Lending Library

In general, being an entrepreneur is tough, but many minority entrepreneurs face an even steeper climb on the path to success for a myriad of reasons. They have limited access to startup funding, lack networks and mentorship programs, and face discrimination and systemic biases. 

Given these hurdles – and the fact that 20% of all new businesses fail within the first year – it’s critical that minority entrepreneurs set up shop in as favorable a location as possible. 

Lendio analyzed eight metrics to determine the best states for minority entrepreneurs, considering factors such as access to small business loans catered to underserved communities, business ownership rates compared to the state’s minority population, job growth at minority-owned businesses, and overall income equality.

Key findings

• Vermont No. 1 Best State for Minority Entrepreneurs:  Driven by its high percentage of business loan approvals per 10,000 residents, an influx of minority-owned startups, low unemployment rate, and lower overall income disparities.
• Hawaii has the highest minority business ownership rates in the country. 51% of businesses are owned by minorities in Hawaii while minorities make up 78% of the state’s population. Hawaii dips in overall rankings due to lower access to capital, average unemployment rates, and lower startup growth.
• Washington D.C. has the highest Black business ownership rates in the country. While D.C. also has one of the highest approval rates for Community Advantage loans and microloans, it falls in the overall rankings due to Blacks and African Americans only owning 15% of small businesses despite making up 42% of the population along with high unemployment rates and income disparities.

Top 20 states

In No. 1 Vermont, the number of Community Advantage loans (.015) and SBA microloans (.34 ) approved per 10,000 residents is high (.34). While West Virginia has the least disparity between its minority population and percentage of minority-owned businesses, Vermont comes in third at a 6.7% difference. Vermont also saw a 560% increase in the number of startups under two years old run by minority entrepreneurs from 2000 to 2001 and a 93% increase in job growth at Minority Business Enterprises. With an average unemployment rate of just 2.23% and a Gini index of .45, Vermont provides a fertile economic environment for small business owners. 

Wyoming, South Dakota, North Dakota, and New Hampshire round out the top five best places for minority entrepreneurs. Wyoming (161.7) and South Dakota (90.98) both receive a high number of Community Reinvestment Act loans per 10,000 residents. North Dakota saw a large increase (86%) in job growth at Minority Business Enterprises from 2021-2022. New Hampshire has the second lowest minority unemployment rate at 1.5%

When the list is filtered to Black or African American populations specifically, Alaska, New Mexico and Hawaii move into the top 20 with Missouri, Massachusetts, and Ohio dropping out.

States with the highest percentage of minority-owned businesses.

While the rankings above compare the percentage of businesses owned by minorities to the percentage of the population that is a racial minority, these rankings show the percentage of minority-owned businesses overall.

States with the highest percentage of Black-owned businesses.

While the rankings above compare the percentage of businesses owned by Blacks or African Americans to the percentage of the population that is Black or African American, these rankings show the percentage of Black-owned businesses overall. Visit this post for more Black-owned business statistics.

Growth of minority-owned businesses

The number of businesses owned by Black, Hispanic, and Asian Americans has climbed to record highs – reaching about 1.2 million in 2020, up more than 50% compared to 2007. 

This is welcome news given research shows that workforce diversity is good for the companies’ bottom line and for the economy at large.  More than half of the 2 million new businesses started in the U.S. over the past 10 years were launched by minorities, creating 4.7 million jobs. But America has much more work to do to empower minority entrepreneurs. People of color own only 20% of U.S. businesses despite making up roughly 40% of the population. This contributes to income inequality.

Lending environment

Access to capital is crucial for any small business owner, but it is particularly important for minority entrepreneurs who may struggle to secure startup funding or loans from traditional financial institutions. The lending gap – which can also come in the form of unequal lending terms and underinvestment – hinders minority entrepreneurs’ ability to start, invest in and scale their businesses.

The data speaks for itself: 52% of white entrepreneurs are fully approved for financing, compared with 35% of Asians, 28% of Hispanics and 27% of Black applicants. In fact, 40% of Black business owners don’t even apply for financing because they expect they’ll be rejected, according to the National Minority Supplier Development Council.

Minority entrepreneurs may face challenges in obtaining loans or credit from traditional financial institutions, but there are some policies and programs from the Small Business Administration that aim to bridge the funding gap and support entrepreneurship in underrepresented communities.

The Community Reinvestment Act, for example, requires banks to offer lending and investment services to underserved communities, and regulators are considering substantial reform that would make race and ethnicity an explicit focus. Our analysis of CRA loans originated per 10,000 residents – 120 on average across the states – examines how well banks are currently supporting underserved business owners, though it doesn’t address minority business owners specifically. Montana ranked the best on this metric, with 180 in CRA loans per 10,000 residents, while West Virginia came in last with 66.

Meanwhile, the 7(a) Community Advantage loans are targeted at small businesses in underserved markets, including opportunity zones and low- and moderate-income areas. Overall, 49% of these loans went to racial and ethnic minorities in 2023, compared with roughly 33% of 7(a) and 504 loans in 2023, which are other common loans for small business owners. 

Economic environment

The overall economic environment in a state also offers clues as to the level of opportunity for minority business owners. Income inequality, for example, is measured using the Gini index; a score of 0 would indicate perfect equality, while a score of 1 indicates total inequality. In the U.S., the Gini index was 0.482 in 2022, up slightly from .481 in 2021. 

