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Woman Business Owners: Trends in Business Ownership and Financing

There is some good news regarding the gender gap in entrepreneurship: it is closing. According to a report conducted by the Global Entrepreneurship Monitor (1), women around the world are finding ways to launch more businesses in industrialized and developing nations. According to the study, the gap has closed by six percent.
The report cites that women, on average, are taking advantage of educational gains and perceived economic opportunities to start businesses. According to the data, women are:
• 40 percent of the global workforce
• Earning more professional degrees
• Seizing start-up opportunities and learning networking skills to sustain small businesses beyond the initial launch phase
• Starting businesses and triggering community impact through job creation.
Women are a Major Force in Building New Businesses
There is more good news for entrepreneurs, particularly women: according to the 2012 U.S. Census Bureau Survey of Business Owners, 36% of small-business owners were women in 2012, up from 29% in 2007. If the number of women-owned businesses grows at the same rate as it did from 2007 to 2012, women could own 50% of all businesses by 2020, according the census data. Further, the industries with the largest increase of women business owners were surprising—given their male-dominated roots. The industries with the largest increase of women business owners included:
• Agriculture
• Forestry
• Fishing and hunting (a 40.5% increase)
• Accommodation and food services (29.8% higher)
• Manufacturing (29.3%)
Getting Funding for New Business
As more women become business owners, business lending options also are increasing. Banks are not the only source of loans. There are several types of alternative funding. However, one of the more popular types is online lending. According to data in a 2014 Harvard Business School working paper, bank lending is decreasing for small-business loans, while online lending is increasing. In fact, alternative lending outlets are expected to comprise 16% of the total small business loan volume by 2020.
Online lenders offer an array of options for borrowers. This gives “Main Street” small business owners—particularly female entrepreneurs—a variety of ways to get the capital they need. However, it is important they not only know the type of financing that is best for them, but the kind of information they need to provide the lender.
Alternative lenders use algorithms based on traditional credit standards, such as personal credit score and cash flow. However, they also use nontraditional metrics, such as:
• social media presence
• The health of the business
• How long the business has been operating
• The amount of revenue the business generates over a twelve month period.
What to Consider When You are Considering a Business Loan
Business owners who are considering online lending should always have a clear understanding of their business goals, how the money will be used, and the terms for each of your loan possibilities. They should also understand that there are some basic steps they should take to get the best business loan possible:
1.  Personal Credit – the lower your credit score, the more likely any lender will perceive you and your business as a high risk proposition. Before applying for a loan from any provider, a business owner should do what they can to boost their personal credit. It takes time and a strategy, but in the long run, upping your credit score can save you time, frustration, and money.

2.  Develop a Business Plan—your lender is going to want to know about you. Your business plan should help you tell the lender exactly why you need funding. Let them know your plans for the future of your company and the funding fits into that plan. Know what makes your business a better option than any other. Learn to sell you’re the attributes of your business. Finally, you also need to be organized: have your bank statements and tax returns available.

3.  Do your research—you should always take the time to evaluate your options. Your research on the lender is as important to the process as the lender’s research on your business. It is wise to look at least three options, including your own local bank. Be sure that you understand the interest rates, terms, and eligibility requirements presented by each lender.

4.  Make sure you are targeting the right lending source—your specific situation will dictate the type of lender you need. For example, if you have an online business that has been functioning for a year and your need is for $30,000 to improve how you fill orders, than a large bank is probably not the lender you need. An online lender might be a better consideration. Conversely, if your business is solid, has a history of positive results, and you need a six figure loan to expand your workforce, you might want to talk to a representative of a large, national bank.
The trends are showing that it is good time to be a small business owner. If you are a female entrepreneur, the news is improving. There are many more lending options now than ever before. So, do your homework. Know what you need and look into some of the options. It is a great time to be starting a business!


1 The Global Entrepreneurship Monitor, “Women Entrepreneurs Thriving World Wide,” November, 18, 2015,

2 Karen Hodgins Miller and Brayden McCarthy, “The State of Small Business Lending: Credit Access during the Recovery and How Technology May Change the Game,” Harvard Business School, working paper, July 2014

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