The growth rate of women-owned businesses is booming. Now the question here is, are small business loans for women keeping up?
The 2014 report by State Of Women Owned Business calculated that the amount of women-owned businesses augmented to 59% since 1997. As such, women-owned businesses are growing at a rate 1 ½ times the national average.
In spite of this, small business loans are usually considered even more difficult to acquire for women business owners as compared to men business owners.
Women’s Access To Financing
In 1988 The Women’s Business Ownership Act proscribed many prejudiced practices that also include requiring a male co-signer for getting business loans. However still, approval rates on business loan from conventional sources are on average 15-20% lower for women-owned businesses as compared to men.
The California Reinvestment Coalition reported that since 2007, business loans for woman-owned businesses reduced by 70%. And in 2014, Babson College report reveals that private lenders authorize less than 3% of women business owners’ business loan requests.
In terms of small business financing, startup businesses run by the women business owners are granted less than 3% of the investments. This stat is all the more remarkable when tied with the fact that men owned businesses acquire six investments for each one that goes to a women-owned business.
Closing The Gaps
There are some lenders that are working to end the financing gap. For instance, the Small Business Administration has unique financing alternatives to help women business owners. But, SBA loans can still be notably complicated to meet the requirements for.
Alternative lenders are trying to close these financial gaps by using algorithms as a base for approval of business loan for women. These financial companies observe that the credit rating often does not demonstrate a borrower’s full potential. Research have shown that, on average, credit ratings of women business owners are 20% less than men’s; therefore a more comprehensive approach to credit can assist balance the approval rates of business loan for women.
There are some other resources that assist women business owners get equal access to business funding. The U.S. Women’s Chamber of Commerce is an advocacy group that helps women business owners. Moreover, the National Association of Women Business Owners works with women business owners to encourage growth and development in their business.
For female entrepreneurs, alternative lenders like Merchant Advisors is a positive step towards financial security and small business success, as the organization recognizes the value and intelligence of women and their role in today’s economy. As a result, the business represents females and their financial needs in a positive light, and this encourages even more women to aspire and to achieve their small business goals. Since these loans are affordable, women are able to pursue excellence without the weight of high-interest payments, penalties for early repayment, and excessive fees. Women possess a strong advantage with Merchant Advisors, offering them a top choice for a good value.