More women are becoming entrepreneurs. According to the Census Bureau’s Annual Business Survey, there is an increase in the amount of women starting their own businesses. Notably, there are over 12 million women-owned businesses in America. This is promising news, however there is still a large disparity when it comes to financing women-owned businesses.
Women-Owned Business Financing
Is there funding available for women-owned businesses? Statistically speaking, it is more difficult for women to obtain business financing than men. On average, women receive a business loan size of about $5,000 less than men. Further, only 7% of venture capital goes to female entrepreneurs. So, there is a lot of room for improvement when it comes to financing women-owned businesses.
Business Financing Gap for Non-White Women
There are many factors to consider when comparing business financing between male and female entrepreneurs. It is difficult to make any comprehensive claims based on sex alone. About half of all women-owned businesses are also minority-owned businesses. So, race and ethnicity are important factors to consider when discussing disparities in business financing.
Did Women-Owned Businesses Have Financing During 2020?
In 2019, only 28% of SBA Loans went to women-owned businesses. SBA Loans, including stimulus funding programs like the Paycheck Protection Program, were instrumental in keeping American businesses afloat during 2020. However, male business owners benefitted from PPP Loans more than female business owners. For ever woman-owned business that received a PPP Loan, 3.4 male-owned businesses received a PPP Loan. On average, PPP Loans for male business owners were over $6,000 more than female owners.
Business Financing for Women
It is safe to assume that women-owned businesses are in need of fast and affordable working capital financing. According to the Global State of Small Business study, female-owned businesses were almost twice as likely to close temporarily during 2020 compared to male-owned businesses. So, it is important that women-owned businesses have access to working capital financing that will improve cash flow and help rebuild.
Financing Options Accessible to Female Entrepreneurs
Invoice factoring services are fast and affordable. Business owners do not need a lengthy time in business or a high credit score. This means that entrepreneurs can still qualify for factoring services even if they would not qualify for a bank loan. Our qualification criteria is different than traditional financing options. So, invoice factoring is a great business financing option for women-owned and minority-owned businesses!