On March 21, 2012, American Express OPEN released their second annual State of Women-Owned Businesses Report. The growth rate of women-owned businesses from 1997 to 2012 increased by 54% which is 1.5 times higher than the national average of 37%. Of these women-owned businesses, those generating $1,000,000 or more showed stronger growth during 2007-2012. In the past year, the amount of women-owned businesses has risen by 200,000, which equates to about 550 new firms per day. A key to the growth of these women-owned businesses is having access to capital, especially during the start-up phase.
According to a study done by Gallup, 16% of women are planning to start a business and already have access to capital while 4% do not have access to capital. In order to boost the economy, more start-ups need access to capital so they can create more jobs. With access to capital, the percentage of women-owned businesses will continue to increase. However, according to a study done by the Ewing Marion Kauffman Foundation, women face barriers to accessing capital. These barriers are, specifically, eight gender myths of women entrepreneurs including: women don’t want to own high growth businesses, women don’t submit business plans to equity providers, and women are not a force in the venture capital industry. Each myth can be proven incorrect by taking into consideration the many successful women-owned businesses in the US. The Kauffman study also provided a summary of programs that offer education, training, and financing to women business owners.
Although these misconceptions may still exist for women business owners, there are still several forms of funding and a plethora of resources women can use to their advantage.
Access to Capital for Women
In order for women to increase their chances of receiving funding, all necessary documents and information must be prepared. It is also important to do due diligence to find out which option to pursue for financing, considering not all options are appropriate for a particular business.
Here are some options to consider that are for women-owned businesses and start-ups:
- SBA (Office of Women’s Business Ownership): This arm of the Small Business Association has been helping women obtain capital for their small businesses since 1979. The SBA offers many loan programs to assist women’s access to capital for their business. Some of the loan programs include the Microloan program, 7(a) program, and the CDC/504 program. There are also venture capital programs including the PRIME program and the SBIC program. In 2009, the SBA offered about $2 billion worth of loans to women and 38 women-owned businesses received $26.8 million in investment capital.
- Count-Me-In (Make Mine a Million $ Business): Count-Me-In for Women’s Economic Independence is a non-profit organization that offers a variety of resources, business education, and support for women entrepreneurs. The members of the Count-Me-In community benefit from the various sponsors who offer financing, equipment, discounts, and expertise. Described by Count-Me-In, the “Make Mine a Million $ Business Competitions are large, live events where women entrepreneurs compete for the Make Mine a Million $ Business Award, a package of financing, coaching and marketing, by pitching their businesses to an audience and panel of judges”.
- Golden Seeds: Golden Seed is an organization that consists of four business groups: angel network, venture capital, private equity, and academy. By the end of 2011, their angel network had invested in 42 companies totaling $34 million, venture capital invested $26.5 million in 8 companies, and private equity group was just recently introduced. For a business to be an eligible investment it must adhere to the follow criteria: woman-led, experienced management team, scalable product, at least one or two paying clients, capital efficient, addressable market of >= $1 billion, among others. The following is a chart indicating Golden Seed’s investments, by sector, from 2005-2011:
- Women’s Initiative for Self Employment: Women’s initiative, a non-profit organization, has been providing business education and financing to high-potential low-income women since 1988. In order for women to have access to one-on-one consultations, networking events, seminars, and business loans they must complete the SIMPLE STEPS business management course, offered by Women’s Initiative. This 11 week course teaches women entrepreneurs: how to write a business plan, analyze the competition, price a product or service, keep accurate records and manage finances, business promotion, among others. Completion of this course will allow women business owners to apply for a loan of up to $25,000 as well as Individual Development Accounts.
- Women’s Economic Ventures: Since 1999, Women’s Economic Ventures has been a certified CDFI in the Santa Barbara and Ventura Counties, assisting local business growth. Their loan program offers Santa Barbara and Ventura County residences the opportunity to apply for business start-up or business expansion loans. The business start-up loans can be between $1,000 and $25,000 while the business expansion loans are between $5,000 and $50,000. Some application requirements include: completed business plan, personal financial statements, application for business credit/authorization to request a credit report, and cash flow projections.
Resources for Women Business Owners
In addition to financing, many organizations offer a wide variety of education and training programs to assist women entrepreneurs with their business ventures. Many organizations hold training workshops, seminars, conferences, educational courses, and mentorship.
- Women’s Business Development Center: The WBDC offers programs and services including multicultural outreach programs, industry-specific programs, professional business counseling, and Women’s Business Enterprise certification, among others.
- Women Accessing Capital: WAC offers women webinars from the 100-300 levels. The 100 level comes at no charge for the general public while the 200 and 300 levels are only offered to paid members.
- Ladies Who Launch: Paid members of Ladies Who Launch will benefit from the vast array of business resources offered to women entrepreneurs including promotion and press, exclusive events, and business resources. LWL also offers information on online marketing, business protection, call center services, legal, and office equipment.
- National Association of Women Business Owners: The NAWBO’s resources center features information on several topics including disaster preparedness, going global, and government contracting. The organization also hosts a variety of events such as the Women’s Business Conference, Regional Leadership Summits, and the Accelerated Growth Series.
Women-owned businesses are continuing to grow in numbers and with more access to capital it will be easier for women to start-up or expand their businesses. As a business owner, doing research and educating yourself are keys to finding a lender willing to offer capital. The organizations discussed are only a few of the hundreds that offer assistance to women business owners.