It’s been a challenging couple of years for women in business (in 2020, women experienced a “she-cession”), and female business owners were no exception. Unsurprisingly, the impact of Covid-19 was substantial; the National Women’s Business Council (NWBC) says the number of women-owned small businesses fell by 25 percent in the early days of the pandemic. Fortunately, it looks like that downturn is in the past. The Enterprising Investor says, “The future is female” and points to pre-pandemic statistics that show women-owned businesses (particularly startups) “may be bigger than we think.”
And the latest statistics we have about female business owners from the NWBC Report show they own 42 percent of all businesses in the U.S. (that’s about 13 million female entrepreneurs), employ 9.4 million people, and earn $1.9 trillion in revenues. Even the female business owners who had no employees had total revenues of more than $229 billion.
Benefits of owning a business as a woman
There are many reasons a woman can benefit from owning a business. Perhaps most importantly, it gets you away from the glass ceiling that still limits how much money women in business can earn and how high they can rise at many corporations in the country.
Getting certified as a woman business owner
For many women, entrepreneurship is the means to a limitless future. So how can you take advantage of that? One way is to get certified. If you’re a female business owner, getting your business certified offers several benefits, including increasing your company’s visibility, gaining access to opportunities you might not otherwise have, and securing the chance to win corporate or government contracts.
There are two types of certification as a woman-owned business:
Women’s Business Enterprise (WBE): This designation is used by private sector organizations and many state and local governments seeking women-owned companies to conduct business with.
Women-Owned Small Business (WOSB): This designation is used by federal government agencies looking for women-owned companies to do business with. The Economically Disadvantaged Women-Owned Small Business (EDWOSB) is a subcategory of WOSBs for those that meet the criteria for being economically disadvantaged.
Decades ago, the federal government set a goal of awarding at least 25 percent of federal contracts for small businesses and five percent for female business owners. Women business owners can, of course, compete for any type of federal government contracts. But some contract opportunities are only available to female business owners.
If you want to compete for federal contracts, check out the Small Business Administration’s (SBA) WOSB (Women-Owned Small Businesses) federal contracting program. As noted above, certain women entrepreneurs may also be eligible to be certified as Economically Disadvantaged WOSBs.
The certification process for WOSBs and EDWOSBs has recently changed, making it “easier for qualified small businesses to participate” in the program by improving the customer experience, according to the SBA.
Find out about the free certification process by going to this SBA website. Learn more about your options or get answers to FAQs. And there’s a lot more information in the beta.Certify Knowledge Base.
Private companies doing business with the federal government may be required to contract with a certain percentage of women-owned businesses. Getting certified as a WBE can give your small business an advantage against bigger businesses when trying to land these contracts.
As recently as late 2020, businesses were able to self-certify; however, you can no longer do so. Businesses must go through an approved third-party organization or the SBA website at certify.sba.gov. Some organizations can help you with the WBE or WOSB certification process, including:
Each organization has specific guidelines, depending on the type of certification you’re seeking. To qualify for WOSB certification, your business must:
Be a small business as defined by the SBA (size of the company may vary by NAICS code)
Be at least 51 percent owned and controlled by women who are U.S. citizens
Have women manage day-to-day operations and also make long-term decisions
To qualify as an EDWOSB, your business must:
Meet all the requirements of the women’s contracting program
Be owned and controlled by one or more women, each with a personal net worth less than $750,000
Be owned and controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years
Be owned and controlled by one or more women, each with $6 million or less in personal assets
To get certified as a WBE by the WBENC, for instance, your company must be at least 51 percent owned, controlled, operated, and managed by a woman or women. “This means one or more women must have unrestricted control of the business, a demonstrated management of day-to-day operations, and a proportionate investment of capital or expertise.”
If you’re already certified through a third party or the SBA, you’ll need to get recertified. However, for self-certified WOSBs or EDWOSBs with active WOSB or EDWOSB set-aside contracts (those contracts the government has limited to or “set aside” for competition amongst small businesses only), your business is still certified throughout the life of the contract.
In addition to certifying female-owned businesses, some certification organizations offer member benefits such as educational programs, conferences, networking events, and matchmaking opportunities.
Women business owners and money
Finding funding has long been a struggle for female business owners. In 2021, female founders secured just 2 percent of all venture capitalist (VC) funding in the U.S. And while it’s a few years old, the stats shown in the last report from the U.S. Senate Committee on Small Business and Entrepreneurship, 21st Century Barriers to Women’s Entrepreneurship, have not changed all that much. That report showed women received only 16 percent of all conventional small business loans.
If you’re a female-owned business looking for a small business loan, you have several options, including:
The Women’s Economic Ventures organization offers both startup and expansion loans to female business owners.
The SBA does not directly issue business loans but works with partner lenders to guarantee loans. SBA lending programs include:
7(a) loans: This is the SBA’s most common loan program and has a maximum loan amount of $5 million.
504 loans: These loans are available through Certified Development Companies (CDCs), which are the SBA’s community-based partners. The CDC/504 Loan Program provides long-term, fixed-rate financing of up to $5 million. To be eligible for a 504 Loan, your business must:
Operate as a for-profit company in the United States or its possessions
Have a tangible net worth of less than $15 million
Have an average net income of less than $5 million after federal income taxes for the two years preceding your application
Microloans: These are small business loans of less than $50,000. Each lender sets its own lending and credit requirements for microloans, and usually, some type of collateral and the personal guarantee of the business owner are required.
Grants for women
Unlike small business loans for women, grants don’t have to be paid back, making them an excellent way for female business owners to get money. However, there is heavy competition for grants.
When you apply for a grant for women, be sure to do your due diligence. Carefully check the eligibility requirements and make sure to file your application on time.
Here are some grant programs for female business owners to look into:
Amber Grants: The $10,000 Amber Grants from WomensNet are awarded monthly. One of the 12 monthly winners also receives an additional $25,000 Amber Grant.
Cartier Women’s Initiative Award: This global grant fellowship program selects three fellows for each global region; each winner receives a $100,000 grant, with second and third-place winners receiving $60,000 and $30,000 grants, respectively.
The Halstead Grant: This is a grant to a new jewelry designer who primarily works with silver. The winner gets $7,500 in startup capital and $1,000 in merchandise. Award application ends August 1st, 2022.
Tory Burch Fellows Program: Founded by design entrepreneur Tory Burch, the program chooses up to 50 Fellows annually, who each receive a $5,000 grant, access to a private online peer community, and a trip to Tory Burch headquarters for five days of networking and workshops.
Many local grants for women are also available, including:
GrantsforWomen.org offers a database of opportunities for women across industries. Many of the grants found here are for nonprofit organizations; however, there are some available for-profit businesses.
Grants.gov is a central clearinghouse for information about federal government grants.
Are there tax benefits to being a woman-owned business?
As you can see from the information above, there are many beneficial programs and supports that make it worthwhile being a woman in business today; however, tax breaks do not factor into the equation. Neither the federal nor state governments give any special consideration to women-owned businesses when it comes to the tax code.
Resources for women entrepreneurs
Another benefit of having a woman-owned business is the support and help you can get. Women business owners tend to be very collaborative, so don’t hesitate to ask other female business owners for advice.
You can also get help from your local Small Business Development Center (SBDC), SCORE office, Women’s Business Center, Ascent, a new learning platform from the SBA, and the SBA’s Office of Women’s Business Ownership. In the case of each of these entities, the main goal is to help empower female business owners.
Disclaimer: Fundbox and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.