Helping Women-Owned Businesses Thrive

by: Smith and Howard

June 27, 2018

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Women have come a long way in the business world since the time of Rosie the Riveter. Unfortunately, even in the 21st century, some women-owned businesses still struggle to secure access to investment capital — or to secure it at loan terms as favorable as men-owned businesses are receiving. How can you add more female entrepreneurs to your loan portfolio?

Be aware of capital constraints

Before you actively target this undercapitalized market segment, it’s important to know the unique financing challenges women-owned businesses may face. Federal lending laws prohibit discrimination based on gender, race or ethnicity. But the loan approval process can be somewhat subjective.

Over the years, some female entrepreneurs have experienced routine denials to their requests for funding, despite owning healthy businesses. And, even when their loans are approved, female entrepreneurs sometimes receive less money (or higher interest rates) than male entrepreneurs with similar credit profiles. Therefore, even highly successful women-owned businesses may be reluctant to apply for a loan because they expect to be denied — or receive loans for far less than they need.

The ability of women-owned businesses to grow may be stunted if their financing opportunities are limited. Instead of going to the bank to apply for a line of credit or term loan, it’s common for female entrepreneurs to rely more on personal savings and investments by friends and family. They also may resort to using personal credit cards to fund short- and long-term capital needs, which can be an expensive financing alternative.

Reach out

To increase the number of loan applications from female entrepreneurs, try to include at least one woman on your lending team. Also make sure your marketing materials reflect the diversity of your borrowers, and get to know the organizations that advocate for women-owned businesses.

In addition, consider sponsoring events and delivering presentations on your bank’s support for women-owned businesses. To lend credibility to your presentation, consider co-presenting with successful female entrepreneurs who currently borrow from your bank.

We can do it!

Don’t wait for female entrepreneurs to reach out to you. Because many have experienced difficulty working with banks in the past, they may lack familiarity with the lending process. So, you’ll need to be intentional and proactive to establish a positive lending relationship with a woman-owned business. Although it may take a little extra time and effort, focusing on this under-served segment of the business community can create profitable, long-term lending relationships that benefit both your bank and women-owned businesses. For questions, please contact Sabre Linahan.

How can we help?

If you have any questions and would like to connect with a team member please call 404-874-6244 or contact an advisor below.