What Do Women Business Owners Want from Banks?

Women Business OwnersI recently hosted a panel at the Small Business Banking conference in Miami focusing on women business owners.   Judging from the crowd and the feedback, there is A LOT of interest in working with women business owners.  And rightly so.

During the past 17 years, women-owned businesses have steadily increased their influence on the U.S. economy. Since 1997 women-owned firms have:

  • increased in number by 68%
  • grown revenues by 72%, and
  • added 11% more jobs.

Banks, credit unions and other alternative lenders are looking for strategies to attract and connect with women business owners. The question is, how?

The two top questions attendees wanted answered were:

  1. What’s the difference between men and women business owners?
  2. What do women business owners want? What matters to them when choosing a bank or banker?

Differences between men and women business owners

One of the top differences is how men and women think about financing.    Men tend to look at financing as a necessary investment.  Women can look at financing as an unnecessary expense.   Men are focused on growing their business as quickly as possible.  Women often focus on growing their business more organically, focusing on getting it right over growing it too fast.

Bank of the West conducted an online survey with Harris Poll in May 2014.  The “Pay It Forward” survey found several differences between men and women business owners.  One difference was that women did more due diligence, asked for more professional advice and were more prepared.

Yet male business owners were better funded.  That’s the finding of a study of hiring by small businesses since the recession, prepared for the National Women’s Business Council.

Women-owned businesses tend to start with less capital than their male-owned counterparts; but once they get off the ground, they often grow faster.

That’s the finding of a study of hiring by small businesses since the recession, prepared for the National Women’s Business Council. It shows that women entrepreneurs raise lower amounts of capital to finance their businesses but are more likely to see rapid growth.

According to the study, women-owned entrepreneurs are more reliant on personal rather than external sources of financing—meaning they’re more likely to launch their businesses using mostly or entirely their own savings. Women started their firms with about $75,000 on average, compared with nearly $135,000 for men. In terms of loan approvals, women were much less likely to have their loans approved, especially for the larger, high growth potential businesses.

What that means is there is a real opportunity for banks, credit unions and other lending sources to reach out to women business owners to educate them about their options.

What do women business owners want?

They’re looking for financial partners to help them make smart decisions, to educate them about their options, and to always have their best interest at heart.

For example, when is the right and wrong time to reach out for financing?   Navy Federal Credit Union’s Susan Compton, Regional Supervisor of National Markets, has this advice:

When is a good time for women to reach out to a bank or credit union for a loan or line of credit?  

1. When they are experiencing positive cash flow and seeking to grow their business.
2. When they experience slower paying customers or clients and need interim financing for such activities as payroll .
3. When seasonal businesses need to buy inventory in the off-season to prepare for the on-season.

What is a common scenario or sign that a woman business owner should look into a loan or line of credit? 

1. When there is a gap in Accounts Receivables and Accounts Payables. A revolving type of business credit product can help fill those gaps.
2. During the off-season when they need to stock up on inventory for the on-season (an example could be a craft store that does a lot of business around holidays).
3. When a business such as a construction company is looking to acquire new tools or machinery for a large project.

At the small business banking conference, one banker commented that women business owners do NOT like putting their homes up as collateral.    Another lender commented that women business owners don’t think they will qualify for loans.  So it’s important to to proactively reach out to women business owners and have discussions about what they need to qualify for loans.

Banks have another opportunity.  I have noticed that a mistake many new women small business owners make is that they start their business “on the side” and do business out of their personal accounts rather than setting up separate business accounts and business credit cards.

Susan Compton of Navy Federal commented that:

Nothing is holding back a women business owner from having a small business credit card at their disposal to assist them when needed.  They can use it to purchase needed supplies and / or low cost equipment.  They could even use the card’s cash advance feature to provide some liquidity when really in a pinch but should know this should only be an action of last resort.  If the card were to have a cash back rewards feature, like Navy Federal’s business credit card, it could provide some needed cash for free from time to time.

What matters to women business owners when choosing a bank or banker?

Trust is key.  Women have to feel their banker has their best interest at heart and isn’t simply trying to sell them something.   What are you doing to proactively reach out to women business owners or women who are thinking about starting a business?

My recommendation is to have more meaningful conversations with women business owners.  Ask them, “If money was no object, what would you do to make your business better?”

Set up an advisory board with local women business owners and ask them what their top questions/concerns/challenges are and how you can help.

Explain why you are an advocate for women.   This is especially helpful for male bankers and lenders.

Connect with influencers.  One of the women on my panel was the Miami chapter head of the Women President Organization.   She knew everyone.    And she was a wealth of information about what women business owners need and want.


Women business owners are starting businesses in record numbers, they are successful with those business, but their businesses may not be growing as much as they could if they had access to credit/loans/funding.

Be her preferred partner.  Explain why you are an advocate for women.  Educate her on her options.    And have more meaningful conversations.

Here’s more advice for women business owners from Navy Federal’s Susan Compton.

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