Financing for women-owned small business

By Josh Hart | uncategorized 0


The title of this post was originally "Women-owned small business growing while financing continues to fall short." That headline is not unique, something no writer wants to admit. But in this case, headlines across the web read similar sentiments. "Number of female-owned businesses grow, but revenue lags way behind," and "What a surprise: Access to capital is still a hurdle for women-owned business," and "Women-owned businesses are trailing in size and revenue." The reason, according to that last Fortune headline? Lack of investors. Lack of financing.

 

According to U.S. Census data released last month,

  • women are starting businesses at twice the national rate
  • women owners account for 36% of all privately held firms
  • women-owned businesses employ nine million workers, and
  • generate $1.6 trillion in revenues

 

Industry Trends

 

The top-growing industries in which women-owned businesses are operating include Administrative Support and Waste Management at +101% (example: office administrative, landscaping, janitorial) and Educational services at +92% (example: computer and language instruction, private schools, music education). While those see large increases, the more traditionally associated retail trade industry saw just an 11% increase.

 

Diversity Reigns

 

Between 2002 and 2012, women-owned firms saw an overall growth of 53%. Minority women-owned firms, however, saw a major take-off, showing numbers such as these:

  • African American +179%
  • Latino +173%
  • Native Hawaiian +138%
  • Asian American +122%
  • Native American/Alaska Native +68%          

 

The numbers seem astronomical because, historically, these minority groups have made up a very small share of the industry, so any growth boosts percentages by a large amount. Growth like this is surely positive, but the question still lingers: why is the revenue divide so large?

 

Barriers and Alternatives

 

Statistics show women still face barriers to increased financial growth that include a lack of access to capital. Women also seek less start-up capital, relying on personal funding. Denial of funds based on creditworthiness impact access to capital, and fewer venture capitalists and angel investors support women-owned businesses.  

 

According to the "21st Century Barriers to Women's Entrepreneurship" report by the 2014 Senate Small Business Entrepreneurship Committee, just 16% of conventional small business loans go to women entrepreneurs. Looking at a comparison, 39% of women get conventional loans while 52% of males are on the receiving end of loan approvals.


Let's get back to why the title of this post changed from "Women-owned small business growing while financing continues to fall short" to the simpler "Financing for women-owned small business." Because opportunities do exist. Alternatives in the lending industry like BizLender and other online lenders are options when traditional lending falls short, providing funding to small businesses that want to grow using greater cash flow and flexibility.

 

Benefits to Alternative Lending 

 

The first clear benefit is approval vs. denial. Access to capital allows you to make improvements, invest in technology, hire another employee, or advertise your business. Other benefits are:

  • Time savings-- applying for a alternative lending requires considerably less paperwork
  • No collateral-- you don't have to offer up your assets in exchange for a loan
  • Fast funding-- when you are approved, the funds are deposited to your account quickly
  • Flexibility in use and repayment-- there are few restrictions on how to use the funds, and repayment schedules and terms are arranged around your earnings

 

Any wise business owner should do her research before committing to a lending agreement, seeking out transparency and sound terms. But when you consider that online lending portfolio growth has grown over 175%, while small traditional banks have declined, it's clear there's a void being filled.

 

When traditional avenues are closed, alternatives exist, helping women-owned small business continue to grow. Questions about alternative lending? Talk with professionals at BizLender. Visit online or call 855-404-3070. 


Posted in uncategorized
Last edit: March 6, 2018

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