising funds through multiple financiers or popular crowdfunding sites, “Crowdfunding” allows women entrepreneurs to generate start-up capital for their businesses.

This funding option can be supported by hundreds or thousands of individual funders as well as institutional investors and their connections. According to studies, while ladies are less likely to use crowdfunding than men to raise funds for their projects, they have more success rates at using this funding option.

In fact, based on the recent study of EST Berlin, women enjoyed a 57 percent rate of reaching their crowdfunding target compared to the 43 percent success rate for men. This data shows how differently financiers recognize women entrepreneurs compared to lenders and venture capitalists.

Setting up a crowdfunding campaign is simple. You just have to set up a profile on crowdfunding websites, describe your company and its services, then include the amount of money you are trying to raise. Investors who are interested in what you do can donate in exchange for some kind of rewards for their contribution.

Moreover, these are the keys to crowdfunding success:

  • Do your research
  • Select the right platform
  • Know your target audience
  • Create a compelling story about your services, products, or anything about your company.
  • Communicate with your investors
  • Offer valuable rewards for donations.
  • Accept feedback

Takeaway

Working capital and appropriate funds are essential factors for all small businesses to thrive. With this in mind, women entrepreneurs nowadays may try the alternative financing options mentioned above to fund their start-up ideas or survive past a few years in business.

About Christine Simmons

Christine Simmons is New York based a finance and marketing expert with a focus on helping women entrepreneurs achieve their goals.

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