Fuel Your Business: Financial Resources for New Entrepreneurs - Fuel Your Business: Financial Resources for New Entrepreneurs
Fuel Your Business: Financial Resources for New Entrepreneurs
Raising money for your business is always a balancing act – risk and reward, ease and difficulty of access, etc. For example, it’s easy to pull out your credit card or tap into your 401(k) retirement fund. Easy but potentially painful, personally. A little more difficult is getting that bank loan or landing an angel investor. However, there are many options focused on helping women, in particular, finance their efforts.
The Time to Find Funding
Funding is fundamental to any business endeavor. Luckily, there are many resources available today expressly for women entrepreneurs. Times when you might need to look for some extra capital include:
- When you’re just getting started – seeding your business idea and efforts
- At launch – when you need to come out big and start strong
- As your business evolves – when it’s time to scale and grow
When it comes to obtaining funding for your new businesses, as an aspiring woman entrepreneur you can face some unique challenges. That is why it’s essential for all budding and seasoned – women entrepreneurs to think about financing for their startups early and often.
For Funding the Early Days, Consider a CDFI
A Community Development Financial Institution (CDFI) provides credit and financial services to underserved communities in the US and the UK. CDFIs go by many names such as a community development bank, a Community Development Credit Union (CDCU), a Community Development Loan Fund (CDLF), a Community Development Venture Capital fund (CDVC), a microenterprise development loan fund, or even just a Community Development Corporation (CDC).
CDFIs are certified by the U.S. Department of the Treasury, which provides funds to CDFIs through a variety of programs.
The CDFI Fund
The CDFI Fund's mission is to expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors and financial service providers.
In fiscal year 2016, CDFI program awardees originated $3.6 billion in loans and investments to finance more than 13,000 businesses and 33,000 affordable housing units according to the Office of Inspector General’s Annual Report of that year.
Working Solutions is the First to Believe in start-up and early-stage businesses by providing diverse entrepreneurs with affordable capital, customized business consulting, and community connections to increase economic opportunity in the San Francisco Bay Area.
Working Solutions funds entrepreneurs with loans ranging from $5,000 to $50,000 and small business grants (when available through partnerships). They also provide every funded entrepreneur with up to 5 years of one-on-one consulting resources.
Start with the Small Business Administration
The Small Business Administration’s Office of Women’s Business Ownership (OWBO) oversees Women’s Business Centers (WBC). The WBC is a good place to find resources and small business loans for women. Training and counseling are also available at WBCs for female entrepreneurs.
In addition, the SBA and WBC offer information about federal contracting opportunities. To participate, check with the SBA and WBC for information about networking events and resources to help you understand eligibility requirements.
SBA-guaranteed loans are not provided directly through the SBA, just backed by the SBA to reduce the risk to the lender. The SBA has a tool called Lender Match that will help you find local lenders, including those who offer SBA-guaranteed loans. The process to obtain an SBA loan is complex, so you’ll need to have a sound business plan, experience and excellent personal credit history.
The SBA also oversees an investment program and innovative research program open to all small businesses. Women in particular are encouraged to apply. Ask about different programs at your local SBA or SCORE office.
Many private lenders have specialized programs for women entrepreneurs. Before signing any contract, be sure to look for hidden fees and upfront costs. If your credit isn’t good enough to apply for an SBA loan, you might be able to work with an alternative lender to get financing and rebuild your credit.
Pull together your paperwork
Don’t even think about approaching potential lenders without the following:
- A business plan that covers all the basics, and more
- Amount of funding you’re looking for, plus how you’ll use it and why
- Your credit history, as lenders use credit scores to determine credit risk and interest rates
- Financial projections for your business, and how you intend to pay back the loan
- The collateral you’ll put up for the loan, e.g., home, car, inventory
- Some industry experience or know-now to showcase your likelihood of success
Then get started with the SBA’s Lender Match program.
Other Funding Options
Small Business Grants
Grants supporting small businesses are highly competitive, but it’s worth investing your time to study up on them since you don’t have to repay grant money. The federal government grant database is grants.gov.
To apply, you must obtain a DUNS number for your business (a unique nine-digit identification number), register to do business with the U.S. government through its System Award Management website, and create an account at grants.gov.
Here are a few examples of the grants available to women entrepreneurs—by no means definitive:
- InnovateHer Challenge: The SBA hosts an annual competition for businesses with a marketable product or service that positively affects the lives of women and families.1
- National Association for the Self-Employed: This nonprofit trade association awards $4,000 each month to small businesses to use for a variety of business needs, like marketing, advertising and hiring.2
- Amber Grant for Women: $1,000 is awarded every month. At the end of the year, one of the 12 monthly winners receives an additional $10,000.3
- The Girlboss Foundation: This nonprofit awards $15,000 grants to female and female-identifying entrepreneurs on a biannual basis.4
- Cartier Women’s Initiative Award: A joint partnership project initiated by Cartier, the Women’s Forum, McKinsey & Company and INSEAD business school to encourage women entrepreneurs.5
Increasingly, people are turning to “crowdfunding,” a way to raise money from the public for a specific project or product, as a way to fund their idea. This is a very new concept and there are many risks involved. Each website that supports this option, such as Go Fund Me or Kickstarter, has different rules for what and how to raise money on their platform. We can’t recommend crowdfunding except to say it’s essential to research these options very carefully to determine if they might work for your project.
Follow industry blogs and financial forums to find more opportunities. But be sure to watch out for scams. You shouldn’t pay money for a subscription or list of grants, because you can find many through a Google search. Your local SCORE office may be able to direct you to local and state funding opportunities.