June 3, 2022

How Loanspark Can Help Female-Owned Businesses

Money may not be the answer to every problem, but it does help women entrepreneurs deal with the challenges they face on a day to day basis.

Loans and Lending for Female-Owned Businesses

Small businesses play an important role in the nation’s economy, and the success of women-owned businesses is vital to local environments and markets. Women are more likely to start businesses that aim to help people in fields like healthcare, education, and social assistance. Their work directly influences their communities, providing important services that support neighborhoods and create a path to financial stability.

The State of Women-Owned Businesses

Women own nearly 20% of all small businesses in the United States, and their numbers are growing. Between 2014 and 2016, the number of women-owned businesses increased 6%, and they employed over 10.1 million workers in 2018. They generate nearly $2 trillion in sales, making this group an important part of the small business sector.

The numbers are even more impressive for women of color. Nearly half of all female business owners are women of color, and their numbers are rising quickly. According to some measurements, they’ve increased by 163% over the last decade. For many of these women, the money they generate through the business is their primary source of income.

It’s important to note that these numbers represent what was happening before the pandemic. COVID brought to light and exacerbated many of the inequities in our economy, including those that exist among small business owners. Women-owned businesses saw greater losses than those owned by men and were 1.7 times more likely to close.

Women-owned businesses had less access to the support and tools necessary to survive the local shutdowns and decreased foot traffic. This included digital services to shift to an online business model and access to money provided through the CARES Act. In fact, only 5% of the businesses that received Paycheck Protection Program loans by the end of 2020 were women-owned establishments.

Images by Loanspark

Challenges Faced by Women Entrepreneurs

Owning a business is not for the faint of heart. Sales can be unpredictable. Customers can be difficult. Employees can let you down.

Business owners give up sleep, spend their own money, and deal with high levels of stress as they work to get the business up and running. They can face similar challenges later when the company is by all measurements successful.

Economic slowdowns, changes in customer interests, and — more recently — a pandemic stress most business owners. These challenges, however, can take a greater toll on women entrepreneurs, whose obstacles are different from their male counterparts.

Challenge 1: Market Saturation

Women-owned businesses have been growing and will continue to do so. This is exciting for women across the country, but it also increases their competition. For example, between 2017 and 2018, the number of women-owned firms within the construction industry increased by nearly 6%. The early entrants to this space easily stood out in this traditionally male-driven industry. But as more women open businesses to fill gaps, they become less of a novelty.

This increases the value of branding and the need for strategic marketing. They have to spend more time doing market research and building their reputation as authorities within the field. All of this happens while they’re still actively running their businesses and keeping up with the daily needs of managing employees, providing services for their customers, and taking care of paperwork.

Challenge 2: Social Expectations

Nearly a decade ago, a Pew Research poll revealed that a fraction of Americans — less than 20% — believe women should return to traditional societal roles. Yet it still can take women longer to be accepted by the public when they start their own businesses. This can affect the company’s bottom line, especially during the fragile early years.

Although female business owners tend to ignore these views, they still may find themselves adjusting their leadership styles to gain acceptance among their entrepreneurial peers. In some cases, they adopt stereotypical characteristics and competitive, aggressive attitudes. Such attitudes do not guarantee success and can be detrimental for business owners forcing themselves to operate in inauthentic manners.

Challenge 3: Support and Networking

Entrepreneurs may start businesses so they can be their own boss, but that doesn’t mean they work in a vacuum. Finding advisors and mentors who can guide them through processes and help them solve problems are important to their success. In fact, most CEOs in the country are receptive to executive coaching and admit that mentors directly affect their business growth. Business owners can leverage the mentor’s experience and use it to increase their networking and hone their management skills.

Unfortunately, finding mentors for female business owners isn’t always easy — and women know it. The Kauffman Foundation reported that nearly half of women business owners say not having a mentor or adviser directly affects their business and holds them back. They also tend to have fewer networking opportunities to build connections with suppliers, partners, and customers.

Challenge 4: Confidence

In light of the obstacles female business owners face, from navigating social expectations to finding networking opportunities, it should be no surprise that many of them struggle with confidence. Even if they know they offer a better product or service, they may question the decision to start a business, especially when they struggle to find the support and capital they need to keep it running.

While the high failure rate of startups has made them notoriously risky, BCG found that companies founded by women tend to outperform companies founded by men over time. According to their research, female-backed companies generated 10% more revenue over a five-year period. Women may struggle to be taken seriously and underestimate their capabilities — often for no objective reason.

Challenge 5: Work/Life Balance

Many female business owners struggle to balance their responsibilities at work and home. More than three-fourths of female entrepreneurs admit that they work more than 8 hours each day — sometimes 12 hours or more. Adding to this challenge is an unwritten expectation in society that they should prioritize their families. Their male counterparts are not often held to the same standard.

