Compared to men entrepreneurs, women business owners face more challenges when getting approved for business funding. Since access to business capital is necessary for business growth, this is a serious problem.
Disadvantages for Women Entrepreneurs
Women get approved for business loans less often as compared to men. Women entrepreneurs get approved for only 16% of all conventional business loans made in the United States every year.
Women only get 80% of the capital men do. This means, to make new products, hire employees and expand their business, women have 20% less capital to use. No matter what type of loan women are applying for, they get smaller loans.
Apart from receiving fewer and smaller loans, women also get more expensive ones. Women pay higher APRs (annual percentage rates) for almost all types of loans.
Below you can find the reasons why women entrepreneurs get approved for fewer and smaller loans with higher rates.
- Lower Credit Scores
The average credit score for men is 630, and for women, it is 621. In fact, there is even a greater difference between credit scores received by men and women entrepreneurs. Credit scores of nearly 1/5 of male entrepreneurs don’t exceed 620, which is true of almost 1/3 of female business owners. When it comes to small business owners, on average, men have a credit score of 645 and women have 629.
- Lower Revenue
On average, women make 30% less in annual revenue than men business owners. The number of men business owners making $1 million is almost double the number of women businesses owners with the same revenue.
- New Businesses
Many business funding providers take into account the number of years you’ve been doing business so to be sure you’ll be able to pay back the loan. Women own younger businesses, so they are likely to get approved for business capital with difficulty.
Though women entrepreneurs are at a disadvantage, unlike men entrepreneur, alternative online lenders can be the right solution to this problem. To get capital for your business without challenges consider turning to firstamericanmerchant.com (FAM), a reputable business loan provider and payment processor that specializes in the high risk sector.