Starting, running and growing a woman-owned business is no small feat. One of the biggest hurdles you’ll face is securing the funds needed to bring your vision to life. Whether you’re launching your business or looking to scale up, the journey to find the right funding can feel overwhelming. 

Here’s the reality—only 2% of all venture capital funding went to women-owned businesses last year, and women entrepreneurs still receive, on average, about $5,000 less in financing than their male counterparts. Add to that the fact that women are nearly twice as likely to rely on personal savings to fund their businesses, and it’s clear that the playing field still isn’t level. But you’re not alone in this journey. Countless women business owners are navigating the same challenge, and the good news is there are funding options out there tailored just for you.

Each option comes with its own benefits and trade-offs, and the key is finding the right one for your unique path. This guide is here to break down five popular ways to finance a business, provide tips for success, and take the mystery out of what can sometimes feel like an uphill process.

This is about more than just finding money; it’s about empowering your vision, growing your impact, and showing what women-owned businesses can achieve. Let’s get started on turning your goals into thriving realities.

1. Bootstrapping: Investing in Your Own Business

Bootstrapping, like the name implies, is all about pulling yourself up by your bootstraps—using personal savings and the revenue your business generates to fuel growth. This approach is a common path for startups in their formative years, especially for those without huge upfront costs. In fact, 77% of small businesses rely on personal funds for startup capital, and women entrepreneurs are no exception. Over 60% of women-owned businesses use bootstrapping as their primary funding method, allowing them to maintain full control and avoid the hurdles of securing outside investment.

By reinvesting profits directly back into the business, you can gradually expand without chasing external capital, which can be essential for those who prefer to grow at their own pace.

Best for:

Bootstrapping is ideal for women entrepreneurs with a solid savings cushion who value maintaining control and want to steer their business without external pressures. It’s especially suited for businesses with low startup costs, like service-driven enterprises, online ventures, or lean startups that can scale organically over time. Bootstrapping also empowers women business owners to build sustainable foundations, with the freedom to pivot as they see fit.

Pros

• Full Control: Using your own money means you’re the captain of your ship. You get to steer every decision, from strategic initiatives to the day-to-day grind, without the interference of investors or lenders.
• No Debt: You won’t have debt hanging over your head or have to fork out interest payments, which significantly lightens your financial load and reduces monthly overheads.
• Ownership: Every bit of your business is yours. You keep 100% ownership, meaning all the profits flow directly to you, giving you the freedom to lead your business in whichever direction you fancy.
• Aligned Interests: When it’s your money on the line, your personal and business goals naturally align. This often leads to sharper decision-making and a more intense focus on the success of your venture.
  

Cons

• Limited Resources: Your fund pool is limited to what you personally have saved. This can bottleneck how fast you can develop and scale. You might find big opportunities slipping by because the capital isn’t there.
• Financial Risk: You’re putting your personal financial well-being on the line. If the business tanks, it’s not just your company’s finances at stake; it’s your savings and future security too.
• Slower Growth: With limited funds, your growth trajectory might be slower than competitors who tap into external funding to scale rapidly and dominate the market.
• Emotional Stress: Balancing personal and business finances can be an emotional rollercoaster. The constant pressure of risking your savings can cloud your judgment and impact your emotional well-being.
  

Tips for Successful Bootstrapping

1. Lean Operations: Keep your operations light. Cut down on unnecessary costs by outsourcing, leveraging free or inexpensive business tools, and running a lean team from the outset.
2. Reinvest Wisely: Ensure profits are funneled back into areas of your business that promise high returns. Be strategic about where you reinvest to spur growth and improvement.
3. Network and Leverage Resources: Surround yourself with a network of mentors, advisors, and like-minded peers. Tap into the myriad of free or low-cost resources available through business incubators, online communities, and local entrepreneur groups.
4. Monitor Finances Closely: Stay on top of your cash flow and craft a robust financial plan. Regularly review and adjust your budget to safeguard your financial health and ensure you remain solvent.
   

2. Bank Loans

Bank loans have long been a cornerstone of business financing, providing structured support that can be essential for fueling growth. If you’re looking to take your business to the next level, banks offer a range of loans tailored to various needs, including term loans, lines of credit, and SBA loans. These options can cover everything from purchasing new equipment and expanding into new markets to managing everyday expenses. Interestingly, only about 23% of women-owned businesses successfully secure bank financing compared to 34% of male-owned businesses, highlighting the need for targeted support and resources for women entrepreneurs in accessing traditional capital.

