While some women entrepreneurs take out business loans to grow and expand their businesses, others find that a business loan is not the best option. Luckily, there are plenty of other options to fund your business.
Women's Small Business Grants
Small business grants are available to businesses that need help starting or expanding, and are usually targeted to help certain types of businesses, including women-owned businesses. Unlike traditional business loans, women's small business grants don't have to be repaid, and they usually don't have to pay any fees or interest.
Generally, grants can be obtained from a variety of sources, including state, local, and federal governments, as well as business organizations. However, be aware that grants are highly competitive and the application process can be more rigorous and time-consuming than obtaining traditional sources of funding.
Consider popular small business grants for women, such as the Amber Grant and funds offered by the American Association of University Women, Girlboss Foundation, Open Meadows Foundation, etc. Contact your local Chamber of Commerce to learn about available grants in your city or area.
Angel investors for women entrepreneurs
If you have a great idea and want to avoid debt as much as possible, looking for angel investors may be an option.
These are people with high net worth who work with business owners to provide them with funding and support, and in return ask for an equity stake, such as 5% of the business' profits.
According to the Venture Research Center, the average business investment from angel investors was $421,675 in 2021. Business owners who applied for funding from angel investors had a success rate of about 25%. They were also more likely to succeed if they were in certain industries, especially in the healthcare, software, energy, and fintech sectors.
business credit card
More than two-thirds of business owners have a business credit card. Unlike other forms of business loans, credit cards are more useful as a way to get small, flexible amounts of capital. For example, you wouldn't want to buy real estate with a credit card, but it can be useful for buying supplies and small equipment for your business. You can also open credit cards for your employees, which can be a convenient way to make payments if they have purchasing authority at your company.
Business credit cards work similarly to personal credit cards: you can spend up to your limit and pay it off over time. And like personal credit cards, you don't pay interest as long as you pay it off in full each month. Plus, some cards offer valuable perks like cash back or free travel.
Crowdfunding
If you have an idea for a flashy or Pinterest-worthy product, crowdfunding is a low-risk way to raise money for your business even before you officially launch.
Crowdfunding is a vague term that means raising funds for your business from a variety of members of the public, including family, friends, and even strangers. When you crowdfund, you don't usually offer people a monetary reward for their investment. Instead, you ask for direct gifts or offer products that your business produces in return.
You can approach it one-on-one, but there are many websites that will help you crowdfund your business (and of course provide a portion of the funds). Kickstarter is a popular example: you can create a profile, promote it, raise funds, and offer your “backers” the opportunity to receive goods made by your business. You can also refund people if you don't reach your crowdfunding goal.
¹Required FICO score may be higher based on your relationship with American Express, your credit history and other factors.