How to overcome obstacles as a female entrepreneur

By Bankrate Staff, Bankrate

The number of women-owned businesses in the United States has seen huge growth. In fact, women are opening an average of 849 new businesses per day.

Women-owned businesses increased a dramatic 31 times over the past 46 years, according to the 2018 State of Women-Owned Businesses Report commissioned by American Express. Between 1972 and 2018, they've risen from 402,000 (4.6% of all firms) in 1972 to 12.3 million (40% of all firms) in 2018. 

Despite the numbers and what looks like success on paper, women-owned businesses actively fail to represent a larger portion of the total employment and revenue share. The lack of employment and revenue signals an alarming problem: As a whole, some are failing to thrive and generate revenue due to a lack of resources, educational opportunities and funding.

Although the number of women-owned businesses has increased, women still face several challenges in starting their own business. To help with that process, programs and organizations offer training in entrepreneurship and networking skills, mentorship, certifications and increased access to capital.

Female entrepreneurship helps to build a stronger and healthier economy overall, as well as increased job creation and revenues in local communities.

Find specialized funding to overcome the gender lending gap

Biz2Credit research has found that the average-sized loan for women-owned businesses was 31 percent less than for male-owned businesses. In short, funding is a major issue for women entrepreneurs and business owners who want to grow their business.

Federal business grants for women

Finding the best funding option for your business can help you gain the resources needed to finance your business goals. Grants are funds that don't have to be repaid, and they're often given to a recipient by a government entity, corporation, foundation or trust.

Loans, on the other hand, do have to be repaid, and there are various loan products and ways you can go about getting a loan to finance your business.

The federal government does not offer grants for starting or growing a business. However, if you've started a non-commercial organization (such as a non-profit) in medicine, technology development or related fields, you could get some funding through specific channels.

Some business grants are available through state or local programs. But these grants usually require you to match the funds or combine the grant with other forms of financing, such as a loan. Various government agencies offer grants on the federal level. Register to apply through and understand your legal eligibility for each funding opportunity.

Small Business Investment Company (SBIC) Program: The Small Business Administration (SBA) partners with private investment funds licensed as small business investment companies to provide growth capital to small businesses.

Small Business Innovation Research (SBIR) Program: This program encourages small businesses to pursue federal research or research and development (R/R&D) projects that can lead to opportunities for commercialization.

Women's Business Centers: Women's business centers can help women entrepreneurs with business development and access to capital. Some lend money directly and others help you find grants.

Private/state and local grants for women

If you're interested in sticking to state and local-level grants, you could check out your individual state for more information about business financing programs. Often, you can find state grant initiatives and more. Economic Development Resources and Small Business Development Centers can also provide a wealth of information.

Angel investor websites are another approach you can take to private investment. A new industry association of angel groups has also emerged, called the Angel Capital Association (ACA). The ACA keeps tabs on angel groups and estimates that there are 265 nationwide.


According to the National Women's Business Council, women have been 32% more successful at raising capital through crowdfunding than men. It may be a good option, depending on which platform you choose. Some platforms have particular niche markets, and others ban certain types of campaigns, such as real estate.

A few platforms for crowdfunding include:

Business loans

Unlike a grant, a business loan is debt that your company must pay back according to the specific loan's terms and conditions. They can come from banks, microlenders and online lenders as well. Lenders require cash flow to support a loan, and if you're only a year or more into your business, it can be difficult to get a loan when you're first starting your company.

Consider looking into small business loans, term loans and business lines of credit. Compare everything, including interest rate and loan terms. Of the loans you qualify for, choose the one with the lowest APR, because you'll pay less over the term of the loan.

Here are a few different types of entities that offer business loans:

Banks: Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

Microlenders: Microlenders offer small, low-interest loans to low-income individuals and groups.

Online lenders: This is an alternative to a traditional bank. Online lenders allow you to apply for a loan on a website instead of visiting a bank, get a fast approval decision, usually within minutes and deposit the money directly into your bank account.

Government business loans: Government business loans are offered through banks and direct lenders that partner with the SBA. These are long-term, low-interest loans that business owners can use to start a business.

Most loans require a high credit score, and if you have a low credit score, a bad credit personal loan is another option for funding business needs.

Having a high credit score is imperative

Biz2Credit found that the average credit scores for women-owned businesses dropped from 598 in 2017 to 588 in 2018 and trailed the scores of their male counterparts (613) by 25 points. According to a report by the American Association of University Women, women take on around $890 billion in student loans, which amounts to the majority of the outstanding student loan balance in the U.S. Unfortunately, once they have that debt, they earn less than men.

How to build good credit from the ground up

Maria Otero launched the Women's Venture Fund in 1996 with the idea that women could succeed as entrepreneurs when they can access credit and resources. "All the research tells you that women have challenges with credit, and for every five women who apply, only one will get funded. Access to credit and equity is a challenge."

