Today, women own four out of 10 businesses in the U.S., employing 9.2 million people and generating $1.8 trillion in revenue annually.
According to the most recent American Express report, from 2007 to 2018 most women, especially minorities, have started their own business out of necessity. A reality that has only grown stronger due to the current economic turmoil and today women have to face more economic hardships than before.
And yet - they are still not getting equal and fair access to small business loans and funding options. In fact, a recent Federal Reserve report found that women were less likely to be approved or receive a full amount of small business funding in comparison to men.
We know the quest to access capital can be challenging. So we've decided to provide you with some useful information about some of the different types of small business loans and funding options for women out there.
Before you apply to them, consider looking into your business’s financial profile, credit rating, financing needs, and overall goals, they’ll rail you in the right direction.
Small business loans and funding options for women:
Working capital: If you need a solution to cover the immediate costs of your business, this is it. This type of small business funding is designed to cover short-term day to day expenses. For example, paying your employees on time or covering your leasing costs. Working capital allows you to continue your daily operations without tapping into your cash flow.
Inventory or equipment loans: These types of loans can be used to purchase equipment or supplies for your business. Inventory loans are best suited for retail stores that sell goods, for example. Equipment loans could also help you out if you're seeking to purchase technology to convert to an online store or manufacturing tools to produce more in shorter spans of time. It can be possible to borrow up to 100%, but most lenders require a type of down payment.
Term loans: A fixed amount of capital that can be repaid either in the short or long term. They typically have a fixed interest rate to generate predictable payments.
Microloans: Microloans are ideal if you have a small capital need and you are just getting started. Just like term loans, you can get access to them through the SBA (Small Business Administration), but also through banks and different financial entities.
You might want to consider this small business lending option if you run a business by yourself. The most you will be able to borrow is $50,000, with the average amount granted being around $13,000.
Alternative Funding: There are several reasons why women may want to consider alternative small business funding such as Merchant Cash Advances (MCA). This option tends to be more focused on the future profit potentials of your business as opposed to your past credit history. MCA’s permit you to borrow against the value of your future credit card receipts. Unlike the other funding options we mentioned previously, you can qualify for an MCA without needing several years of business history or a perfect credit score.
Choosing the right option:
When seeking out traditional small business loans for women, there are different options you can choose from: federal entities, such as SBA loans; or traditional banks, and credit unions. But these qualification requirements might be difficult to fulfill, especially for women who don’t have a strong credit report or an established business-operating history.
Additionally, the traditional bank loan application process can be tedious and might require that you turn in the type of paperwork that you might still not have in your hands. If you need to access capital now, this might not be the best option, their approval process can take months.
Alternative Funding Sources
Alternative funding sources provide working capital and other forms of financing for small and medium-sized businesses whose owners need to access funds quickly and/or don’t qualify for more traditional loans from a bank. Business owners don’t need to have perfect credit scores to be approved for funding. Plus, the application process for alternative funding is likely to take minutes, not months. And the types of funding available, such as merchant cash advances- are designed to meet the needs of smaller businesses. Once approved – you often can access the funding faster – in days rather than the month or more that it takes to access funds from a traditional bank loan.
Or you can easily check if you qualify for small business funding in a couple of minutes from your home or business. One Park has already helped dozens of established women-owned businesses prosper, create new jobs, and generate economic growth in their local communities.
Established in 2010 and founded by entrepreneurs, One Park Financial understands the challenges associated with small business loans and their need for working capital. Visit oneparkfinancial.com or call 855.218.8819 and connect with a funding expert to discover the options that make sense for you and your business.