Business Financial Support For Women: Why You Should Start Your Own Business
About 40% of all new entrepreneurs in the US are women. Before Covid-19 struck, there were about 13 million women-owned businesses in the United States in 2019. These businesses employed a workforce of 9 million people and yielded revenues of $1.9 trillion.
These women face multiple challenges that they need to overcome to start their businesses. Finances are one critical aspect that’s often a barrier to women starting in business.
But it comes as a great relief to know that lenders (like Camino Financial) offer business loans for women to start their businesses. We’ll look at why it’s essential to have a financial plan and the available support to women entrepreneurs.
Why A Woman Should Start A Business
1) To pursue one’s passion
They’re women who find corporate jobs routine and uninspiring but merely keep them stable to earn a livelihood. Some, however, leap of faith to start a business in the area of their passion. You’ll be highly motivated to invest your energies in an area of interest and leave a legacy you’ll want to be associated with.
2) To enjoy more freedom
To enjoy more flexibility to achieve a work-life balance, women are increasingly turning to entrepreneurship. Being your own boss makes it possible to take care of the family and oneself while earning. Entrepreneurship becomes the go-to option for those who need a flexible schedule to take care of kids or parents.
3) For financial independence
Although things have been improving in the last two decades, the gender pay gap still exists. Women earn 84% of what their male counterparts pocket for the same job roles. By venturing into entrepreneurship, women get the opportunity to charge their worth by attaching a price tag that reflects their true worth.
4) To move faster up the line
Entrepreneurship is a faster way for women to shatter the glass ceiling in getting promotions in the corporate job market. Promotions favor men in many organizations. Fortunately, women can go up much faster by starting their businesses depending on their efforts.
5) As a safety net against uncertainties in the corporate world
Being laid off by an organization you’ve worked for all your life is a heartbreak many people can’t handle. To mitigate against this risk, some women branch off into starting their own businesses after seeing lives that have been devastated by company buyouts and restructuring plans in the corporate world. Running your business means you have a level of control regarding the future.
Importance Of Having A Business Financial Plan
A financial business plan is a forecast of how the business will perform in the future. It doesn’t have to be super accurate, but it should be realistic, nonetheless. A business financial plan is vital for several reasons.
- Guiding you in your day-to-day business running, you can tell whether or not your business is achieving what you projected at the onset. If not, you need to adjust your projections.
- A business financial plan is vital in attracting funding from investors such as venture capitals, angel investors, business incubators, or financiers such as credit unions, banks, and digital lenders. Agencies that offer business loans for women will be keen on assessing the viability of your financial business plan.
- Assessing business viability. The projections will paint an easy-to-follow picture of whether the business will be profitable.
- Funding gaps; your business financial plan will help identify funding needs in your industry. Cash flow projections, the projected profit and loss statements, and the projected balance sheet can help identify and estimate the extent and type of funding needs of the business.
Support Available For Women Entrepreneurs
There’s financial support available for women who are starting businesses. All they need to do is to find out if they qualify for these funding options.
1) Digital lenders
Fintech lenders are Incredibly fast in conducting an automated credit appraisal and drawing down funds. Digital lenders offer convenience and flexibility to lend to small businesses that may not have collateral or credit history. Camino Financial is one such example that you can consider to finance your startup.
2) Grants for women-owned or women-led businesses
Women-owned businesses enjoy access to grants from several federal agencies and private corporations. Essentially, this is free financing as opposed to loans that are payable back. Logically, that means accessing these funds is highly competitive. Here are some of the most common ones.
- Federal small-grants for women; check these out on Grants.gov.
- Private small business grants targeting women: InnovateHER Challenge, Amber Grant, Girlboss Foundation, Eileen Fisher Women-Owned Business Grant, Open Meadows Foundation, Tory Burch Foundation, Walmart Foundation,
- The government-guaranteed term loans; The Small Business Administration (SBA) is a US government agency that guarantees loans offered by banks to small entrepreneurs.
- The SBA also sponsors the Women’s Business Centers (WBC) that are instrumental in helping women access funding to start and grow their businesses.
3) Asset-based line of credit
An asset-based line of credit enables the borrower to access funding by using its assets to finance their working capital funding gap. This funding gap arises when business bills such as rent and wages fall due while payments from buyers have not yet been settled.
Like a credit card, the funding functions with flexible repayment terms with a percentage of the debt payable within a certain period. The major setback with this funding option is the length of credit approval time. Then you need to have collateral.
4) Equipment financing
Equipment financing is a viable financing alternative for women starting up businesses. It can help acquire machinery in a wide range of categories depending on your industry’s needs.
5) Invoice financing
Invoice financing is relevant when customers take 30 or more days to settle outstanding invoices, yet you need to make upfront payments to meet customer needs. This creates a cash flow shortfall. Invoice financing involves seeking a financier to advance a percentage of the invoice, let’s say 80% or 90% of the invoice, as you await your client to pay the outstanding invoice.
6) Purchase order loans
Similar to invoice financing. Your purchase order guarantees the purchase order loan from the lender. The bank makes a direct payment to your supplier to enable you to process the final product for your customer. When you deliver the goods to your client, they pay directly to the lender, who deducts their fees for the loan and sends you the balance.
7) Merchant Cash Advance (MCA)
MCAs is a quick and flexible business funding option meant to assist small businesses access funds. The financier advances funds to a business that pays back through future credit card payments on its point of sale card terminals. The lender earns a percentage of each card payment. Although this is a flexible way to access credit, the annual rates can be incredibly high.
8) Personal loans
Not every entrepreneur may be eligible for business loans for women when starting out. Personal loans are easier to access as the terms are less stringent when compared with business loans as they consider your personal credit history and finances. Personal loans typically allow you to access smaller amounts of up to $40,000.
9) Home equity loan
A home equity loan is pretty easy to access from most lenders if you meet the requirements. If you’re servicing a mortgage on your home and can afford the payments and have a good credit rating, you’re good to go.
10) Nonprofit loans
Nonprofit loans are great for women as the funding is usually from not-for-profit lenders from the community who aim to boost the businesses of small business owners. Examples include the National Association of Women Business Owners (NWABO), The Center for Women & Enterprise (CWE), and Grand Rapid Opportunities for Women (GROW).
What To Know About Financial Planning
You need to have a financial plan for your new business. These steps will help you walk through the process with confidence.
- Budget for all the costs you need to launch the business; think about leasing premises, renovations, signage, furniture, fittings, stationery, advertising brochures, business cards, insurance, licenses, and permits.
- Tabulate your monthly fixed and variable costs
- Project your monthly sales figures; don’t be overambitious due to the excitement. Let your figures be anchored in reality.
- Prepare a cash flow statement.
- Do a break-even analysis that shows your investors when you expect to begin returning a profit from the operations.
- Project a profit and loss statement for the year
- Draw up a beginning balance sheet showing the projected asset, liabilities, and equity for your business at the end of the financial year
Tips for women entrepreneurs to succeed starting a business
- Have a business plan that guides and directs your strategic direction as a business.
- Make use of mentors in your industry.
- Networking with players in the industry helps to be abreast with developments in the industry. Participate in relevant professional bodies or your local chamber of commerce chapter
- Be prepared for feedback from clients and others to improve on your product and business processes.
- Work on your Marketing and PR to develop a strong brand for your business.
- Be a risk-taker who is not afraid to fail.
You don’t have to stay in an uninspiring role in the corporate world if you fill the entrepreneurial bug biting. There are numerous sources of business loans for women to help you start up successfully. Make a point of exploring the different lending options today to kickstart your business.