You can increase your credit score through several methods:

  • Make on-time payments on everything, even items like utility bills (though these aren't usually reported to credit agencies).

  • Keep your credit utilization -- which is the ratio of your outstanding credit balances compared to your overall credit limit on all accounts -- to 30% or less.

  • Limit your number of credit inquiries.

  • Minimize student loan debt.

  • Keep balances low on all revolving credit -- a type of credit that does not have a fixed number of payments and is the opposite of installment credit.

How your personal credit score could affect your business

There are three major types of business loans that can be an option: bank loans backed by the Small Business Administration, microloans from nonprofit lenders and loans from online lenders. It's also possible to get a business loan with bad credit.

There are a few simple steps you can take:

1. Find the right loan.

2. Shop around for lenders. Compare interest rates and terms for all lenders you research. Lots of options, from banks to microlenders (for businesses that are really small) and online lenders could be an option for you.

3. Gather up your documents, such as business and personal tax returns, business and personal bank statements, business financial statements and legal documents. Your lender will tell you which documents you need.

Apply for mentorship and business development programs

Total market share in terms of employment and revenue is not consistent with the growth in women-owned businesses. The lack of employment and revenue despite the growth of women-owned businesses means these new businesses fail to thrive and generate revenue due to a lack of resources, skills and funding.

This is especially true for minority women-owned businesses, which fall behind women-owned businesses as a whole.

American Express' State of Women-Owned Businesses Report states that while the number of women-owned businesses grew 58% from 2007 to 2018, firms owned by women of color grew at nearly three times that rate (163%). It also reveals that if revenues generated by minority women-owned firms matched those currently generated by all women-owned businesses, they would add around four million new jobs and $1.2 trillion in revenues to the U.S. economy.

How to find development programs

There are several programs and organizations that offer entrepreneurial mentorship programs to help build networking skills, business development and women-owned certifications.

A few notable mentorship programs for women entrepreneurs can have a Women Business Enterprise Certification with the Women's Business Enterprise National Council (WBENC), a private third-party that certifies women-owned businesses on behalf of U.S. corporations. Also, look for WBE certification through city, county or state programs. A few options include:

  • Look for mentorship programs on a local level. An example is Valley Venture Mentors, which was founded by Feldman. It builds, supports and maintains a community to launch entrepreneurs and nurture startups.

  • If you're a minority, look for Minority Business Enterprise certification (MBE) with the National Minority Supplier Development Council (NMSCD) or a local MBE program. The requirements are that the mentorship program should be51% owned, operated, capitalized and controlled by a member(s) of a minority group who is the top executive officer. MBDA Business Centers work to promote the growth of minority-owned businesses and can also help you find a mentor.

According to Experian's Small Business News' Statistics and Obstacles Facing Women Entrepreneurs study, small business owners who have access to mentoring report higher revenues and growth rates.

Hone your industry-specific skills

Women business owners in specific industries face unique financial and startup challenges. Half of all women-owned businesses are concentrated in three industries, which have all seen a decrease in revenues. These three industries include:

  • Health care and social assistance

  • Professional/scientific/technical services

  • "Other services," such as hair/nail salons, pet care, etc.

Women in other industries such as construction and STEM often face increased scrutiny and access to funding due to inexperience, knowledge and overall acceptance in these industries

How to seek further education, experience and involvement

Women-owned businesses that have the highest total revenue are in industries in wholesale trade, retail trade, and scientific and technical services. Women historically haven't broken into these industries and must seek additional experience, credentials and education to increase credibility and industry acceptance.

Further education and certifications in these industries can increase trust and credibility in the eyes of investors, through online classes, certifications, STEM mentorship in high school/college and building relationships in these industries.

Co-founder and CDO Taylor Bruno of SoLo Funds, says, “As a female co-founder in the predominantly male-led tech industry, I've worked for the last 10 years in close proximity to the challenges facing female entrepreneurs." She says her approach has everything to do with relationships. "I form relationships with the people I work closely with on a professional level while opportunistically finding time to get to know them on a personal level over coffee."

Get involved

Experts agree that the more people who can attend networking events, conferences, and conventions in these industries, the gender gap will eventually close. Get involved in discussions, presentations, seek peer mentors in hard-to-break industries.

Rick Feldman, lecturer in entrepreneurship, organizations and society at Mount Holyoke College, a women's liberal arts college, says, "We need to start putting money where it'll make a deep-rooted, long-lasting significant change. The money has to go to not just causes, but activities that will generate even more resources, and that means putting the money in resources and women who are doing real things, starting businesses, taking on leadership roles. That's where we need to see more resources."

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Finance Magazine: How to overcome obstacles as a female entrepreneur
How to overcome obstacles as a female entrepreneur
Women can face unique challenges when building a business.
Finance Magazine
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