Studies have found unemployment rates and entrepreneurship rates have a dynamic relationship with unemployment spurring entrepreneurship and entrepreneurship in turn lowering unemployment rates. However, studies have also found that unemployment spurring entrepreneurship only holds true in higher-income areas.

There are also longstanding racial gaps when it comes to underemployment, defined as the share of the labor force that is 1) unemployed, 2) working part-time but would like to work more or 3) recently gave up job-seeking but would prefer to work. According to the Economic Policy Institute, the underemployed rate was 9.8% among Black adults, 9.9% among Hispanics and 5.5% among white people in December 2023.

Conclusion

Not all business owners have equal opportunities to succeed. In particular, minority entrepreneurs face barriers in accessing the capital they need to start and grow their businesses – even in the top-ranked states. With this report, we aim to raise awareness about the need to level the playing field for minority entrepreneurs. 

Specifically, we recommend the following within the lending industry:

• Greater use of automation throughout the qualification process: Automation not only expands access to capital for more small businesses by reducing costs for lenders but also reduces discrimination and bias. For example, a paper by the National Bureau of Economic Research found that after traditional banks automated their processes, lending to Black-owned firms increased.
• Alternative underwriting solutions: Many small businesses are cash-only making it difficult to build up the business credit necessary to meet traditional loan qualification requirements. Lendio’s technology mines customer deposit data instead of relying exclusively on credit score to pre-qualify customers for a loan. This approach is supported by a paper from the Bank for International Settlements that found that the alternative data used by two FinTech companies was able to better predict future loan performance than traditional methods, especially in areas with high unemployment.
• We're pleased to see progress toward more resources for underserved groups, like the recent announcement from Treasury Dept and Vice President Harris in April of over $1.73 billion in grants for Community Development Financial Institutions (CDFIs) across the country.

Methodology

We used the most recent data for these eight metrics below to determine the best states for minority entrepreneurs. We used a Z-score distribution to scale each metric relative to the mean across all 50 states and Washington, D.C., and capped outliers at 2. We multiplied some Z-scores by -1, given a higher score was negatively associated with being above the national average. A state’s overall ranking was calculated using its average Z-score across the eight metrics. In cases where states were missing data due to a low sample size, the remaining metrics were averaged to determine their overall scores. Here’s a closer look at the metrics we used:

Lending environment

• Community Advantage Loans approved (Small Business Administration, 2021-2022), per 10,000 residents (Census Bureau, 2022)
• Microloans approved ((Small Business Administration, 2021-2022), per 10,000 residents (Census Bureau, 2022)
• Community Reinvestment Act loans originated for small business owners with revenues of $1 million or less Federal Reserve, 2021, per 10,000 residents (Census Bureau, 2022).

Business environment

• Difference in minority business ownership rate, measured as percentage of employer firms owned by a person of color, (Census Bureau, 2021) vs minority population percentage. (Census Bureau, 2022)
• Percentage change in the number of jobs at designated minority business enterprises (National Minority Supplier Development Council, 2021-2022)
• Percentage change in the number of new businesses (under two years old) that are owned by minorities (Census Bureau, 2020-2021)

Economic environment

• Gini index of overall income inequality (Census Bureau, 2021)
• Minority population average unemployment rate (Economic Policy Institute, Q3 2023)

Editor’s note: This article was originally published in 2020 with updates in December 2022 by Rachel Mennies Goodman and Lendio’s editorial team.

Economies are cyclical. Even the most fine-tuned cycle can have problems shifting into the next gear every now and again. Running a business that can weather just about any economic storm, or as we like to call them, "recession-resistant" businesses, is an exciting prospect.

So where would you find one of those? In our updated list of recession-resistant businesses, each harboring the possibility of financial rewards even when an economy dips into a not-so-rewarding time.

Discount retail

Discount retail is the only industry to appear twice on the list of the top 10 S&P 500 stock performances from 2008, a.k.a., the most recent, official recession in memory. During the 2008 recession, Walmart’s stock grew 20% and Dollar General’s increased 60%. It’s not just stock prices either—in 2008, Dollar General’s sales increased 9%. 

Small businesses can see this bump, too. During any economic downturn, convenience stores and local shops may displace grocery stores and bigger retailers by providing lower prices — and convenience. 

Delivery services

Any time that goods are bought and used, they need to get from Point A to Point B. That’s why FedEx’s and UPS’s domestic operations continue operating during a slowdown. There is, of course, a catch: the broader “shipping and logistics” industry was shown to be susceptible to slowdowns when the Covid pandemic disrupted international supply chains. Still, that same period also highlighted the value of local point-to-point delivery as Door Dash, Uber Eats, GrubHub and the like experienced a spike in new customer acquisition in early 2020.

Groceries and specialty foods.

Remember Maslow’s hierarchy of needs? At the bottom level is food. We all need to eat. And if households pull back on restaurant fare during economic challenges, that often means a boost in the sale of groceries for at-home cooking. More simply put, when economies go south, sales of basic staples increase.

Does that mean luxury food items take a hit? A quick look at 2008 indicates no. “We’re seeing an increase in items like pate and robust cheeses, blue cheeses, washed-rind cheeses,” said Whole Foods specialty coordinator Frank Schuck noted in 2008.  “With these items, a little goes a long way.”

