Women’s Small Business Month: Access to Capital for Women Entrepreneurs

According to the “State of Women-Owned Businesses Report” by American Express, women-owned businesses now make up 40% of businesses in the United States. Between 1972 and 2018, the number of women-owned businesses grew 31-fold. Even so, women entrepreneurs still face unique challenges today that can put them at a disadvantage when competing against other businesses. Access to capital is one of them.

Whether it’s for political, economic, social, or technological reasons, women historically have had a tougher time gaining access to capital. And though women-owned businesses are now a significant driver of economic and employment growth, many female entrepreneurs still see access to capital as an obstacle to growing their business. However, statistically, female entrepreneurs are more likely to be focused on repaying debt than other new business owners.

Barriers for Female Entrepreneurs

Some possible barriers women entrepreneurs may face when seeking financing could be:

  • Lack of local and state government grants for women entrepreneurs
  • Economic factors such as the earning power of men versus women
  • Lack of a deep and diverse business network that includes both women and men
  • Lack of knowledge and resources

But there are things you can do to overcome some of these barriers. For example:

  • Diversify your business network to include both men and women to increase your opportunities for access to capital.
  • Learn as much as you can about your financing options and the application process before applying.
  • Consider getting involved with a women’s business association. Many have local and national chapters, and some are even segmented by industry. You can network with and learn from other women who have had success raising capital and overcoming similar challenges. If possible, find a mentor who can help you through the process.

Tips for Accessing Capital for Your Small Business

If you are struggling to raise traditional financing for your small business, you have options. According to the Private Capital Access (PCA) Index by Pepperdine Graziadio Business School and Dun & Bradstreet, an increasing number of small businesses are having success seeking alternative, more flexible forms of financing, including business credit cards, crowdfunding, online lenders, and merchant cash advances. Particularly in cases where your business doesn’t have a long credit history, seeking out alternative lending may be a better option.

Business Credit Cards

If you have not yet established business credit for your company, a business credit card could be a good way to do that. Fifty-three percent of PCA Index respondents had success financing their business expenses with business credit cards in Q2 2019. Unlike traditional loans, business credit cards may offer an interest-free period, and some don’t require an annual fee. A business credit card can also assist with business expenses in the form of rewards, such as cash back, air miles, or hotel points. It’s important to understand the terms and conditions of any card you choose and factor its repayment into your overall business budget.


Crowdfunding raises relatively small amounts of capital from a large number of investors, usually mediated by an online crowdfunding firm. It can be based on donations (where the “investors” don’t expect repayment), rewards, or even equity (where investors receive a tiny stake in your company). It can be tough to make the case for donation-based crowdfunding, depending on your type of business or reason for seeking financing. If your business benefits public interests (e.g., the environment, civil rights, etc.) or has community ties and needs funds to recover after a misfortune (e.g., a fire or other disaster), “investors” may feel more inclined to donate toward your business.

Depending on what your business is, rewards-based crowdfunding can be a way to presell and gauge interest in a new product while raising the cash you need to develop and produce it. It can also be leveraged as a marketing tool to help create awareness around your brand.

Online Lending

Seventy-one percent of PCA Index respondents had success securing financing with an online lender in the second quarter of 2019. Many online lenders are more lenient than traditional lenders when evaluating credit scores and credit history, which can be a plus if your business is relatively new or your credit scores aren’t as strong as they could be. There are also a variety of nonprofit lenders geared specifically toward helping female entrepreneurs secure financing. Be aware that in these cases you can sometimes expect shorter repayment periods with higher interest rates. Do your research before seeking financing with an online lender to make sure they are reputable and that they can offer terms and conditions that you can meet.

Merchant Cash Advance

A merchant cash advance (MCA) is up-front cash offered in exchange for a percentage of future debit or credit card sales. Many businesses choose MCA financing because of how quickly they can access the funds and because MCA providers are more accepting of bad business credit scores and history. However, many consider MCA “loans” to be a last-resort option. For one thing, it’s an expensive way to raise capital: APRs can end up being three times the normal rate for a loan, based in part on how fast you repay the funds. Also, the payment frequency can cause severe cash flow problems, making it difficult to get out of debt.

The number of women entrepreneurs, CEOs, and board members has grown steadily over the last several decades. To support women-owned businesses, celebrate Women’s Small Business Month in October 2019 by showing support on social media, buying products from women-owned companies, and giving the women entrepreneurs in your life a recommendation or positive review.

Visit our Business Credit Resources for more tips on how to grow your business.