Sunday, March 8 was International Women's Day 2020. The theme this year is more important than ever as women continue to seek equal rights:
“I am Generation Equality: Realizing Women's Rights”
SmartBiz Loans works with small businesses owned by women every day and their business are thriving in America. Equal rights are important to the SmartBiz team and we strive to hire a diverse workforce with women in key roles in addition to providing low-cost funding to help them reach their business dreams.
Because of their minority status, special opportunities and assistance exist for women-owned businesses. A woman-owned business is defined as a business with at least 51 percent ownership by a woman or women, including contracts, procurement set-asides and financial and/or business assistance.
Not all women-owned businesses pursue these benefits, but certifying your business as a woman’s business enterprise (WBE) can help your enterprise. Here’s information you need to know about WBE advantages.
WBE certification is necessary if you wish to participate in programs that require tracking the amount of business done with women-owned enterprises. Most local, state and federal government purchasing agencies have programs for woman-owned businesses. To become WBE certified, you must show:
- Woman Ownership: You must prove that the business is 51 percent owned, controlled, operated, and managed by a woman or women.
- Time in business: Your company must have been in business for at least six months.
- US citizens: The owner or owners must be US citizens or legal resident aliens.
- Contribution of capital: The woman business owner or owners must show that the contribution of capital is real and in proportion to the ownership interest in the business.
Federal Contractor Status and State/Local Certification
To help provide a level playing field for women business owners, the government limits competition for certain contracts to businesses that participate in the women’s contracting program. According to the Small Business Administration, the federal government's goal is to award at least five percent of all federal contracting dollars to women-owned small businesses each year.
To be eligible for the women’s contracting program, your business must:
- Be a small business. The SBA’s size standards determine whether or not your business qualifies as small.
- Be at least 51% owned and controlled by women who are U.S. citizens.
- Have women manage day-to-day operations and also make long-term decisions.
Grant options for women-owned businesses
Here are some good places to start your search for public or private grant opportunities:
- The Eileen Fisher Women in Environmental Justice Grants
- The SBA's InnovateHER Challenge
- The Girlboss Foundation Grant
- The Amber Grant for Women
Loan options for woman-owned businesses
Although these loans are not specifically earmarked for women, they can provide the funds you need for your business.
If you qualify, the Small Business Administration’s low-cost loan programs can be your best option. SBA loans have low rates, long terms and very low payments to fuel stability, growth, and savings.
There are three types of SBA loan programs available for business owners, the 7(a) Loan Program, the CDC/504 Loan Program and the Microloan Program
The 7(a) Loan Program
An SBA 7(a) loan can be used for a variety of purposes.
- Working Capital: Purchase equipment, increase inventory, add marketing programs, for operating expenses to hire additional staff.
- Debt Consolidation Loans: Refinance merchant cash advances, short-term business loans, high interest business loans, daily or weekly payment loans or business credit cards.
- Commercial Real Estate: Refinance an existing commercial real estate mortgage, buy an office building or other owner-occupied commercial space.
For in-depth information about the popular SBA 7(a) loan program, visit the SmartBiz Small Business blog and review our comprehensive article: What is an SBA Loan?
The 504 Loan Program
This program was created to give small businesses low cost funds for expansion or modernization. Typically, up to 50% of project costs are funded by a lender backed by the SBA. CDCs (Community Development Corporations) usually fund up to 40% of the project cost. The final 10% is a cash down payment expected to come from the small business owner. A 504 SBA loan might be a good fit for small business owners interested in purchasing a commercial real estate property and if their unique business circumstances fit with the public policy goals of your local CDC. Find a CDC here.
The Microloan Program
The Microloan Program is for very small businesses, including start-ups and provides loans of up to $50,000. Requirements to qualify for a microloan can vary depending on the lender. Proceeds from an SBA Microloan can be used for most business expenses but not for paying down debt or real estate purchases.
There are plenty of non-SBA loan options available although they may have higher rates, shorter terms and larger payments.
Business Lines of Credit
A business line of credit allows you to borrow funds up to a limit based on your credit, typically smaller than a term loan. You only pay interest on the amount you use, and you can continue borrowing as necessary until you reach the set maximum. These loans are usually unsecured, meaning that you won’t have to provide collateral to qualify. For in-depth information, read this post from the SmartBiz Blog: Small Business Lines of Credit Pros and Cons.
Business credit cards are revolving lines of credit. The main distinction is that they don’t terminate once the predetermined limit is reached. They work like personal credit cards, with varying spending rewards and offers depending on the lender. Learn more here: 5 Business Credit Card Myths.
Merchant Cash Advances
A merchant cash advance (MCA) is most often used by small businesses that accept credit and debit card sales. You receive a specific sum in advance that is repaid either by a percent deduction from daily transactions or through daily or weekly payments.
Keep in mind that MCAs often lead to extremely high annual percentage rates. Even the minimum within the range can be several times larger than term loan annual percentage rates and can reach up to well over 300%. For more info, read What You Need to Know About an MCA.
Bank Term Loans
If you need funds quickly, consider applying for a bank term loan. SmartBiz currently offers term loans through its network of banks for working capital, debt refinance, and new equipment purchase:
- $30,000 to $350,000 loan amounts
- 2 – 5 year repayment terms
- Fixed interest rate*
- Monthly repayments
- No pre-payment penalties
*Interest rate depends on loan term and the applicant's credit and financial profile.
Women owned-business assistance
If you need help launching, running, or expanding your business, free or low-cost assistance is available. A Women's Business Development Center or a Small Business Development Company offers all kinds of programs and assistance for small business owners. Locate assistance centers here: Find local assistance. SCORE is also a fantastic resource, pairing entrepreneurs with seasoned business professionals. Locate your local SCORE office here.
Female entrepreneur success stories
Despite the success and growth of businesses owned by women, a troubling blanket of unfairness still exists. A 2016 study showed that female-owned businesses receive loan approvals 33% less often than male-owned businesses.
As a result, we’ve experienced 30% of SBA 7(a) funded loans going to women-owned businesses compared to the national average of only a 14%. From 2017 to 2019, SmartBiz increased the dollar amount facilitated to African American Women owned businesses by 45%.
We love to speak with our female customers to learn about their entrepreneurial journey to successful business ownership. Read about them on the SmartBiz Small Business Blog:
Wonder Years - Christy Miranda started working for the business she now owns when she was just 15. She is expanding to a new commercial real estate property to expand her successful child care business.