While some women entrepreneurs may use business loans to grow and expand their businesses, others may not find them to be the best option. Fortunately, there are plenty of other alternatives available to fund your business.
Small Business Grants for Women
Small business grants are available to businesses that need help getting started or growing operations and are typically aimed at helping specific types of businesses—including those owned by women. In contrast to traditional business loans, small business grants for women do not require repayment, and there aren’t usually any fees or interest payments required.
In general, grants can be obtained from a range of sources, such as state and local governments, the federal government and corporate organizations. Keep in mind, though, that grants are extremely competitive and the application process can be more rigorous and time-consuming than obtaining a more traditional source of funding.
Consider popular small business grants for women like the Amber Grant and funds offered through the American Association of University Women, Girlboss Foundation or Open Meadows Foundation. Contact your local chamber of commerce to learn about applicable grants in your city or region.
Angel Investors for Female Entrepreneurs
If you have a strong idea and you’d rather avoid taking on debt as much as possible, one option might be finding an angel investor.
This is someone who has a high net worth and works with a business owner, offering funding and support. In return, they ask for an equity stake in your company, such as 5% of the business’s profits.
The average business investment from angel investors was $421,675 in 2021, according to the Center for Venture Research. Business owners who applied for funding from angel investors had about a 25% chance of success. If you were in a certain industry you had a greater chance of success too—notably the healthcare, software, energy and fintech sectors.
Business Credit Cards
Over two-thirds of business owners have a business credit card. Unlike other forms of business loans, credit cards work better as a flexible source of small-dollar funds. You wouldn’t want to buy real estate with one, for example, but it could be handy to buy materials and smaller equipment for your business. You can even get credit cards for your employees, so they have a handy way to pay for things if they have purchasing privileges with your business.
Business credit cards work similarly to your personal credit card: You can spend up to your credit limit and pay it back over time. And just like with personal credit cards, if you pay off all your charges in full each month, you won’t owe any interest. Additionally, some cards even offer valuable rewards like cash back or free travel.
Crowdfunding
If you have an idea for a splashy or Pinterest-worthy product, crowdfunding is a low-stakes way to get funding for your business, possibly even before you officially start it.
Crowdfunding is a loose term that means raising money for your business from a wide array of everyday people, including family, friends and even strangers. When you crowdfund, you typically don’t offer a financial return on people’s investments. Instead, you either ask for an outright gift or offer an item that your business makes in return.
You can approach people individually, but many websites can help you crowdfund your business (for a cut of the funds, of course). Kickstarter is a popular example—you can create and advertise a profile, collect money and offer “backers” the chance to receive an item your business makes. If you don’t reach your crowdfunding goal, you can offer to refund people’s money.
¹The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