Household essentials

Think back to the toilet-paper rush of March 2020. Whenever there’s a blip in the economy, household essentials hold their own. Falling under the same umbrella as grocery staples, certain household and hygiene essentials are inevitably the last things cut from household budgets or business budgets. This is also a case in which luxury vs. housebrand may not matter so much. A shopper might buy an off-brand disinfectant spray, seeing no difference from the name brand, but splurge on the tissues that make their nose feel good.

Utilities

The demands for gas, water, and power continue during a recession. When prices for each of these necessities is high, however, growth slows. Where are we now? Gas prices have dropped to the lowest level in more than a year. If history has a say in the matter, that means consumer spending on fuel will start to climb up.

Accounting

As the saying goes, only two things in life are certain … and accountants help prepare one of those things, taxes. Accountants generally have low unemployment. During the 2008 recession, the accounting sector added thousands of jobs as unemployment neared 9.7%. 

Speaking of taxes, if your business employed workers through pandemic slowdowns in 2020 and 2021, you may be eligible for the Employee Retention Tax Credit, which can net you up to $26,500 in tax credits (and even a refund?) per employee. You can find out here if your business may be eligible for the cash.

Funeral services

Funerary workers help prepare the other “certain thing” in the aforementioned idiom. The death industry has faced numerous issues not directly related to recessions over the years, including consolidation of small businesses and longer life expectancy. But even as spending on death decreases, it doesn’t ever completely stop, so funeral homes and services tend to have a steady supply of business.

Home repair (retail and service).

During a downturn, households can’t afford to buy a new home. However, they might have enough money to repair and remodel their current home. Nasdaq.com notes, “Home Depot is poised to maintain its sales growth through difficult times and boom once the economy recovers due to the state of the housing market.” That same trend likely extends to competitors Lowe’s and local hardware stores and to businesses and contractors who do repair jobs, too. 

Auto repair (retail and service).

Usually, auto repair and auto parts stores see increased business during a recession as consumers do their best to hold onto their cars instead of buying new ones, although consumers may only invest in the most necessary repairs. Still, after a few years of supply challenges, it’s hard to predict what might happen if the economy enters a recession in 2024.

Laundry 

People continue washing their clothes during a recession. Cleaners and coin-operated laundries still face numerous challenges: consumers might wait longer between washes, and location and changing demographics can wreak havoc on a laundromat if its customer base moves out. But well-located laundromats can expect to see at least some business even during a downturn. Plus, households might opt to hold off on repairing a broken washing machine and use a laundromat instead until their financial condition improves.

Fast food and fast-casual restaurants.

Sit-down restaurants often feel the pinch of a recession as households stay in and cook more to save money. But fast food stalwarts like McDonald’s and KFC see relatively steady sales during downturns as consumers look for value and comfort. Incidentally, the 2008 recession was one of the major catalysts of the fast-casual trend. Restaurants like Chipotle, Shake Shack, and Noodles & Co. found success with slightly higher-quality ingredients and made-to-order meals, even if it was a bit more expensive than traditional fast food. At the same time, casual chains, including Applebees and Chili’s, saw a dip in sales with 2008’s more value-conscious consumers.

Alcohol

So-called “sin” industries often do well during recessions, and alcohol sales grew following the 2008 financial crisis. Interestingly, craft beer sales grew in the 2008 recession as sales of macrobrews (Budweiser and Coors) fell significantly. Why? No one is sure, although value-conscious consumers may have been treating their 6-pack in the ‘fridge as an affordable luxury and prioritizing taste (and possibly higher alcohol content) over price.

Bankruptcy lawyers

Some businesses only do well when someone else is having a terrible day. In early 2020, when the US economy was eyeing its worst situation since the Great Depression, Fortune noted that job listings for bankruptcy attorneys had tripled “since January [2020] on online job board ZipRecruiter, while postings across all industries have fallen 48%.”

Collection and repo agents.

Lawyers aren’t the only ones who have to swoop in during tough times. Collections agencies can experience increases in traffic during recessions, although it’s a double-edged sword: the 2008 downturn showed that as work for collections agents increased, profits decreased because they were collecting smaller sums and cutting their profit margins.

BTW, repo services also see a huge surge of repossessions early on in a recession, but it doesn’t last. If the economic stagnation lasts for more than a year or two, there are simply fewer cars left to repossess.

Waste disposal

The failure of garbage pickup is one of the most commonly-cited signifiers of infrastructure failure. Expect garbage disposal to be one of the last services to be cut or reduced. Barron’s notes that “80% of sales are service-based and not tied to the health of the overall economy.”

Staying ahead of the economy's fluctuations.

BTW, research from the Harvard Business Review provides crucial lessons for any business hoping to endure a possible recession—and the first lesson, perhaps the most important, is to start preparing early. There are a million reasons to wait, but they’re all outweighed by the fact that delaying efforts only dilutes your prep’s ultimate effectiveness. 

“Main Street has it right,” explains the HBR. “Even as the debate about ‘when’ continues among economic forecasters, companies should begin to prepare themselves for the next recession…as getting ahead relative to peers (even slightly) during recession gives companies an advantage that is tough to reverse when the economy is doing better.”

So whether you’re considering a pivot of your business model, an addition to your services, or simply applying for financing, like a small business loan or a business line of credit to ensure you retain a positive cash flow regardless of what the economy throws your way in 2024, taking action early is the best way to minimize the impact of an economic downturn.