It’s not uncommon to find business owners working an excessive number of hours, but the structure of women-owned businesses contributes to this problem. Since women-owned businesses are less likely to have employees, most of the responsibility for day-to-day operations and managing the company falls on the shoulders of the owner.

Challenge 6: Market Access

Every entrepreneur must find ways to access their markets, which is a significant challenge when they first open their doors. It takes time and money to get a product or service in front of potential customers, and newly established companies may struggle with both. This may be a more pressing issue in the global marketplace, but it’s also a factor in the U.S.

Growth is essential for every company, and businesses are regularly on the lookout for new places to sell their wares. For U.S.-based businesses, expansion may include exporting goods to other countries. They will need money to pay for licenses, shipping costs, tariffs, and taxes that may not be necessary for their domestic operations.

Challenge 7: Funding

Women find it more difficult to get funding than men do. The traditional routes companies use to finance their businesses, including banks and venture capitalists, are not as accessible to women. Even when they do get approved, they receive less money than men. One study found that, on average, companies owned by women receive $935,000 compared to the $2.1 million given to male entrepreneurs.

This doesn’t necessarily indicate that lenders intentionally avoid lending money to women-owned businesses. Venture capitalists tend to give money to business owners within their circles, such as alumni from their university and business associates. Since networking opportunities are already a challenge for female entrepreneurs, they’re less likely to find lenders within their own existing groups.

Images by Loanspark

The Solution?

Money may not be the answer to every problem, but it does help women entrepreneurs deal with these challenges in several ways. In some cases, funding covers specific expenses necessary to operate the business. It also may increase cash flow so business owners can invest in the company to expand it. The U.S. Chamber of Commerce identifies access to funding sources and assessing capital as a priority for developing female entrepreneurs and encourages the growth of women-owned businesses.

Here are a few examples of how this can work:

  • Market saturation: Business owners can invest in market research and strategic marketing campaigns to expand their reach and generate sales. This may include social media campaigns, traditional marketing, and business expansion to attract more customers.
  • Social expectations: Access to funding gives female business owners a sense of security so they don’t feel pressure to conform to others’ ideas and can focus on building the business and keeping it solvent.
  • Networking: Business owners need money to pay for membership fees and conferences to meet like-minded entrepreneurs and build a support system. They may not feel comfortable spending this money if they’re worried about paying for materials and infrastructure to keep the business going.
  • Confidence: When women business owners can concentrate on their strengths, they also build confidence. Money can help make this possible. This can include taking classes to develop technical skills to help them manage or expand the business.
  • Work/life balance: Increasing cash flow opens doors for female business owners to hire employees so they can focus their energies on tasks that grow the business. These employees may run the day-to-day operations, manage marketing campaigns, or participate in research and development.
  • Market Access: Giving women access to funding creates more opportunities for them to expand into additional markets that can require training, licensing, group membership, and more.

How Loanspark Can Help Women-Owned Businesses

Loanspark’s co-brand business lending as a service helps support women-owned businesses in several ways. The service allows businesses to offer lending solutions to their customers under their own brand. It’s an efficient and cost-effective way to build stronger connections with customers and capture more sales.

Access to Funding

This supports their women-owned business customers by giving them access to funding that might not be available through other channels. Unlike a big bank, Loanspark has more flexibility when making lending decisions. It can complete the process much more quickly so customers can get the products and services they need to keep the business running. All of this happens at no cost to them.

Business Expansion Opportunities

If you’re a woman who owns a business, you can use this service to expand your operation without investing resources in developing a platform. Loanspark handles the technology, licensing, compliance, and support so you can focus on what you do best: running the business.

Income Generation

Not only are you offering a valuable service to your customers, but you’re also generating a more consistent revenue stream and creating cross-selling opportunities. Your customers won’t have to stop in the middle of the purchase to secure funding or tie up the cash they can use for other purposes. Best of all, Loanspark handles all of the paperwork and submissions, so you’re free to focus on your business.

Networking Options

If you’re a female business owner doing business with a company that partners with Loanspark, you’re creating more opportunities for yourself. You can buy from your vendor without tying up your cash or losing time to potentially futile attempts at acquiring a loan. At the same time, you know your vendor values your business and is offering you the support you need when you need it.

The Loanspark Difference

No matter what you sell to your customers, you can leverage Loanspark’s expertise and experience to benefit your business and female-owned business customers. We can set up the entire process in as little as 14 days. This includes setting up a customer portal, online application, and call center for sales and support.

Female-owned businesses need access to funding, and Loanspark gives you a way to strengthen your customer base by allowing that access. This is why everyone needs a Loanspark. All you have to do is tell your customers about the exciting new service you’re offering.

Reach out to us today to find out how we can enhance your business.

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