It is a misconception that women entrepreneurs do not get SBA loans. So why aren’t more women applying?

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Studies by the US Small Business Administration show that women entrepreneurs are much less likely to apply for a small business loan through the SBA than men, although statistically speaking they are just as likely to be approved. According to a study by the Kauffman Foundation, female entrepreneurs rely more on personal and internal resources rather than external funding compared to male entrepreneurs.

Abigail Gonzalez, economic development specialist for the Houston division of the SBA, set the record straight to debunk the myth that women are not likely to be approved for loans. Gonzalez also discussed the many free programs the SBA offers to help all entrepreneurs, especially women, start their businesses.

Can you start by explaining SBA loans and why they are so useful for small businesses?

The SBA, as a federal agency, has a variety of resources for anyone looking to start a business. The SBA has SBA guaranteed loans that are available to anyone looking to start a business, expand a business, or perhaps export a service or product. These are used by participating SBA lenders. So, the SBA does not provide the money directly to the applicant, but the small business owner can apply through a lender to access an SBA loan.

SBA loans can be used for almost anything, including working capital, constructing a new building, or purchasing a new business. What we are doing is reducing the risk to the lender to make it easier for small businesses to access capital. This makes it easier for small business owners to obtain loans.

The SBA recently concluded a study to determine whether or not women were less likely to be approved for SBA loans. What can you tell us about this study and its findings?

We looked at the past 10 years of lending in Houston to see if the common view that women did not get financing for their businesses was correct. So what we wanted to do was look at our data to see if women are receiving SBA funding. Does SBA funding equitably represent the proportion of businesses owned by women? And is there room for growth or for change?

Research indicates that women aren’t less likely to be approved when they apply, but they don’t apply as much. Because another data point they looked at in another research study indicated that women are less likely to apply for loans and are more likely to depend on personal savings and other resources rather than to apply for loans.

Our aim here is to empower women who are looking to access a loan so that they do not read certain headlines that may imply that women are not receiving any funding. Women do not receive enough funding to reflect the number of businesses owned by women. But it is not because they are denied. It is because they are not applying.

Why do you think women are statistically hesitant to apply?

I think it can be a variety of things. On the one hand, it can seem a little intimidating looking for a loan because there are so many anecdotal stories that say women don’t get the funding. Or because a lot of small businesses owned by women are businesses created out of necessity, or because it’s a sole proprietorship and it’s a one-woman show.

We spoke to a small business owner here in Houston, Ana Rojas, Founder and CEO of Orolait, a Houston-based breastfeeding clothing line. She was able to share her own story of reluctance to apply for loans.

She said that initially, when starting her business, she also relied on savings and favors from her social network to do things like build her website. What I thought was really important was that she said loans for her was a very scary idea. Because if you are afraid that you will not be successful, or if you are afraid of owing someone money, it sends a much bigger message to your worth as a person and your ability to manage a business. business.

It wasn’t until she took the time to talk to a lender to see what her options were that she learned she could do it. It wasn’t something that would be terribly intimidating – this great, frightening occasion. She got the information she needed and ultimately was able to secure funding through the SBA Express program.

Going back to your original question, I think part of it was just reluctance and not being fully aware of the resources available. I think with any big step in life or entrepreneurship, you have to get the right information and make a plan on how you’re going to access it.

If someone is denied a loan for whatever reason, what does the SBA do? What other resources does the SBA offer?

The SBA will help you determine what you need to do to get the loan. They will say, “OK, you have to work on your credit score or save a little more so that you can get a bigger injection of equity in this loan.”

It’s about having a plan, establishing it, and then getting the loan you need to start or grow your business. We have SBA approved and SBA funded SBA resource partners to provide free advice to small business owners including Small Business Development Centers, SCORE Houston, and Women’s Business Centers.

So an entrepreneur can turn to one of these resource partners for totally free advice on a business plan or marketing strategy, or just to talk about a business idea. They can also approach these resource partners to discuss their financing options, find out what options are available, and find out where they stand in terms of what they need to do to prepare for a loan. We always recommend speaking to a resource partner before speaking to a lender, so that they are better prepared to speak to a lender and answer questions about their business and even present a business plan.

So the SBA provides a lot of free resources that a lot of people don’t know about and actually pay for through consultants?

A lot of people don’t think about the fact that we have resource partners who offer free advice. These resources are completely free, they are already paid for by taxpayers’ money. So there’s no need to go out and pay hundreds of dollars for those same services that are already available to small businesses here in Houston and across the country, completely free of charge.

What would you say to a female entrepreneur who is apprehensive about taking her first steps?

I would say, first step, to work with our research partners with our Women’s Business Center if you are more comfortable working with a woman who is a consultant. Or we have our other small business development center, and you can work with them to learn more about your options for preparing your business plan and financial projections.

My number one tip is that you don’t have to do it alone. The SBA and resource partners are here to help you access these loans and to prepare you. So if anything, that would be the first point of my first recommendation for any small business, but especially women who are considering lending but may not be sure exactly where to start or

My second tip is to make sure you don’t ask for less than you need. Research and even anecdotal data have shown that sometimes women ask for less money than they need. We want to share this post that you are no less likely to be approved than a man, so ask for the money you need and go for it and be as prepared as possible.

Are there other useful programs that we haven’t covered?

The SBA has an Ascent tool. It is a free platform for women entrepreneurs only, and it offers many educational tools for women who want to develop or improve their business. I would recommend women and all the companies out there so they can do some online learning on their own.

I think a lot of people still ignore some of the resources that we have because they will automatically think of disaster loans when they think of us. But the SBA offers disaster free loans that can help you start or grow your business. We want to make sure everyone is aware of this.

Resources for the programs mentioned in this story can be found at the following websites:

Small Business Administration: www.sba.gov

SBA Ascent Tool: www.ascent.sba.gov

SBA Women’s Business Center: https://www.sba.gov/business-guide/grow-your-business/women-owned-businesses

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