Financing Options for Women Entrepreneurs

U.S. agency has programs geared toward female small-business owners.

by Raj Tulsan
- Jun 03, 2013

Since its establishment in 1953, the U.S. Small Business Administration has been working as an independent agency of the federal government to promote the growth of small businesses. The SBA has also been instrumental in providing access to financing for women entrepreneurs through public lending programs and partnerships with private lending agencies.

Women approaching the SBA for capital to set up their own businesses can benefit from equity financing and debt financing from the agency. There are grants for nonprofit organizations headed by women. Female small-business owners scattered throughout the United States, the U.S. Virgin Islands, Puerto Rico and Guam can benefit from the range of financing programs developed and designed for their benefit.

Here are a few of the programs available to women entrepreneurs.

The Office of Women's Business Ownership

Women entrepreneurs with small businesses under their management can get sponsorship and advocacy assistance through the Office of Women's Business Ownership, a federal program.

Existing and emerging female business owners can look forward to securing technical knowledge, financial support and managerial aid from this agency. The Office of Women's Business Ownership has introduced essential training skills in business and counseling through its numerous training centers spread out in 28 states.

The SBA understands the critical role women small-business owners play in driving the economy of a country and offers highest level of support

Minority Enterprise Development Programs

SBA offers these programs under Sections 7(j) and 8(a) of the Small Business Act to help socially and economically underprivileged people secure funds for their businesses and promote ownership of business.

A woman (or minority) is required to have 51 percent of the business holdings, and manage the business in order to meet the requirement of being "socially and economically disadvantaged" to qualify for assistance under the MEDP. As a part of this program, female business owners can get access to loans, federal contracts and technical aid.

SBA financing options for women business owners

Most women business owners have to depend on their own funds or loans from friends and family, as banks and financial institutions are less willing to give out business loans to women. But the SBA provides excellent financing options for women who desperately need funding for their small businesses.

Equity and debt financing are two vital tools facilitated by the SBA to help women entrepreneurs make their mark in the competitive business arena.

Equity financing: Under this form of funding, investors do not require paying back of money, but seek a part of ownership or a higher rate of return on their investment. It is a concept widely propagated by angel investors. As a part of this financing option, women entrepreneurs' stocks are sold to shareholders. SBA can help women small-business owners to look out for this form of financing through their programs that attract venture capitalists.

Debt financing: Female small-business entrepreneurs can borrow money under this form of SBA financing, only after assuring the lender to repay the loan borrowed along with the interest rate charged on it. Women can benefit from debt financing through SBA's guaranteed lending program.

The SBA understands the critical role women small-business owners play in driving the economy of a country and offers the highest level of support.

About the Author

Raj Tulsan works directly with Biz2Credit customers to help them successfully apply for small business loans. Tulsan owned and operated his own successful small business prior to joining Biz2Credit, and regularly writes and speaks on entrepreneurial issues.

Founded in 2007, Biz2Credit is a leading credit marketplace connecting small- and medium-sized businesses with lenders, service providers and complementary business tools. Biz2Credit's network consists of 1.6 million users, 1,100+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers.

Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.

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