Best for:

Bank loans are best suited for businesses with a proven track record. If you have strong credit, consistent revenue, and a well-prepared business plan, you’re in an ideal position to qualify. However, women-owned businesses often face higher hurdles in securing loans; nearly 58% of women rely on personal savings or self-financing, given the challenges of traditional financing. So, while bank loans can be an incredible resource for established businesses, startups or those with limited credit history may find bootstrapping or alternative funding options a more viable initial step.

Here are some common uses for these loans:

1. Expansion: Thinking about opening a new location, adding new products, or diving into new markets? Bank loans can provide the capital you need to make it happen.
2. Equipment Purchases: Need machinery, technology, vehicles, or other essential equipment? These loans can fund those critical acquisitions to enhance your operations.
3. Working Capital: Managing day-to-day operations like payroll, inventory, and utilities can be smoother with the right financial support.

Pros

• Flexible Options: Banks cater to various needs by offering short-term loans, long-term loans, lines of credit, and SBA loans. This flexibility means you can find just the right type of loan for your situation.
• Large Sums: If you’re eyeing a significant project or a large purchase, banks can provide substantial amounts of capital that you might not otherwise access.
• Structured Repayment: Bank loans come with clear repayment terms and schedules. Fixed interest rates and monthly payments provide predictable budgeting, making your financial planning a lot easier.
  

Cons

• Stringent Requirements: Banks don’t make things easy. You need a strong credit score, a detailed business plan, collateral, and sometimes even personal guarantees. This can be a significant hurdle for newer businesses or those with shaky credit histories.
• Debt Accumulation: Remember, taking on a bank loan means adding debt that must be repaid with interest. This can strain your cash flow and financial stability, especially if the business hits a rough patch.
• Lengthy Process: The journey from application to approval is often slow and filled with paperwork. Gathering necessary documentation, submitting your application, and waiting for a response can take weeks or even months.
  

Tips for Securing a Bank Loan

1. Prepare Thoroughly: Bring your A-game with a comprehensive business plan that includes detailed financial projections, market analysis, and your strategy for using the funds. Have all your financial documents—tax returns, balance sheets, income statements—ready to go.
2. Improve Credit Score: Your credit score can make or break your application. Pay off outstanding debts, correct any errors on your credit report, and avoid taking on new debt before applying.
3. Offer Collateral: If you can offer collateral like property, equipment, or inventory, you’ll increase your chances of getting approved and may secure more favorable terms.
4. Explore SBA Loans: Small Business Administration (SBA) loans are backed by the government and usually have more flexible terms. If traditional bank loans seem out of reach, SBA loans might be your best bet.
5. Understand Your Need: Be crystal clear about how much capital you need and exactly what you’ll use it for. Misjudging the amount can either leave you financially strained or short of necessary funds.
   

3. Grants: For Women-Owned Businesses

Ladies, talk about grants—those golden opportunities for non-repayable funding from governments, non-profits, and organizations designed specifically to power the dreams of women entrepreneurs like you. Women-owned businesses face unique challenges, from limited access to capital to balancing underrepresentation in certain industries. That’s why a range of grants exists solely to support women-led ventures. In fact, with over 300 grants currently available for women entrepreneurs in the U.S., there are targeted funds ready to help bridge that gap.

Best for:

Grants are ideal for women entrepreneurs who want to relieve financial strain without the pressure of repayment. If you’re ready to grow your business and expand your impact, these funds can provide essential support without adding debt. Many grants specifically target women-led businesses in tech, arts, social impact, education, and sustainability. Whether you’re looking to develop a new product, ramp up marketing, hire key talent, or fund R&D, there’s likely a grant tailored to your industry and mission.

The key to securing a grant? Clearly articulate your vision, demonstrate the potential impact of your work, and showcase how your business aligns with the funder’s mission.

Pros

• No Repayment: This is essentially no-strings-attached money. Think about it—no monthly payments, no interest rates. This isn’t a loan; it’s an investment in your potential.
• Recognition: Winning a grant isn’t just about the money. It’s about the credibility it brings. When you’ve been backed by a reputable organization, it amplifies your business’s prestige among customers, partners, and potential investors.
• No Equity Dilution: Keep full control of your business. Unlike venture capital or angel investments, grants don’t require you to give up a stake in your company. Your vision remains your own.

Cons

• Competitive: Here’s the tough reality: everyone wants a piece of the pie. The competition is fierce, and not every high-potential business gets the funding.
• Specific Criteria: Grants come with strict guidelines. You need to meet specific eligibility requirements and ensure your proposed use of funds aligns perfectly with the grant’s objectives.
• Time-Consuming: Brace yourself for a meticulous application process. Detailed proposals, business plans, budgets, and possibly extensive documentation and reporting will be required.
  

