How to Find a Loan for a Women-Owned Small Business in 2021
Updated: Jan 10
Yet, only 39 percent of privately owned businesses are owned by women, and an even smaller amount of those businesses are receiving fair access to capital needed to grow their businesses!
In this blog post, we’ll dive into the challenges of funding for women-owned businesses, as well as several ways these businesses can finance their growth.
Honeycomb has helped women-owned businesses find capital from the very beginning! Owner Naomi Homison brought her community into her business’s growth to purchase a delivery van in Honeycomb’s first-ever crowdfunding campaign.
Gaps in small business funding for women-owned businesses
Not only do women small business owners have to face the gap in funding for small businesses, but they face disadvantages due to their gender in finding financing.
For one, the average size of a loan for a women-owned business is 31 percent smaller than it is for a similar male-run business.
Yet, women-owned businesses are currently booming, and in some areas outperforming their male counterparts. This is partly due to women-owned businesses taking on more risk, having higher levels of emotional intelligence, and more grit due to all the rejection and obstacles they’ve faced.
At Honeycomb Credit, we’re proud to be part of narrowing that gap between women entrepreneurs and the funding they need. 50% of the crowdfunding campaigns run in 2020 have been for women-owned businesses. Women small business owners who run Honeycomb campaigns have also been integral to paying back their communities through their crowdfunding campaigns!
Take alumni business Square Cafe, for example. Sherree Goldstein, owner of Square Cafe and My Goodness in Pittsburgh, is a fantastic example of a female entrepreneur who has been able to give back to her community through her businesses.
“I hire lots of women and lots of what people would call marginalized employees, so it’s not just about women for me, it’s about giving people a chance,” she says.
For Sherree, her businesses are about so much more than just serving great food and making a profit. This philosophy has paid off for her business’s reputation, and as a result, Square Cafe was able to raise $250,000 in record time in their crowdfunding campaign to move locations in 2020.
Join the Small Business Administration 8(a) program
As we discussed in another blog post on loans for Black-owned businesses, the SBA 8(a) program isn’t directly a loan, per se, but is instead an opportunity for socially disadvantaged groups (including women) to get a leg up in the small business world.
The SBA 8(a) program offers federal contracting, mentorship, and technical assistance and education on business matters to businesses that are certified for the program. To be eligible, your business must be at least 50% owned by a socially disadvantaged group, have a net income of less than $350,000, and demonstrate good character.
Find microloans for women-owned businesses
For women-owned small businesses who need just a small loan for their needs, such as purchasing a piece of equipment or funding a bit of inventory, microloans are a common option.
Microloans are used throughout the world, from financing women entrepreneurs in the global South and here in the United States through various organizations. They’re often offered by non-profit or community development organizations to help provide opportunities especially for women entrepreneurs living in poverty.
You can also crowdfund a microloan through a platform like Kiva, who offer zero-interest loans between $1,000 and $10,000. These kinds of loans make capital accessible especially for new businesses starting out who might not be ready to take on large amounts of debt.
For larger microloans, defined by the SBA as anything less than $50,000, you can seek out SBA loans or crowdfund them through Honeycomb! Honeycomb can finance loans from $15,000 to $500,000, so any size of capital needed for a women-owned small business is possible.
Seek out resources from Women’s Entrepreneurship Centers
Another great resource for female entrepreneurs looking for funding is to seek out their local women’s entrepreneurship center. Also known as Women’s Business Centers, these organizations are great for networking, training resources, and sometimes even funding.
Sometimes, women’s entrepreneurship centers will offer grants for women-owned small businesses, or host pitch competitions where women can get funding for their businesses as prize money.
These resources are often pretty local, so it helps to look at what’s available near you, and weigh your different options and opportunities. For example, Pittsburgh has some great resources for women entrepreneurs such as the Chatham University Center for Women’s Entrepreneurship and the Invest in Her pitch competition.
Finance your women-owned small business through crowdfunding
We’ve alluded to it throughout this post, but crowdfunding a small business loan is an excellent way for women-owned businesses to fairly access capital they need to grow.
In an economic climate where it’s increasingly difficult to find bank loans for small businesses that are just starting out or lack collateral, crowdfunding is a great opportunity to not only get the money you need for your small business, but to also effectively market your business and boost its growth.
If you choose crowdfunding to finance a loan for your small business, you’ll be able to raise money from your community and give back to it at the same time. As a result, your relationship with your customers will be strengthened, and you’ll benefit from marketing buzz that can launch your business to the next level!
Ready for your women-owned business to run the world? Crowdfund fair community capital to grow!
Women-owned businesses from food trucks like Squash the Beef to zero waste retail like Little Spark Refill Shop have benefited from crowdfunding campaigns, raising funds for expansions and starting new ventures. Could your small business be the next crowdfunding success story?
Learn more about Honeycomb’s crowdfunded small business loans at www.honeycombcredit.com/grow and fill the form out below to receive more information!