According to Biz2Credit’s annual State of Women-Owned Small Business Finance Study, the average funded business loan for women-owned businesses was $57,097.
By comparison, the same study found the average size of a business loan for male entrepreneurs was $103,604, nearly double the amount that women entrepreneurs receive.
This is an obvious and concerning problem, especially when you consider women-owned businesses account for over 12.3 million U.S. companies alone. Additionally, these women-owned businesses generate $1.7 trillion in sales and employ roughly 9 million people.
Amongst all privately owned businesses, the ones that are majority owned by women contribute 8% of employment and 4.2% of revenues.
With women-owned companies being such an integral part of the U.S. economy, why are they having such difficulties securing sufficient funding that is more in line with what their male counterparts are receiving for their businesses?
While that question still needs a whole lot of answering, fortunately there are some small business financing programs and companies out there that cater specifically to women entrepreneurs to help bridge the gap.
LendEDU offers some insights on a couple of these initiatives.
KeyBank, a national small business lender, actually has a unique lending program known as Key4Women that is intended specifically for women entrepreneurs.
Key4Women not only provides helpful online resources aimed at advising women small business owners, but also makes available term loans to women entrepreneurs that are members of the Key4Women program.
As a member, women can access small business loans that start at $10,000. For these loans, repayment terms and interest rates will vary depending on amount and the applicant’s credit history.
Key4Women’s term loan may provide up to 100% financing for the purchasing of equipment. These loans can be unsecured or secured and may even be backed by the Small Business Administration (SBA).
In terms of finding a small business loan for women, KeyBank and its Key4Women program is a great place to start.
Women’s Economic Ventures
Another small business financing option for women entrepreneurs is the Women’s Economic Ventures organization, which was started in 1995.
This program can provide either start-up or expansion loans to women-owned businesses; both options typically will come with fixed-interest rates and manageable repayment terms.
Through the Women’s Economic Ventures program, women entrepreneurs can access start-up loans that range from $250 to $25,000 or expansion loans that can be as much as $50,000.
The application process for this lending program works like a typical small business lender as applicants will need to provide their financial details, in addition to the reasons they need a small business loan, and a decision usually will follow in the subsequent weeks.
Other Things to Consider
For women entrepreneurs in the market for a small business loan, there are a few things they need to consider.
First, they need to make sure all of their paperwork is in order before submitting any type of application. Things they may need include their business credit score, their own credit score, assets and liabilities of the business, annual revenue numbers, legal structure of the business, and reason they are applying for a loan.
Second, they could always consider companies and programs other than those two mentioned above. Some other reputable small business lenders include companies like Funding Circle, Lendio, and LendingClub.
Or, they could go the government route and look into SBA loans that are backed by the federal government. This could be a viable option because SBA loans need to meet certain parameters and are usually guaranteed.
Third, they could think really outside-the-box and consider something like a home equity line of credit if they are a homeowner. This option would allow them to access financing via the equity they have built in their home by paying off their mortgage.
Ultimately, it’s important for our valuable women entrepreneurs to consider all of their options for small business financing and for all of us to continue working towards closing the small business financing gap that exists between men and women.
In his role at LendEDU, Mike Brown uses data, usually from surveys and publicly-available resources, to identify emerging personal finance trends and tell unique stories. Mike’s work, featured in major outlets like The Wall Street Journal and The Washington Post, provides consumers with a personal finance measuring stick and can help them make informed finance decisions.
CTA: LendEDU helps people compare and learn about student loans, personal loans, mortgages, home equity loans, credit cards, insurance, small business loans, and more. At LendEDU, our goal is to help consumers and business owners make educated decisions when it comes to financial products and strategies without having to do all the legwork themselves.
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Woman business owner stock photo by marvent/Shutterstock