How to Fund a Woman Owned Business
Today, women-owned businesses can easily find funding for business expenses without that much trouble. However, let us first have a look on what exactly it is.
What is considered a woman-owned business?
A woman-owned business is a business that has at least 51% of its shares owned by a woman or multiple women. Needless to say, this has to be proven through certification which can be granted through a Third Party Certifier like WBENC or through self-certification.
How does your business become certified?
- Decide what level of certification you need
The rules can vary from state to state, but generally, businesses that only operate within a locality need not apply for a national certification. Thus, the application would revolve only a local government agency. For those that do not intend to pursue government contracts, only national certification is needed. On its polar opposite, it is best to inquire first regarding their certification requirements. Essentially, what should ultimately decide your course is the vision of your company, the scope of your services, as well as your target market.
- Complete and submit all the necessary documents
After you inquired on what the requirements are, the next step is to compile all the information and documents. To hasten the process, it helps to have these organized. If the agency has specific instructions on how to prepare your paperwork, follow them. Keep copies of the documents you are going to pass as well. Most importantly, before submitting, make sure that what you will submit is organized, accurate, and complete. Then, turn your application to the concerned agency.
- Prepare for an interview and site visit
Aside from all those papers, the review committee will conduct an interview and a site visit as well. This is to make sure that women really are in charge of the company not only in paper, but in real life as well. If you are not good with words, be prepared. Make sure to think of all the possible questions they may have for you. Exude confidence and just be truthful.
- Wait for the results
You have done your part, so just wait for the results. In case your application is denied, you will be supplied with their reasons behind it. 30 days will be given to you to make the necessary changes and to contest their reasons.
Where do all businesses usually get funding?
Most of the time, thinking how to fund a woman-owned business is just the same as with any other business. Here are some ways you can acquire cash for your commercial expenses:
Small business line of credit
If approved your line credit will be accessible to you anytime you need it. Somewhat like a credit card, the balance will only accrue interest once money is withdrawn.
If you need equipment financing, you can apply for an equipment loan. Here, not only are you required to have 20% down payment, the equipment itself will serve as a collateral. Thus, if you fail to pay the balance when the loan matures, your creditor will repossess you collateral, in this case, whatever equipment you may have bought.
Small business term loan
Whether you need financing for expansion, or for day-to-day expenses, small business term loans can temporarily augment your income. The beauty of this option is depending on the credit history of your business, you can get a no collateral and fixed interest loan. Thus, you would not risk letting go of any business asset and be worried about potentially fluctuating interest rates.
Accounts receivable financing
With accounts receivable financing, the accounts receivables of your business serves as the collateral. Thus, a portion of your income is taken by your creditor as your clients pay their invoices. Most, if not all the time, the interest rate is variable.
What are funding options specifically for women-owned businesses?
If your business cannot qualify for loans in a traditional bank, you still have a lot of alternatives worth looking into. The funding options we will mention here either are exclusively for women-owned businesses or are known to favor women entrepreneurs.
Loans and institutions listed here have high approval rate for women business owners, and are usually considered an after traditional banks.
Operation HOPE Small Business Empowerment Program
Their target are women in low-income groups who want to be an entrepreneur. Offering a wide range of financial products and services, you are sure to find the right one for your needs.
Economic Opportunities Fund
Operating in the Philadelphia Metropolitan Area, EOF is a subsidiary of WORC (Western Organization of Resource Councils) that offers loan products and services. The maximum amount they offer is low, maxing only at $10,000. If such amount would suffice to get things started, consider applying.
PNC Financial Services
PNC does more than provide financial services to women-owned businesses. Their company boasts around 1,700 women business advocates who work closely and monitor the business itself. With the guidance of consultants, you will be sure to pick a loan program that can help you further your business interests.
Since 2005, KeyBank has already lent more than $6 billion to women entrepreneurs. Aside from the capital and financial solutions they offer to Key4Women members, they also provide networking opportunities and educational financial information.
Applying AND getting approved for a grant is something that many aspire. If you want to give this a try, below are only some of the grants for women-owned businesses.
Wal-Mart Women’s Economic Empowerment Initiative (WEE)
Unlike most grants here in U.S., they are also open to funding international women-owned companies. Currently, they are in their third year of increasing the budget for this venture by $40 billion.
The Eileen Fisher Women-Owned Business Grant Program
This grant is for a 100 percent women-owned businesses looking to take things to the next level. Moreover, the applicants’ businesses must be rooted in social consciousness, innovation, and sustainability.
InnovateHER: Innovating for Women Business Challenge
Sponsored by SBA, it is a contest where women will submit business ideas that will directly impact the lives of women. The three chosen proposals will split a $70 thousand prize money. As women-owned businesses can benefit from a variety of finance options, looking for something complementing your status and needs would not be a problem. Whether you want to go for a traditional or a non-traditional funding, there will always be a way to fund and grow your business.
Anne is a Senior Author for SBL. She began her career as an independent consultant for local businesses after graduating with a BA in Management. Since that time, she’s expanded to writing as well as consulting to spread helpful knowledge to small business owners across the country.