How to access business finance as a female founder

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Closing the gender funding gap and how to access business finance as a female founder

New research shows that women-led businesses receive less funding than their male counterparts, but solutions exist to bridge the gap.

How to access business finance as a female founder

New research by independent SME funder Bibby Financial Services (BFS) has found that 66% of women business leaders believe that banks have become more hesitant to lend to businesses like theirs, while 57% say that it is more difficult to access external finance than it was six months ago. 

BFS’ survey also found that 61% of female founders believe that the current funding landscape is killing entrepreneurialism, compared to 54% of male founders. 

Does this data reflect institutional financial bias? Or is there a more complex story to be told?

Whatever the cause of this discrepancy, boosting investment in women-led businesses is not just an ethical imperative, but a financial one too: up to £250 billion in value could be added to the UK economy if women started and scaled new businesses at the same rate as UK men.

Against this backdrop, how can women founders go about funding their business for success?

Closing the gender funding gap 

According to the 2023 Investing in Women Code report, the percentage of women-led businesses or all-female founder teams seeking funding stands at a much lower proportion compared to male-led businesses and all-male founder teams.

The report found that in 2021, 13% of women-led businesses made applications for a standard loan or overdraft, compared to 51% of male-led businesses and 36% of mixed gender businesses. 

Yet, loan approvals for both women and men are broadly the same at around 90% — suggesting that the issue lies not in approval rates, but in the application rates themselves. This highlights a potential lack of awareness about funding options, greater aversion to risk, or perhaps a hesitation among women founders to apply due to perceived biases or a fear of rejection.

Weighing up the various funding options and taking a well-considered risk could deliver significant returns. 

Enlisting the help of an experienced finance broker can significantly improve your chances of success. The NACFB Membership Report 2024, for example, found that 32% of small businesses successfully funded in 2023 thanks to brokers had previously faced capital refusals elsewhere, underscoring their crucial role in advocating for firms.  

A trusted broker like Hilton Smythe can assist with:

  • Determining the ideal type of financing for your needs (loans, lines of credit, investor funding, etc.)
  • Providing access to alternative lenders 
  • Compiling compelling funding proposals, including financial models, pitch materials, and presentation documents
  • Negotiating favourable interest rates and loan terms on your behalf
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You may wish to look at initiatives that are specifically targeting female entrepreneurs including grants, credit lines, and mentoring programmes. 

The UK, for example, has allocated £1 billion under its Start Up Loan Scheme to support new businesses – 40% of which has gone to female founders. 

Amongst high street lenders, NatWest prides itself on its favourable loan and finance options to help female-led businesses expand. In 2023, the bank issued a €500m issuance for a women’s social bond, which has led to over 14,500 loans to women-led businesses being made across the UK, and the Group is on track to exceed its target to lend £2bn to women-led businesses by 2025.

Meanwhile, amongst alternative lenders, 365 Finance advertises flexible business loans for women with a 90% approval rate, while SWIG Finance offers business loans for women based in the South West of England. 

Research conducted by BFS in 2023 found that four in ten (43%) female business leaders say they don’t have the cashflow they need to grow, compared to 29% of their male peers – a 14 percentage point gap.

High interest rates in recent times have impacted profit margins and cashflow capabilities, with nearly 48% of surveyed female business leaders expressing concerns about their ability to repay loans, compared to only 32% of male respondents. 

Cashflow can be improved through various means, such as leasing rather than buying assets, offering discounts for early payments, negotiating lower prices with suppliers (e.g. by forming a buying cooperative), inventory optimisation, increasing pricing, and using a high-interest savings account. 

Cashflow challenges can also be at least partly rectified through merchant cash advances, invoice finance/invoice discounting, or a straightforward cashflow loan. 

Don’t let funding hold you back. Talk to a trusted broker at Hilton Smythe about financing solutions for women-led businesses.

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