A Woman’s Guide To Finding Small Business Funding

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Women-owned businesses are an important part of a thriving, equitable economy. These companies make up an estimated 39% of all businesses, employ 12.2 million workers and generate $2.7 trillion in annual revenue.

Despite their considerable economic impact, many female entrepreneurs still struggle to get funding. On average, female small business owners ask for $35,000 less in funding than their male counterparts. For those who do attempt to secure loans or lines of credit, about 40% don’t receive funding.

To foster a thriving economy, we must develop a more inclusive one. That starts with expanding access to capital to talented entrepreneurs of all backgrounds and closing the business funding gap for women. While this will require a larger effort across industries, there are several resources and strategies female entrepreneurs can leverage right now to help their small businesses.

Tap women-focused business funding programs

Several grants and loans are specifically designated for women-owned small businesses.

The U.S. Small Business Administration (SBA) offers loan programs to help business owners who have traditionally lacked access to capital. The SBA says loans to female entrepreneurs it guaranteed and approved have increased 70% since 2020. Separate research indicates women receive just over 21% of SBA 7(a) loans, which provides loans of up to $5 million.

Women who belong to a minority group—at least one-quarter Hispanic, Black, Asian-Indian, Asian-Pacific or Native American—can also seek certification as a minority business enterprise (MBE). MBEs have access to a variety of capital-building opportunities along with networking and educational tools.

Grants are another option. The Amber Grant, founded in 1998, awards at least $30,000 in grants every month to female entrepreneurs. The Tory Burch Foundation has a Women of Color Grant Program, which selects 75 women-owned businesses to receive $10,000 and $20,000 grants. The program also gives grantees access to educational resources and a supportive network of fellow entrepreneurs.

For female small business owners looking for venture capital funding, several funds focus on women and underrepresented groups, including the Female Founders Fund, the Fearless Fund and Lightship Capital.

Consider crowdfunding

There are several online platforms that can help you raise funds and boost your business’s visibility.

Crowdfunding approaches include rewards-based, equity, debt and donation-based crowdfunding. With rewards-based crowdfunding, supporters typically receive a product or service in exchange for their contribution. Equity crowdfunding gives investors an ownership stake in the business, while debt crowdfunding works like a traditional loan that business owners pay back with interest. Donation-based crowdfunding involves supporters making a donation without getting anything in return. SCORE, the country’s largest network of volunteer, expert business mentors, has a helpful list of do’s and don’ts for effective crowdfunding.

Join professional organizations

Professional organizations such as the National Association of Women Business Owners, Women’s Business Enterprise National Council (WBENC) and the SBA’s Women’s Business Centers offer networking opportunities, resources and advocacy for female entrepreneurs. WBENC, for example, expands access to procurement opportunities for women-owned businesses by connecting them with purchasing decision-makers at major corporations and government entities.

Joining professional organizations gives female small business owners the opportunity to expand their network and access resources they may not have otherwise discovered. In this way, even if you don’t directly obtain capital through these organizations, you may gain knowledge and build relationships that lead to new business opportunities, potential partnerships or revenue streams that accelerate your company’s growth.

Bet on yourself

Though this isn’t an option for every female entrepreneur, using personal assets to self-fund your business can provide greater control and independence. Research shows 54% of founders rely on personal savings to fund their business.

You could use your work salary or draw from savings and investment accounts to initially fund your small business. Launching a side hustle also can support your business during the early stages, especially if it has low startup or overhead costs, such as an event planning, personal training or career coaching business.

Unlocking funding as a woman-owned business

Woman-owned small businesses are an indispensable part of our economy. Whether it’s through crowdfunding, SBA loans or women-focused grants, there are myriad resources women entrepreneurs can leverage to set themselves up for success. For more ideas and assistance, consider contacting a State Farm® agent to learn about available small business banking products or for small business insurance information, and find more tips and resources at NBCU Open Doors.

Contact a State Farm agent to learn more about small business insurance