Last year, the number of women-owned businesses on the Fortune 500 hit a new high at 41. While there is still plenty of room to grow, this increase in female entrepreneurship has inspired some. others to start their small business and fulfill their dream of being their own boss.
Businesswomen face so many challenges as their male counterparts, including pay gaps, lack of support, fewer assets, lack of representation in leadership positions, the list goes on and on. . Unequal access to financing for growth is one of the most overlooked barriers faced by women business owners. All businesses need growth capital to support them in the initial launch and to grow their business. However, women business owners have not had the same access to traditional loan opportunities, making their business survival much less likely.
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According to biz2credit, the average loan amount for women-owned businesses ($36,981) was 33% lower than for men-owned businesses ($55,061) in 2020. 47% less than men-owned businesses ($78,229). These disparities in loan amounts are clear indicators of an uneven playing field and disadvantaged access to growth capital.
What is the solution to fill these gaps and encourage women entrepreneurs to grow their businesses? Microcredits.
The benefits of microloans
As the name suggests, microloans are smaller loans that typically range from $500 to $50,000. For new small businesses, a microloan can be a great way to get started and get started as you build the foundations of your business. Microloans are a great way to help cover initial start-up costs until you can establish enough credibility to apply for larger forms of financing later.
For established businesses, these small loan amounts can help during times when you’re struggling to break even. If your business is doing well, but you’re struggling to give your employees raises, a microloan is a great way to cover other expenses that can translate into a direct return on investment, like advertising and marketing. . simply put, a microloan gives you the freedom to use your current earnings to improve salaries and benefits for your staff, while you use that small amount of borrowed money to reach new clients and increase your future earnings.
How Microloans Affect Women-Owned Businesses
According to biz2credit, 31% of women-owned businesses are categorized in services and 15% in retail. These industries require large inventories, equipment, shipping costs, and storage space. Fortunately, even if traditional loan options or investor financing are insufficient, microloans are increasingly available to women looking to start or grow their own small businesses.
Additionally, microlenders like business warrior provide an easy and affordable way for women-owned businesses to get competitive rates on loans so they can give their small businesses the financing they need. Not only is it a smart option for obtaining financing for businesses, but these loan programs also provide mentorship and business resources to support business growth and development.
Get the best microloan for your business
The application requirements for microcredit are not as stringent as those for traditional business loans. For business owners who haven’t been around for a long time or who have a weak credit history, microloans can be a great option. Moreover, it is designed to get you your money fast. Typically, you can be approved and funded within a week or two, which can save you from having to operate underfunded for several months.
The purpose of microloans is to provide qualified small businesses with fair and accessible financing, as well as to train and educate business owners. Existing businesses should also take advantage of microloans to provide a financial boost to develop and expand current operations. Always do your research on the company you want to borrow from. Some programs have restrictions on how you use your funds, so it’s important to review how you plan to spend the funds with your lender to make sure you’re compliant.
Microloans level the playing field
Although we have made great strides towards equality, there is still a lot of work to be done. Fortunately, even if traditional lenders don’t help you, you still have options. Microloans help level the playing field when it comes to financing for traditionally disadvantaged business owners, such as women, veterans, or minorities.
To find out if a microloan might be the right financing choice for your small business, visit businesswarrior.com.
Author: Rhett Doolittle is CEO and President of Business Warrior. Business Warrior is an open-source technology company that provides small businesses across the United States with a suite of data-driven, next-generation marketing and finance solutions to build local market dominance. Founded in 2014, Business Warrior is solely focused on delivering locally targeted lead generation marketing and finance solutions that fuel small business growth. Using next-gen machine learning and native software, Business Warrior has made growth financing and conversion marketing accessible to thousands of underfunded and underfunded small business owners. For more information, visit BusinessWarrior.com.