Resources for Women-Owned Business Grants

Finding the right grant takes effort. Here are some platforms that can guide you:

• Grants.gov: A treasure trove of federal grants across various industries. Start here to find public funding opportunities.
• Amber Grant: Named after a young entrepreneur, this grant awards $10,000 monthly to women-owned businesses. It’s one of the most accessible options with a straightforward application.
• 37 Angels: They offer hands-on boot camps and an accessible investment network, all led by former entrepreneurs who get it. Perfect for finding funding or learning angel investing with hands-on mentorship.
• Cartier Women’s Initiative: An international competition providing funding and support to scale your business. If you’ve got a solid business plan, it’s worth entering.
• Tory Burch Foundation Fellowship Program: Offers fellowship grants, educational resources, and networking opportunities. Plus, a community of like-minded women to support you.
  

Tips for Successfully Securing a Grant

1. Do Your Research: Dive deep into the grantmaker’s mission and align your application with their priorities. Know what they’re looking for and tailor your proposal accordingly.
2. Prepare a Strong Proposal: Your proposal should be a roadmap of your business goals and how the grant will help you get there. Detail everything—budgets, timelines, success metrics.
3. Seek Feedback: Don’t go it alone. Get input from mentors, peers, or professional grant writers. Fresh eyes can make a big difference.
4. Stay Organized: Deadlines, documentation, guidelines—keep track of everything. Missing a detail can disqualify your application, no matter how strong.
5. Consider Multiple Grants: Don’t put all your eggs in one basket. Apply to multiple grants to increase your chances of securing funding.

Taking these steps might feel overwhelming, but remember, the journey towards securing a grant can transform your business. Keep pushing forward, stay resilient, and continue to believe in the impact your business can make.

4. Venture Capital: Supporting Growth

Venture Capital (VC) isn’t just funding—it’s a launchpad that can catapult your startup to new heights. If you’re a founder with bold ambitions in technology, fintech, or biotechnology, then you know that rapid growth demands resources beyond bootstrapping or traditional loans. Venture capital provides both substantial funding and strategic guidance, making it the ideal choice for startups with the potential to disrupt industries. Despite VC’s promise, only about 2% of all venture funding went to women-owned businesses last year, underscoring the ongoing gender disparity in high-growth capital access.

Best for:

Venture capital is best suited for businesses primed for explosive growth but needing financial firepower to take big risks. If you’re an innovator with plans to scale aggressively, break into new markets, or invest heavily in R&D, VC might be your path forward. VCs are searching for startups with transformative potential—businesses that have a compelling value proposition and a scalable model capable of reshaping industries. For women entrepreneurs, VCs focused on diversity and inclusion offer valuable support, helping to close the funding gap and champion women-led innovation.

Pros

• Large Capital: Imagine having the financial power to take your operations to the next level. Venture capital provides the kind of substantial funding that can turbocharge growth—perfect for those capital-hungry ventures that need fuel to fire up.
• Expertise: VCs aren’t just writing checks. They’re bringing their A-game—offering mentorship, strategic insights, and invaluable industry connections. Picture doors swinging open to new customers, potential partners, and top-tier talent because of their networks.
• Rapid Growth: With VC funding, you’re not just inching forward; you’re leaping ahead. It can accelerate scaling operations, broaden your product offerings, and help you penetrate new markets faster than you could imagine.

Cons

• Equity Dilution: Here’s the catch—you’ll need to part with a slice of your business. Future profits are shared, and there’s a potential for sacrificing a bit of control over your company.
• Investor Control: Investors come with opinions and a keen interest in your decisions—from strategic directions to key hires and financial management. This might translate into less autonomy for you and your founding team.
• High Expectations: Ready to sprint? VCs are, and they expect you to do the same. There’s intense pressure to deliver rapid growth and robust returns on their investment. Not hitting those milestones can lead to friction with your investors.
  

Tips for Securing Venture Capital

1. Develop a Robust Business Plan: Present a captivating story with your business plan. Outline your market opportunity, solid business model, growth strategy, and financial forecasts. VCs are looking for their investment’s path to significant returns and yours should be crystal clear.
2. Build a Strong Team: Beyond ideas, it’s about your people. VCs are betting on your team’s experience, cohesion, and vision. Demonstrate your capability—because a strong team ups your investment appeal.
3. Show Traction: Do you have proof of concept? Demonstrated market traction, customer uptake, and revenue growth make a compelling case for VC. They are more inclined to bet on something that’s already showing promise.
4. Network and Seek Referrals: Relationships matter. Within the venture capital ecosystem, connections can lead to the right introductions. Attend industry events and meetups, and consider startup accelerators to get your foot in the door.
5. Be Prepared for Due Diligence: The scrutiny is real. VCs will dig deep with due diligence before committing. Tackle it head-on with comprehensive details about your business operations, financials, legal matters, and market positioning ready for review.
   

