Funding a Woman-Owned Business

Finding funding for a small business isn't easy. When you're a woman business owner, it can be even more challenging. By some accounts, roughly 30 percent of businesses are woman-owned, but their businesses get a paltry 3 percent of venture capital dollars.

How can you up your odds of landing the capital you need for your business? The Center for Women's Business Research identifies the four key traits needed to land traditional bank financing: credit, collateral, character, and capacity. In other words, if you have a good credit rating, a track record in business and good references, business assets you can pledge against a loan, and the capacity to use the loan to generate more business income, you're in good shape. Since many businesses can't say they have all four of these, finding funding usually involves some creativity.

Rather than simply applying for a loan at your nearest bank or pitching angel investors or venture capital firms in general, target institutions with a mission of funding women-owned businesses. Here’s how to get started.

Resources

A great place to start learning about good funders is the Small Business Administration's Office of Women's Business Ownership. The office operates more than 100 Women's Business Centers around the country, staffed with SBA employees and volunteers who specialize in helping women-owned businesses succeed.

There are also nongovernmental organizations such as Springboard Enterprises, which may be able to help. Springboard's mission is to connect women business owners with funders.

Certification

There may be advantages to becoming a certified Women's Business Enterprise, as this may help you qualify for government contracts. Having a signed contract for business in hand is counted as collateral by some funders, so this could help your funding quest. Many governments have requirements that a certain percentage of their contracts be awarded to women- or minority-owned businesses, so they must find qualified companies to do the work.

Microloans

If you don't need much money, $35,000 or less, to get your business going, consider pitching a microfinance organization. The majority of their loans go to women, many of whom are starting or running one-person businesses. Major microfinance lenders include Accion and Kiva. The latter just recently broadened its scope to include American businesses.

Angel Investors

There may be women angel investors within many angel groups whom a woman business owner could target. Check the Web sites of angel groups and scan their "team" list to see if women are involved. There's also one angel group focused entirely on women business owners: Seraph Capital Forum in the Seattle area.

Venture Capital

A handful of VC funds specifically target women business owners. Examples include Fund Isabella (its motto: "We're the New Girl Network!"), Women's Venture Fund, and Texas Women Ventures Fund. As with angel groups, you can also scan team lists to target women venture capitalists at other firms.

Business reporter Carol Tice contributes to several national and regional business publications.