The following excerpt is from the staff of Entrepreneur Media’s book Finance Your Business. Buy it now from Amazon | Barnes & Noble | iTunes
In 2016, there were an estimated 11.3 million women-owned businesses in the United States — a 45 percent increase since 2007, according to The 2016 State of Women-Owned Businesses Report from American Express. This percentage increase exceeded the national average of business growth during the same time frame by five times. It also illustrated what we already know: Women entrepreneurs are having a tremendous impact on the small-business landscape nationwide.
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Yet to continue to be competitive and grow, these entrepreneurs have to find funding for their ventures. And, alarmingly, women entrepreneurs are increasingly being turned away by banks for small-business loans. Thankfully, they have other options, given the rise of technology-driven financial lending sources, such as online loans, peer-to-peer loans and crowdfunding.
Then there are government grants. While not widely known or used, these grants are another great option for women seeking extra funding for their business ventures. They just take a little more work.
Business owners often turn to grants because they’re not required to pay them back; essentially, you can look at grants as “free money,” although they come with stipulations. Also, understanding and navigating the grant process can be complex.
First, you have to research and find a grant for which you’re eligible. Then you have to understand the strict application and compliance guidelines you must meet to be eligible. You must devote time and energy to the lengthy application process, and then wait for approval. You have to compete with other businesses for the same pool of money. And finally, if you’re awarded a grant, you must report on how you used it. In a nutshell, you need to have all your ducks in a row, upfront and afterward.
Finding federal and state grants
Many business owners think federal grants are just a click away. We’ve all seen the ads promoting free federal money to start a business, but this is a huge misconception. While there are federal grants available in the areas of medical research, science, education and technology development, no such grants exist specifically for women-owned businesses. You may find grants funding projects that empower women, but such funding is often set aside for nonprofit corporations, not for-profit businesses.
When researching grants specifically for a woman-owned business, start at the state level. Most states offer grants for women-owned businesses in some capacity. Each state website has a business section where you can find grant and funding opportunities for women and minority-owned businesses.
Related: 5 Essentials for Raising Your Growth Round of Financing
Another great resource is the Minority Business Development Agency (MBDA). The MBDA is an agency of the U.S. Department of Commerce that assists minorities in establishing and growing their businesses. On its site, you can research grants and access links to state agencies that work with women-owned businesses for funding opportunities. The MBDA provides a list of state agencies here.
Private grants for women
To help in your search, here’s some information on a few private grants for women:
The Eileen Fisher Women-Owned Business Grant Program. Five grants are awarded annually. The businesses must be 100 percent women-owned and have founding principles of social consciousness, sustainability and innovation, plus be ready to move to the next phase of development.
FedEx Opportunity Knocks Small Business Grant Contest. Applicants are encouraged to share their visions to receive a portion of the $100,000 awarded in grants. Part of the judging involves the general public voting for the finalists, so participants may promote their businesses while garnering votes.
Idea Café Small Business Grant. The Idea Café is a free gateway that hosts different grants on its site. One grant is the Small Business Grant, which awards one $1,000 grand prize to a business with the most innovative idea. Visitors to the site vote for the winner.
InnovateHER: Innovating for Women Business Challenge. This business challenge is sponsored by the SBA’s Office of Women’s Business Ownership. The top three finalists split $70,000 in prize money for submitting ideas that have an impact on the lives of women.
Small Business Innovation Research. Eleven different federal agencies participate in this awards-based program, which incentivizes and enables small businesses to explore their technological potential.
Small Business Technology Transfer Program. The STTR program reserves a specific percentage of federal research and development funding to provide funding opportunities to small businesses.
Zions Bank — Smart Women Grants. This Utah-based bank’s grant annually awards $3,000 across six different categories, including business.
Applying for a grant
Once you find a funding opportunity, there are multiple steps required to apply. Here are a few tips to assist you:
- Make sure your business is eligible for the grant: Read the grant synopsis guidelines and eligibility requirements.
- Create a checklist for all the required documents.
- Follow the rules. Grant applications can be very technical. It wouldn’t hurt to have a second (or even third) set of eyes review the application to ensure you have provided all necessary documents.
- Start early. Since the application process can sometimes be long, it doesn’t hurt to get a jump on things.
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If you find the grant application process too daunting or lengthy, online lender Kabbage is committed to supporting small-business loans for women business owners. Because its application process is fully automated and online, Kabbage can quickly provide small-business loans of up to $100,000. It uses simple, meaningful revenue data from your business to approve your loan — not elaborate documentation that takes extensive time to gather.