_{The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. Any content provided by our bloggers or authors are of their opinion and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything. The information provided in this post is not intended to constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.}

Debit cards continue to be a pillar of the modern payment ecosystem. A 2019 study by the Federal Reserve found that 31% of consumer purchases were paid for with a debit card. While they look almost indistinguishable from credit cards, debit cards function essentially like cash in practice. For consumers, they’re the best of both worlds—the simplicity of credit cards coupled with the hassle-free nature of cash.

For small businesses, though, debit cards function more like credit cards because you’ll be charged a variety of fees each time a debit card is swiped at your establishment. However, the fee systems for both types of payment are different—and in many cases, the popularity of debit cards is well worth the fees.

Debit cards vs. credit cards.

Debit cards look like credit cards, but the similarities mostly end there. As the moniker suggests, debit cards debit money out of an account, typically a checking or savings account at a bank or other financial institution. When a purchase is made, the funds are deducted directly from the buyer’s account. In this way, debit cards are similar to cash.

Credit cards, on the other hand, involve financial institutions—like banks or credit card companies—extending credit to a consumer. Purchases are made on this credit, and the consumer makes repayments to the credit card issuer.

In a sense, debit and credit cards work in opposite ways for consumers—while credit cards run up credit, debit cards debit funds out of an account. For small businesses, though, accepting payments is fairly similar for both credit and debit cards.

Why are small businesses charged debit card fees?

Both debit and credit cards require sellers to pay a range of fees every time a transaction occurs because a lot of entities are involved whenever a card is used—and all of these entities want something in return for their services.

3 main groups expect to get paid when someone uses a debit card at your business: banks, credit card companies, and debit card processors. The fees charged by these companies can be a combination of flat fees and percentages based on the purchase price.

Types of debit card fees.

The 3 types of fees usually charged on every debit card transaction are interchange fees, assessments, and processor’s markup fees. Interchange fees are charged by the bank that issued the debit card to the customer. Card companies, like Visa or Mastercard, charge the assessments. Debit card processing companies, like STAR or NYCE, charge the processor’s markup.

Several factors can alter the fee amounts, like the size of the bank that issued a debit card and the type of business you own. Whether a PIN or a signature is used when a debit card transaction occurs also impacts fees.

Mobile payment processors.

Mobile payment processors, also known as Payment Service Providers (PSPs), are increasingly becoming a very popular way for small businesses to accept debit and credit card payments. You’ve probably come across businesses that use PSPs like Square and Stripe.

“Most payment service providers use a flat rate structure for pricing,” explains review site Ecommerce Platforms. “Basically, this ensures that you pay the same amount for every transaction, no matter what the card type might be. There’s no monthly fee to worry about, and other costs beyond transaction costs are usually nonexistent too.”

PSPs have become popular because setup is usually cheaper and easier than with traditional merchant account systems. Many PSPs try to charge simple, transparent fees. However, other systems may prove to be less expensive over the long run as your business scales up.

How much are debit card fees?

Debit card fees can vary broadly depending on the debit card used, your merchant category, and whether a PIN is used during the transaction. According to data from 2018, the average interchange fee was $0.23. As a percentage of a purchase, the average interchange fee was 0.57%. These averages are for both signature and PIN transactions. Assessment fees mostly range from 0.11% to 0.13% of each debit transaction. Processor’s markup fees can range from 0.75% to 0.9% of each transaction, plus $0.13 to $0.22. Some of these companies might charge businesses annual fees along with their other fees on every transaction.

What is right for your small business?

Deciding whether or not you want to accept payments other than cash is a big step for your business—but most businesses accept multiple forms of payment, as you’ve probably noticed in your shopping experiences. Knowing the costs associated with accepting cards is very important—especially if yours is a smaller business, as the costs can impact key aspects of your business (like your pricing strategy). Generally, if you’re set up to take credit cards, you should be able to take debit cards as well.

The economy is on everyone's mind in 2024, with everything from the housing market to inflation making headlines. If this has you considering your first (or next) small business opportunity, this may also have you considering financial franchise opportunities. A financial franchise allows you to open a business with an established brand presence. Even if you aren’t a CPA or licensed bookkeeper, many franchisors provide the small business know-how you need to get started.

What is a franchise?

You might think of a franchise agreement as allowing the franchisee to open up an outpost of the main business. McDonalds, 7-Eleven, Ace Hardware, and Marriott hotels are all very common franchises. But a franchise is really just a type of license agreement between a small business owner (called a "franchisee") and a bigger company. As part of the agreement, the franchisee gains access to proprietary business knowledge, trademarks, processes, products, and branding of that bigger company or franchisor.

The franchisee gets to run a business with a recognizable brand and a track record of success. The franchisor is paid in return, usually in the form of initial startup fees and annual licensing fees, although agreements vary.

What is a financial franchise?

A financial franchise is a franchise that offers services within the financial service industry. There are franchise opportunities for entrepreneurs interested in small business financing, tax preparation, bookkeeping, and more. Some of the brand names in the financial sector you know well, including Lendio, Allstate, and H&R Block, have franchise opportunities—but there is a whole universe of options.

Categories of financial franchise.

There are financial franchise opportunities across the financial-services spectrum—and ones that customers badly need. We pay taxes, we open businesses, we need financing, we pay employees, and we know everything should be insured—all opportunities for a financial franchise to assist us. 

