Woman-Owned Businesses

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Roughly 40% of businesses in the United States today are owned by women. Some woman-owned businesses you may be familiar with are Cisco, Liquid Paper, and Proactive. However, despite their substantial presence in the business world, woman-owned businesses continue to struggle to obtain the credit and funding vital to their success, especially when owned by minority or immigrant women.
As a business owner, the key to maximizing your chances of getting credit and funding approval for your company is to boost its fundability as much as possible. Women business owners especially must establish strong fundability. This can be accomplished by following these practices when setting up a business.
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First, separate the business from yourself as much as possible. Many businesses today are started and/or run from home. It is vital to establish contact information for the business (telephone number and e-mail address) that is different from your personal data. Make sure the e-mail address is not from a free service like Gmail or Yahoo. It is acceptable to use the home address as the business address, because having a physical address increases your chances of being approved for funding. A post office or UPS box is not considered credible by many lenders, and if used, is more likely to result in credit denial.

Working from home and utilizing a virtual office ensures you do not have to change the business address if you move; however, a virtual office costs about $200 per month. In addition, some lenders may not consider it credible, but a virtual office has a much greater chance of being accepted than a PO or UPS box.
Set up your business properly by ensuring you:

  • Establish an EIN (federal tax number)

  • Incorporate your business

  • Open a dedicated business bank account

  • Obtain a DUNs number through Dun & Bradstreet

Setting Up Business Properly

Setting up the business properly and building fundability takes time, and once established, will substantially increase the chances of a woman-owned business to secure credit and loan approvals necessary to build and broaden the business. But what if your woman-owned business needs funding now? There are several funding options available even if you have limited business credit.

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Credit Line Hybrid

Credit Line Hybrid is a great for start-up businesses, offering up to $150,000 in unsecured business credit lines that can be used for real estate, equipment/vehicles, working capital, etc. at 0% interest for terms up to 18 months. They report to business credit reporting agencies, so as you use the credit lines, you are building business credit. They do not require cash flow, down payments, income documentation, bank statements, or tax returns. Only good personal credit is needed:

  • >680 FICO score

  • no late payments in the last two years

  • < 6 credit inquiries in the last six months

  • no open collections or bankruptcies; no bankruptcies in the last seven years at least two open credit cards with > $2,000 limits and > 18 months of good

  • payment history

  • <40% utilization of those credit limits

Those not meeting requirements can qualify by adding a credit partner (guarantor) with good credit to the application

Business Revenue Lending

Business Revenue Lending offers immediate funding if your business has consistent revenue of >$120,000 per year (> $10,000 per month). Requirements are:

  • Business must be > one year in operation

  • Credit score > 500

  • Bank statements to verify revenue

  • Business bank account must have > five small transactions per month

  • No recent bankruptcies

Merchant Cash Advances

Merchant Cash Advances are available for businesses that accept credit card payments and have a credit score > 500. Businesses with at least $100,000 per year in credit card sales can get up to $750,000 (an amount equal to one month’s credit card processing volume) with rates lower than traditional financing.

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Accounts Receivable (AR) Financing (or Invoice Factoring/Financing)

Accounts Receivable (AR) Financing (or Invoice Factoring/Financing) is a method of utilizing outstanding accounts receivable invoices as a funding source. This alternative funding program takes two weeks or less for approval and will give the business up to 90% of its receivables within 24 hours of closing. Receivables should be from government or other businesses; it is rather difficult to get AR financing with individual customer invoices. You will get the rest of the funding after full payment is received on the invoices. How does this help your business?

  • Because customers pay on terms, it enables your business to allow its customers to pay over a longer term and still provides you with 90% of the funding right away.

  • Your business accumulates an asset you can utilize as collateral for programs like SBA funding. Business owners can use this alone to qualify for very low-rate financing that does not require cash

  • flow/revenue or good credit.

Equipment Financing

Equipment Financing – equipment, even software, is considered collateral which can be used to secure funding for up to $10,000,000 for terms of 5 to 60 months. Even start-up businesses can qualify for this funding. Requirements are as follows:

  • FICO score > 550

  • First and last month’s payments in advance

  • Equipment details must be furnished to the lender

  • May need to provide 2 years of corporate and personal tax returns depending on the situation

Enterprise SBA Loans

Enterprise SBA Loans offer long term, low interest financing up to $12,000,000 with terms up to 25 years. Businesses must meet the following requirements:

  • Be a “for profit” and have evidence of growth

  • Have collateral worth 50% of the loan amount

  • Have a FICO score > 620 and established business credit

  • Provide tax returns for the last three years

  • Have no bankruptcies in the last four years

woman-owned small businesses funding-shelfcompanyinfo

Business Grants for Women

Business Grants for Women do not need to be repaid. Many different grants are
available, but are time-consuming to get and are highly competitive due to large pools of applicants. Although helpful, the amounts are usually not enough to fund a business, so women should not rely solely on grants. A backup plan is needed for other funding options if the business needs money quickly. Women have a better chance of getting grants with smaller application pools, such as those with limited criteria (i.e., specifically for African-American women or businesses in a certain state or area). Here are two types of grants available for woman business owners.

  • Amber Grant offers $10,000 each month to a woman-owned business. Applicants need only submit their business’s story and pay a $15 application fee. One recipient is chosen for an additional $25,000 at the end of the year.

  • Cartier Women’s Initiative Award has a regional category and a science & technology category. The regional category awards $100,000 for first place and $30,000 each for second and third place.

woman-owned small businesses funding-shelfcompanyinfo

Once a woman-owned business has established fundability and obtained the funding it needs, it can further strengthen fundability by utilizing this foundation to get accounts from lenders that report to credit reporting agencies. This can be rather difficult, as very few business lenders report good credit history – around 7%. Even fewer business lenders will approve credit without an established business credit history. In this scenario, it would greatly benefit a woman business owner to seek advice from an individual or company well-versed in business credit.

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