5. Crowdfunding

Ever felt like your groundbreaking idea or innovative product just needed a bit of a push to get off the ground? Enter crowdfunding—a game-changer that taps into the vast potential of the internet to gather small contributions from a large number of people using specialized online platforms. This approach breaks down the barriers that traditionally kept entrepreneurs from reaching potential backers, making it easier than ever to pitch your ideas directly to the public. Thanks to platforms like Kickstarter and Indiegogo, crowdfunding has become a cornerstone of modern capital-raising strategies.

Best for:

Crowdfunding could be your game-changer if you’re an entrepreneur facing financial hurdles. With a strong network or an innovative product destined for success, this platform is perfect for you—whether you’re launching consumer goods that need early excitement, creative projects like films and art craving passionate support, or a startup eager to validate market demand.

For community-focused initiatives, non-profit causes close to your heart, or groundbreaking tech inventions, crowdfunding can be your lifeline. Social change and global connectivity start with small contributions, and crowdfunding brings them together into something powerful.

Types of Crowdfunding

1. Reward-Based Crowdfunding: This is the crowd favorite! Backers contribute to your project and in return, they get rewards or perks like early versions of the product, exclusive merchandise, or special experiences. Think Kickstarter or Indiegogo.

2. Equity Crowdfunding: For those looking to give back more than just a thank you. Here, investors receive shares of your company in exchange for their financial contributions. It’s a regulated process similar to traditional equity financing. Check out SeedInvest or Crowdcube.

3. Debt Crowdfunding: Also known as peer-to-peer lending. This is where businesses borrow money from numerous individuals and repay them with interest over time. LendingClub and Funding Circle are prime examples.

4. Donation-Based Crowdfunding: Perfect for charitable causes, community projects, or non-profit funding. Fundraisers collect money without offering any financial returns or rewards. Platforms like GoFundMe and JustGiving lead the way here.

Pros

• Marketing Perks: Your campaign can create buzz and significantly boost brand awareness. A successful campaign might even catch the media’s eye, building a loyal customer base before your product hits the market.
• Real-Time Feedback: Direct engagement with backers can offer invaluable feedback, helping you refine your product based on user input.
• Presales: Gauge product demand and secure early sales. This validation can provide crucial cash flow before diving into full-scale production.
• Lower Financial Risk: By validating your idea and securing funds upfront, you can mitigate many financial risks associated with launching a new product.

Cons

• Time-Intensive: Running a campaign can be incredibly laborious. From creating compelling content to managing updates and engaging with backers, it demands significant effort.
• Outcome Uncertainty: No funding goal is guaranteed. If you don’t attract enough interest, your time and effort could go to waste.
• Public Exposure: Your ideas are out there for all to see, including competitors. This exposure increases the risk of theft or rapid replication.
• Platform Fees: Crowdfunding platforms often take a cut, ranging from 5% to 10% of the total funds raised. Plus, there are usually payment processing fees on top of that.
  

Tips for a Successful Crowdfunding Campaign

1. Craft a Compelling Story: Tell potential backers your vision, goals, and the problem your product solves. A great story resonates and inspires support.
2. Create Engaging Content: High-quality images, videos, and detailed descriptions are your friends. Showcasing your product’s functionality and benefits through visuals can make a huge impact.
3. Set Realistic Goals: Establish achievable funding targets and realistic delivery timelines. Being transparent about risks and challenges builds trust.
4. Leverage Social Media: Use social media to build a community, engage with supporters, and spread the word. A solid social media strategy is crucial for reaching a broader audience.
5. Offer Attractive Rewards: Design enticing rewards that match contribution levels. Limited edition items, personalized perks, and early access can incentivize higher contributions.
6. Maintain Communication: Stay in touch with your backers. Regular updates about progress, milestones, and challenges will foster a strong relationship with your supporters.
   

Other Ways to Fund Your Business

We all know that securing the necessary funding when starting or expanding a business can feel like an insurmountable challenge. But don’t worry—there are various avenues to explore beyond the intimidating realm of traditional bank loans. Consider Angel Investors and Private Equity, both offering unique benefits and considerations tailored to meet your specific needs.