Key franchise sectors in the financial services industry.

1. Small business lending
2. Tax preparation services
3. Accounting, bookkeeping, and payroll
4. ATMs
5. Insurance

Financial franchise services can also be combined easily into a robust business appealing to a wide swath of customers. With a Lendio franchise, for example, you can offer financing help as well as bookkeeping services.  

1. Small business lending.

A small business lending company is one of the most profitable types of financial franchise—and it’s relatively accessible to open as an entrepreneur. These types of franchises find loans and other funding for small businesses. In many cases, you don’t need to open a physical office, and you only need around $55,000–$65,000 in liquid capital to start.

2. Tax preparation and services.

Tax preparation franchises are very common forms of financial franchises—you’ve probably seen H&R Block or Jackson Hewitt franchises in your area. Depending on the company, you do not need to be a CPA or tax professional to open a tax preparation franchise, because they put you through rigorous training. Since people and businesses will always need help with their taxes, these types of franchises remain popular.

3. Accounting, bookkeeping, and payroll.

While many CPAs, accountants, and bookkeepers open their own solopreneur business or independent small storefront, there are several franchise opportunities for these roles as well. Since accounting is often the last thing entrepreneurs know how to handle, it's logical that many will outsource this factor of operating a company. You may not need to be credentialed to open an accounting franchise, but it helps to be a licensed CPA, CFA, or another financial professional.

4. ATMs

Even in this digital age, we all need cash sometimes. You can open a franchise that installs and maintains ATMs—a great way to get into a financial franchise without a huge infusion of startup capital. This type of business can be a particularly strong fit for an entrepreneur looking for flexible hours. It’s also great if you want to be on the road more and in the office less, especially if your staff is small.

5. Insurance

Insurance is a big enough business to be considered its own field, but it is technically a part of the broader financial industry. Many insurers have franchise opportunities, like Allstate and Farmers. Oftentimes, the companies provide all the training—you don’t have to already be an insurance agent to get started. Because of the field’s product diversity, you can specialize in many forms of insurance, including life, home, auto, small business, rental, and event insurance.

Best financial franchise opportunities in 2024.

First, choosing the best franchise is about finding the right one for you within the market you intend to operate. Will you be serving mostly business clients or consumer clients? Is your market already teeming with accountants and insurance providers or are there only a few options available locally? Do you want to invest in a storefront or would you rather focus on something like small business lending, where you may not need a storefront, the initial fees are relatively low, and you can leverage your existing business network for success?

Because every situation is different, consider the following questions when deciding which franchise is best.

• Why are you interested in starting a franchise? Do you want to be hands on with the business? If so, ensure it's a franchise that you find interesting. If this is this your first and only business, you may be able to commit more time to it than if it's another business you're adding to your portfolio.
  
• How much liquid capital do you have? Most franchise opportunities disclose up front the capital you'll need to invest.
  
• What does your market look like — particularly in terms of competition? The best franchise is usually the one with the best chance to succeed within the market you intend to operate.

How do you get franchise financing?

To get financing for a franchise, you need to ensure that you qualify for both the franchisee agreement and the needed financing for such a business. There are online platforms to help you determine what financing you are eligible for.

What is the most profitable franchise to open?

Fast food franchises, like McDonalds and Dunkin’, are often the most profitable for franchisees. The UPS Store or Anytime Fitness franchises are also known for being profitable. The most important factor, however, should be your interest: think about your passions, and let that lead you to a franchise opportunity that works for you. If your passion is helping people grow or run a business, a Lendio franchise may be a good option. If you’d prefer to work with vacationers, consider hotels, t-shirt shops, or restaurants. Like kids? You may be interested in a childcare franchise or a children’s boutique. In addition to aligning with your own interests, your franchise will be more likely to turn a profit if it fits the physical location (note that some franchises, particularly in the financial services sector, may not require a physical location).

What is the cheapest franchise to invest in?

While many of the most popular franchises require a hefty amount of capital to open, there are dozens of franchise opportunities that require an investment of fewer than $15,000 to open. Some only require an initial fee of $10,000. For about the cost of a used car, you can open up a Jazzercise, Complete Wedding and Events, or Building Stars franchise, for example.

Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.

In a world where gender equality is a constant topic of discussion, it's essential that we do our part to uplift and support women in business. Women entrepreneurs bring a unique perspective and innovative ideas to the table, and supporting them isn't merely a moral imperative—it's a strategic one.

There are many ways we can make a difference, from investing in women-owned businesses to mentoring aspiring female entrepreneurs. In this post, we will discuss five actionable ways you can support women entrepreneurs. So, whether you're a seasoned business owner, a budding entrepreneur, or someone looking to make a difference, read on to find out how you can contribute to this critical cause.

1. Seek out women-owned businesses online and in-person.

Perhaps the most important way to show support for women entrepreneurs is to be committed to seeking them out. “We can support them by being conscious of how we are spending our money and intentionally supporting women-owned businesses, says Wendy Muhammad, a real estate developer.

Making a conscious effort to like and share information about a women-owned business on social media is another way to show your support. Exposure is critical and explains why companies spend so much on advertising—and why they spend more on social media than other advertising mediums.

