Uncovering the Myths of Female Entrepreneurs and Small-Business Loans
Since 1997, the number of small businesses in the United States that are owned by women has grown by 59%, a rate of one and a half times the country’s overall business growth. If that is not impressive enough for you, then consider that employment by women-owned businesses has grown by 10%, and their revenues have likewise grown by 63%. Only the country’s largest publicly traded companies can boast higher numbers.
In the United States, there are more than 8.6 million businesses owned and operated by women entrepreneurs. These companies employ 7.8 million people, and generate more than $1.3 trillion in revenue every year. All of this growth does not come without consequences. In fact, over the years, several myths have come to be associated with female entrepreneurs and their ability to get funded. Here, we take a look at three popular myths and uncover the truth.
Myth: Women Entrepreneurs Have Easier Funding Requirements
Truth: When it comes to risk, lenders are cautious with their money, regardless of whether the applicant is male or female. Just because an applicant is a woman does not mean that the lender will be more lenient with their loan qualifications. While there are some special programs available for women entrepreneurs through the SBA, lender requirements necessary for obtaining the SBA-backed loans are no less stringent.
Myth: Women Business Owners Have Less Funding Competition so Approvals Are More Commonplace
Truth: Just because a small-business loan application is submitted by a female does not put them ahead of the pack in terms of being approved for funding. Many people think that there are only so many loans to go around, and that the number is separated by gender — but that is not how it works, except in cases where the funds are reserved specifically for female- or minority-owned businesses.
Female business owners still need to have compelling business plans, good personal and business credit ratings, and professional presentations if they want to improve their odds of obtaining a loan. As stated earlier, risk is risk, regardless of the entrepreneur’s sex.
Myth: Small-Business Loan Amounts for Women Entrepreneurs Are Unlimited
Truth: While it’s true that male entrepreneurs are ineligible for business loans that have been earmarked for female-run companies, this does not mean that there isn’t a cap placed on the amount of funds that are available for women business owners. Just like every other small-business loan, the amount approved is based largely on the company’s age, its credit history, and its financial health.