Angel Investors

Imagine finding someone who believes in your vision just as much as you do. Angel investors are affluent individuals who provide capital to startups, usually in exchange for equity ownership or convertible debt. If you have a promising business idea but feel stuck because of financial constraints, angel investors could be your ticket to growth.

Advantages of Angel Investors:

• Flexibility: Unlike venture capitalists, angel investors often skip the red tape and are more willing to chip in smaller amounts during those crucial early stages.
• Mentorship: You’re not just getting funding; you’re gaining a mentor. Many angel investors bring a wealth of industry experience and can open doors you didn’t even know were there.
• Quick Decision-Making: Need to seize a sudden market opportunity? Angels can make swift investment decisions, allowing you to act quickly.

Considerations:

• Equity Stake: Taking their money usually means giving up a slice of your company’s pie, which can dilute your control over business decisions.
• Varying Levels of Involvement: Some might want to be deeply involved in your day-to-day operations, while others may adopt a hands-off approach. It’s crucial to find an angel whose involvement aligns with your vision for the company.
  

Private Equity

Private equity could be your answer if your business feels stuck and you’re ready for growth but feel it’s like climbing Everest without gear. Think of private equity firms as those investors who bring significant amounts from institutional and high-net-worth individuals and get deeply involved in your business. They provide large capital injections, top-notch expertise, and a laser focus on growth and profitability. But be prepared to share control and face intense oversight—it’s high stakes, but for the right business, it can be transformational.

Advantages of Private Equity:

• Large Capital Injections: These firms can give you the financial muscle needed for large-scale restructuring, expansion, or operational improvements.
• Expertise and Resources: They’re not just bringing money; they’re bringing strategic resources and industry expertise aimed at enhancing business performance and shareholder value.
• Focus on Growth and Profitability: Private equity drives a laser focus on growth metrics and profitability, turning your business into a lean, mean, revenue-generating machine.

Considerations:

• Loss of Control: With the substantial stakes they acquire, private equity firms often get a significant say in major business decisions, which can affect your autonomy as an original leader.
• Intensive Oversight: Be prepared for rigorous reporting standards and the pressure to meet strategic objectives set by the firm.
• Suitability: This funding method is suited for established businesses seeking transformative changes rather than early-stage startups.
  

Key Steps in Financial Preparation

1. Maintain Accurate Records

We all know keeping financial records can be daunting, but trust me, it’s a game-changer. Regularly updating your balance sheets, income statements, and cash flow statements can save you heaps of trouble. It’s not just about ticking a box; it’s about ensuring transparency and building trust with those potential investors or financial institutions who scrutinize every detail. Get this right, and you’re halfway there.

2. Develop a Robust Business Plan

Think of your business plan as the heart and soul of your enterprise. This isn’t just a document to stick in a drawer; it’s a living, breathing roadmap that outlines your objectives, market analysis, competitive strategy, and operational plans. When done right, it doesn’t just guide your growth; it sells your vision to potential investors, showing them that your business isn’t just viable—it’s compelling.

3. Set Clear Financial Projections

Let’s get real—no one wants to pour money into a black hole. You need to provide detailed financial forecasts that project your revenue, expenses, and profitability over the next three to five years. Remember, these numbers aren’t just for show. They should be based on realistic assumptions and prove that your business can scale and generate serious financial Returns. Investors need to see the potential, and clear projections do just that.

Conclusion

Whatever funding route you decide to go down, meticulous financial preparation isn’t a luxury—it’s a necessity. Accurate, up-to-date financial statements and records aren’t just good to have; they’re essential for attracting investors or securing loans. These documents give a transparent view into your business’s current health and future potential, which is precisely what potential investors and lenders look at when making their decisions.

Ultimately, the informed selection of a funding strategy can massively influence your growth trajectory and overall success. Don’t be afraid to engage with financial advisors, seek multiple perspectives, and choose a path that not only meets your financial needs but also aligns with your vision and values for the company. Take the time to think it through, and you’ll be in a much stronger position to secure the funding that will propel your business forward.

By addressing these key steps and thoughtfully considering your options, you’re setting your business up for long-term success. So, dive in, do the work, and watch how thorough financial preparation can be your ticket to growth and stability.

Interested in harnessing expert financial guidance for your business? Connect with FMS Advisory today to explore how our experienced CFOs and financial professionals can help propel your company forward. Whether you’re navigating growth phases, refining financial reporting, or strategizing for the future, we’re committed to providing tailored solutions that align with your business goals.