However, B. Michelle Pippin, owner of Women Who WOW, stresses that social media amplification is not as important as making a purchase. “One popular saying is, ‘Even if you can’t buy from her, hitting like or making a comment costs nothing,’ and this is true.” But the problem with that strategy, according to Pippin, is that liking or sharing an entrepreneur’s social media post isn’t putting money in anyone’s pocket. “The women entrepreneurs I work with every day aren’t ‘playing business’—this is how their families are supported financially.”

One interesting fact about women founders: there’s rampant gender disparity in funding.

So when you can, it’s important to actually buy a product or service. And if you can’t buy something yourself, Pippin recommends introducing women entrepreneurs to people who can.  

2. Make it easier to find women entrepreneurs.

Social media makes it easier to find women-owned businesses, but according to N. Damali Peterman, Esq., founder and CEO of Breakthrough ADR, this should extend beyond likes and shares by consumers. “For example, companies and influencers should highlight women-owned businesses in their networks and on their social media platforms,” she explained. “Online retailers like Amazon should have a symbol or identifying mark that indicates if a product is a woman-owned brand.” Peterman says she’s often been in a physical store trying to decide between 2 similar items and made her decision based on the “Woman-Owned” logo on the packaging.   

3. Share experiences

The sisterhood of women entrepreneurs can create a level of support that is mutually beneficial. “Meet each other on Zoom, connect via email, write content that expresses how you are experiencing the pandemic that can be shared,” recommends Deborah Sweeney, CEO of MyCorporation.

“Being a strong steward of information and your experience can be a great way to help other women and to connect.” In fact, when Sweeney writes an article or shares an experience, she often receives feedback from women. “This feedback helps me improve and learn, and others can receive takeaways that can help them.”

4. Collaborate 

Another way to show support for women entrepreneurs is to collaborate with them. Talia R. Boone, founder and CEO of Postal Petals, looks for ways to work with other women and support Black business owners to help them grow their respective businesses. “For example, on Friday on our social media platforms, Postal Petals celebrates #BlackFloristFridays.”  

However, she says it’s those collaborations with larger companies that can help change the trajectory of a small business. “Seek out opportunities to partner with and hire services of women-owned businesses,” Boone advises.

Her advice is seconded by Muhammad. “If you have a business, make women-owned companies one of your stakeholders, and make it a point to hire services providers, for example, who work for women-owned businesses,” she says.

Collaboration can also take the form of offering business discounts. “My company has a Let’s Grow Again! plan that provides startups and small businesses discounted rates for public relations and SEO services,” explains Lisa Porter of Porter PR & Marketing. The goal is to give companies a hand so they can get back on track without the added stress of wondering how they can pay for marketing. “My company got plenty of help when we started, and now it’s time to give back,” she says.

5. Provide mental support and mentorship.

Being a woman entrepreneur is exciting, but it can also be frustrating and mentally draining.  

“If you have a woman in your life who is leading a small business, you can support her by encouraging her to evolve, adapt, and expand with the changing business landscape,” advises Bri Seeley, business growth advisor and entrepreneur coach. “Encourage her to look beyond what her business has been and to begin looking at what it could be.”  

Sometimes, that’s hard for women to do when they’re struggling to stay afloat while juggling numerous other roles at home. “The best way to help women entrepreneurs is to provide mental support to lift them up when they hit challenges,” says Charlene Walters, MBA, PhD, entrepreneurship coach, business branding mentor, and author of Launch Your Inner Entrepreneur.

“Female founders will continue to hit obstacles—it's a part of the game, and the important thing for them is to be able to regroup, come up with Plan B, C, D, etc., find the silver lining and not take setbacks or failure personally.”   

If you’re in a position to mentor women entrepreneurs, you could help them learn from your mistakes and avoid unnecessary pitfalls. “The easiest way to help them is by purchasing products, but mentoring women business owners will have a more lasting effect on their success,” explains Amy Edge, who specializes in operations and project management for entrepreneurs. “If you have the resources and skills to do so, share your expertise with women who are looking to get into business.” 

Conclusion

There are a lot of ways to help women entrepreneurs, so If you’re on the sidelines, the most important thing is to get involved and do something—not just for women but for the economy in general. “If small businesses are the backbone of the economy, women entrepreneurs are the skeletal system that holds everything together,” says Peterman.   

Lendio is committed to supporting women in business by offering tailored financial solutions. Learn more about business loans for women.

Acquisitions are a key part of business. A small business can be acquired by a larger company and reap the benefits of a bigger and more established infrastructure. However, that same small business can also go through an acquisition where it is dissolved entirely. 

There are multiple types of acquisitions and different reasons for each. Here are 4 common acquisition types and why they are used in business. 

1. Vertical acquisition

One of the most common types of acquisitions is the vertical model. In this case, a company buys another that falls in a different place on the supply chain. The acquisition will either be for a company higher or lower in the manufacturing process—hence the vertical reference. 

For example, instead of an ice cream company buying milk from a dairy farm across town, it could acquire the farm itself. This turns an expense—milk buying—into a new revenue stream. 

There are multiple reasons why companies opt for vertical acquisitions. First, it’s easier to acquire a company than to build a new one.

Using the ice cream example again, it’s faster to buy a fully functioning farm than to look for land, cows, equipment, and expertise. With the amount of time and planning it takes to start a business, it’s also likely cheaper to buy a company than to build one. 

