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How to Get Funding for Women Owned Companies

November 14, 2023
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Women owned companies are exploding onto the scene.  In fact, you may be surprised to learn that companies such as Cisco, Liquid Paper, The Body Shop, Spanx, and Proactive are all owned by women. 

What Women Owned Companies Need to Succeed

Women owned companies are definitely becoming a force in the entrepreneurial world.  According to Fundera, 40% of US businesses are owned by women. If you are ready to join the ranks, here is what you need to know. 

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Women Owned Companies: Start Off On the Right Foot

All businesses, including women owned companies, need strong fundability.  This starts with how your business is set up. The first part of this is separating the business from yourself.  This starts with having separate contact information, meaning you do not use your personal address or telephone number as your business address or telephone number

That sounds easy enough.  However, many entrepreneurs, especially women, choose to start their business from their residence.  It makes sense.  In theory, a female business owner could better manage a home and children if running a business from home. Even a woman, or a man for that matter, without  a family could find benefit in the flexibility of running their own business from home.

There is no commute, you cut the cost of buying lunch out, and you can work in your pajamas. 

Fundability Foundation™

While some would argue these things are not all they’re cracked up to be, one thing is for sure. It is definitely tempting to use your personal contact information as your business information if you work from home. There are two things you need to know about this.  

Contact Information

First, regardless of where you run your business from, you do not need to use your personal contact information as your business contact information.  Second, you can still run your business from your home and still have separate contact information for your business.

The phone number part is easy.  You could get a separate phone, but it isn’t necessary.  It is easy enough to get a number that works through the internet.  You can then forward it to your regular phone, and whenever someone calls your business number it will ring to your personal phone.

An address is a little trickier, but not impossible.  Whatever you do, don’t use a P.O. Box or an UPS box.  Many types of funding will not accept this type of address. They want to see a physical address.   women owned companies credit suite

Other Setup Information

This is not the only issue with setting up your business to be fundable.  But it is the first step.  After that you need an EIN, you need to incorporate, and you absolutely must get a D-U-N-S number.  You also have to open a dedicated business bank account

The whole point in setting up your business to be fundable is so that you can get funding for your business.  There is a huge catch-22 here, as if you are already running a business and are not yet set up to be fundable, you may need money before you can get it done.

The set up is only one piece of the fundability puzzle.  There are over 100 different fundability factors that lenders consider. Building business fundability takes time. 

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Best Funding for Women Owned Companies Right Now

The problem is, the longer you wait, the hard it gets to build fundability. Not only that, you need money now, right? How do women owned companies get the funds they need to grow and thrive, or just survive, in the meantime?  We have a few suggestions. 

Credit Line Hybrid

The credit line hybrid is unsecured business financing.  It is available to pretty much anyone for any type of business expense. You can use it for real estate, equipment, working capital, and even startup expenses.  Not only that, but there is no security required.  Furthermore, there is no down payment, and you do not have to provide income documentation. It is completely no-doc financing. 

You do need to have personal credit of 700 or above.  Also, there cannot be any late payments in the past 12 months, there can be no open collections or bankruptcies, and there should be less than 4 inquiries in the past 6 months on your consumer credit report.  There also has to be at least 2 open credit cards with a $2,000 limit or higher with 2 years of good payment history. 

If you do not meet these requirements, you can take on a credit partner that does meet them. The payments will still be reported on the business’s credit report, so business credit will build whether you get the financing yourself or through a credit partner. 

You can get up to $150,000, and often interest rates are as low as 0% for the first 6 to 18 months.  

Business Revenue Lending

If your business has consistent revenue of $120,000 per year or more, you may qualify for this type of funding. Lenders verify revenue using bank statements.  There can be no recent bankruptcies, but the minimum credit score to qualify is as low as 500.  

A business must also be in operation for a year or more, and they must do over 5 small transactions each month to get business revenue financing. 

Merchant Cash Advance

If your business accepts credit card payments and you have at least a 500 FICO, you could get up to $750,000 in a merchant cash advance. Credit rates are usually lower compared to traditional financing as well.  

Your business must bring in $100,000 or more per year in credit card sales, and typically you can get approval equal to one months credit card financing volume. 

Account Receivable Financing

Outstanding account receivables can also be a source of funding for your business. Get as much as 80% of receivables advanced in less than 24 hours. You get the rest of the accounts receivable amount once you collect full payment for the invoice. Closing takes 2 weeks or less. 

Receivables should be with the government or another business. Getting financing with receivables from individuals is not as easy. If you also have purchase orders, then you can get financing to have those filled. You won’t need to use your cash flow to do so.

Equipment Financing

You can secure this type of financing by using existing equipment or new equipment you want to purchase as collateral.  Funding is available up to $10 million. Terms range from 5 to 60 months, and you need a minimum 550 FICO. 

The equipment must be new, and most types of equipment are acceptable, including software. 

You’ll need to provide details on the equipment to be financed and, depending on the loan amount and certain risk factors, you may need to show 2 years corporate and personal tax returns.

Enterprise SBA Loans

For these loans you have to have collateral worth up to at least 50% of the loan amount, but you only need a FICO of 620.  There also can be no bankruptcies in the past 4 years.  Only for profit companies qualify, and they must have positive trends in sales growth. Generally amounts are available of up to $12 million with terms up to 25-years. 

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Women Owned Companies Can Get the Funding They Need

While there are some women business grant opportunities out there, they are highly competitive and rarely enough to fully fund business needs.  These funding options are great for immediate cash needs, and you can work on building your fundability in the meantime. Once your business has strong fundability, you can have pretty much any business funding you need.  

The absolute best way to build fundability is with the help of a business credit expert. They can walk you through the complicated web of the many factors that affect fundability, including helping you find accounts that will report to your business credit profile.  That is the only way to build a business credit score.

About the author 

Faith Stewart

Faith has a BBA with a major in Accounting, and a combined 20 years of experience in the fields of finance and account.

Before switching to writing, she spent 10 years working in various areas of small business and personal finance and accounting, including working as a public auditor at BKD, LLP, Financial Director at Central Arkansas Development Council, and Commercial Credit Analyst at Farmer's Bank and Trust.

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