Buying firms along the supply chain also means companies will save money in the long run. Let’s say it costs a farmer $2 per gallon to produce milk and he sells the product to an ice cream company for $3 per gallon. By buying the farm, the ice cream company can receive their milk without the markup. They might also optimize the infrastructure to the point where it only costs $1.75 to produce a gallon of milk.   

Companies don’t just buy down the supply chain—they might also look to buy higher in the manufacturing process so they can profit from selling products instead of just materials. 

Vertical acquisitions make companies more independent of market trends and vendors because they don’t have to turn to outside suppliers to make their products. 

2. Horizontal acquisition 

A horizontal acquisition doesn’t have anything to do with the supply chain. Instead, it refers to companies acquiring other firms in their industry—companies that offer similar or the same products. When Facebook acquired Instagram, it was a horizontal acquisition. Both companies were social networks for people to connect, share, and promote themselves. 

Horizontal acquisitions are often created to eliminate competition and quickly increase market share. If there’s another company that people are excited about that poses a threat to your business, you can eliminate the threat by buying them. If you can’t beat them, acquire them.

The main challenge of horizontal acquisitions is that they may pose antitrust threats to American citizens. When one company buys competitors, it can eventually lead to a monopoly. You can see examples of antitrust laws in the purchase of Sprint by T-Mobile last year or the desire for Staples to buy Office Depot. 

The Federal Trade Commission (FTC) oversees antitrust laws to make sure the American people are protected. This way, consumers have options and a sense of free market exists. It prevents a single company from acquiring all of its competitors and controlling supply and prices.

3. Conglomerate acquisition

A conglomerate acquisition occurs when one company buys another from a completely unrelated industry. For example, if our ice cream company decided to purchase a brewery. 

There are multiple conglomerates in the United States, and you might not realize that some of your favorite brands are all part of the same umbrella.

For example, Procter & Gamble is the company behind the Oral-B line of dental hygiene products while also selling Tide laundry detergent. Mars, Inc. is known for candy bars like Snickers or Twix but also operates Pedigree dog food. 

Typically, companies take steps to become conglomerates as a way to protect themselves from market fluctuations. If you own multiple businesses, then it’s unlikely that they would all lose money at the same time. If for some reason people stop buying Tide products, Procter & Gamble can still make money from the other arms of its business. 

As far as the smaller companies are concerned, the acquisition gives them stability. They don’t have to operate as a small business anymore and can tap into the resources and expertise of their new parent company. 

It’s hard for conglomerates to become monopolies because they would have to own almost every significant business within an industry rather than several businesses in a variety of industries. 

4.  Market extension acquisitions.

This option is similar to a horizontal merger in that the 2 companies are in the same industry. However, they are not competitors because they are a part of different markets.

For example, a company that sells the dominant product in the United States might acquire a similar company that is dominant in Germany. The German company might continue to operate as it always did, except it will be owned by an American firm. 

This acquisition is often meant to absorb the competition before it poses a real threat. Instead of competing with a brand that is trying to enter your market, you can keep them at bay with an acquisition.

From a proactive standpoint, market extension acquisitions can help companies enter new markets without having to compete with existing brands. They also won’t have to waste time and money on building up brand recognition. 

Know your mergers.

Different acquisitions provide multiple levels of change for companies. When one company buys another, it may want to let the purchased organization continue to run on its own. However, some companies buy up competitors with the sole purpose of shutting them down. 

Understanding the acquisition process, different acquisition types and the relationship options of business mergers is important for business owners being acquired and also for companies looking to acquire other businesses. In the process of acquiring a company? Learn more about business acquisition loans. 

New year, new plan. If 2024 is the year of "increased sales" for your business, you can jump-start your goals with these 4 simple action-items.

Action item 1: find your niche.

Creating useful, memorable products or services that offer unique solutions to customer needs is no easy task—but it’s one of the most important principles for sales growth. What sets your business apart from the others in its category? Maybe you’re the first salon for curly haired clients in your neighborhood. Perhaps you’re the only landscaping company in town willing to work through all 4 seasons. Or, you’re the one bakery in the neighborhood serving my favorite Scandinavian pastries. Whatever the niche, once you can clearly visualize the answer to this question, find creative ways to communicate it to your customer.

Utilizing social media can be a powerful way to convey your small business’s niche to your customers, new and returning alike. Partner with like-minded small business owners to spread the word, as the company Omsom—makers of “loud, proud” and utterly delicious East and Southeast Asian sauces and recipe starters—does with their “tastemaker” program. These talented chefs serve as virtual brand ambassadors for Omsom’s offerings, spreading the word about their unique products and lending them credibility through their work as restauranteurs.

Ensuring that you have a unique product or service like Omsom’s—and knowing how to describe what makes your product or service remarkable—is a critical tool to increasing sales and improving your place in the market. Ultimately, if you can’t differentiate your product or service from everyone else who offers something similar, your business will struggle.

Action item 2: Increase the upsell.

A sales professional once told me, “There are 2 ways to increase sales within your territory: find more customers, or get the customers you already have to buy more.” Once your customer is in the door—or on your e-commerce site—convincing them to combine or add items to their purchase should be a foundational part of your sales pitch to them.

What’s the best way to convince customers to buy more? Personally, I’m a sucker for the latte-upsell, but that may not work when my furnace is on the fritz, unless the repair van doubles as an espresso truck. An air-duct cleaning or annual maintenance plan that helps me prevent another emergency repair, however, might.  Free-shipping thresholds and bundled product sets with discounts, like my favorite e-commerce skincare site Glossier offers, can be a great way to attract online shoppers to add more to their carts.

In person, it’s all about the impulse buy. Next time you go through the checkout line at your favorite local market, notice the candy bars, gum, news magazines, and other miscellaneous items designed to get your attention. Successful merchants in any business are always trying to use these last-minute add-ons, once you’re already in line to pay, to “add to the invoice.”

Action item 3: bring customers back.

Although I sometimes lose track of punch cards, I use them—what’s better than a free sandwich or pastry? Even better, virtual punch cards or app-based points systems motivate me to shop at my favorite retailers, knowing that I’ll earn some free treats or cash back with my customer loyalty without overflowing my wallet.

However, the best way to reward frequent customers is with what’s called a “surprise and delight”: an unexpected free treat or discounted item to reward them for their loyalty. When my neighborhood bakery threw in an extra croissant for my spouse—for absolutely no reason— I knew I’d be back for more. Perhaps for your company, this means waiving a consultation fee after a customer signs a contract for service or throwing in a travel-size hairspray at no cost after a cut and color.

How can you entice your returning customers to become regulars? Customer service, whether online or in person, is key to building lasting relationships with your customers—and increasing sales as a result.

Action item 4: make friends with your neighbors.

Look around: you’ll find other businesses in your area that cater to the same type of customers you’re looking for. For example, a photography studio could partner with a flower shop or event venue to offer bundles to prospective newlyweds. A dog-boarding center could sell another area business’s homemade dog treats and toys. Returning to my beloved bakery, their commitment to fellow local businesses introduced me to other shops and services in the neighborhood. I even have a plant from the same shop as the one in their window, and I shop there any time I need a new one.

The beauty of building these symbiotic relationships with other local businesses: because you work in different parts of the same industry, your customer base probably overlaps. Look for opportunities to form strategic partnerships—or alliances—that are mutually beneficial. Best of all, these types of synergies are good for customers, too.

_{The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. Any content provided by our bloggers or authors are of their opinion and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything. The information provided in this post is not intended to constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.}

If you don’t have the best credit but need to buy equipment for your business, rest assured that there are options at your disposal. While you might have to do some research and take some extra steps to get approved, you can lock in an equipment loan with a less-than-perfect credit score. Here’s everything you need to know about securing equipment financing with bad credit.

Can you get equipment financing with no credit check?

Lenders will check your credit score as part of the process of securing equipment financing. But don't let this deter you! Remember, your credit score is just one piece of the puzzle. Lenders also consider other factors about your business. So, even if your score isn't perfect, it doesn't mean you're out of options. 

Why equipment financing requires a credit check.

Your credit tells lenders how likely you are to repay what you borrow. If you have bad credit, they’ll view you as a risky borrower and may be more hesitant to lend to you. The good news is that many lenders have lenient requirements and serve borrowers with bad credit. 

These lenders often consider other factors like your annual revenue, profitability, cash flow, and outstanding debt when deciding whether to approve you for an equipment loan. Keep in mind, however, that if you have a bad credit history you might have to settle for a higher interest rate or make a larger down payment than a business owner with good or excellent credit.

Bad credit equipment financing options.

The following lenders offer equipment financing with minimum credit score requirements of 600 or below.

How to increase your chances of approval.

If you have bad credit but need to borrow money to fund the cost of your business equipment, certain strategies will boost your likelihood of locking in construction and heavy equipment financing, restaurant equipment financing, and other types of business equipment financing. Here are some ideas to consider.

Apply with Online Lenders

Compared to traditional lenders with brick-and-mortar locations, online lenders are usually more flexible. You’ll find that they are often open to lending to borrowers with less-than-perfect credit scores. Do your research and find several online lenders who specialize in bad credit equipment financing. 

Consider Equipment Leasing

It’s important to understand equipment financing vs. equipment leasing. By doing so, you can decide whether equipment leasing makes more sense for your unique needs. With an equipment loan, you make a down payment and finance the rest of the equipment cost. 

An equipment lease, on the other hand, lets you rent and use the equipment for a specific period. While most businesses return the equipment at the end of the lease, some decide to buy it at fair market value or explore other options outlined in their agreement. 

Offer Additional Collateral

In a typical equipment loan, the equipment itself serves as collateral. Since the lender can seize it if you default, they take on less risk. If you have bad credit, you might want to offer additional collateral, like your commercial vehicle or inventory, to help secure the loan and reduce risk for the lender. Just make sure you feel confident that you’ll be able to repay what you borrow or you might lose a valuable asset.

Increase Your Down Payment

The larger your down payment, the smaller the loan you’ll need to cover the cost of your equipment. If possible, save up for a hefty down payment so that lenders are more open to lending to you with bad credit. Not only will a larger down payment position you as a more attractive borrower, but it can also save you hundreds or even thousands in interest fees and lower your overall cost of borrowing. 

Perfect Your Business Plan

Your business plan is an important document that shows lenders who you are and what you plan to do with the funds. Take the time to look over and improve your business plan so that it accurately reflects your business acumen and clearly highlights how an equipment purchase will help your business. 

Apply with a Cosigner

A cosigner is someone with strong credit, a stable income, and significant assets. If you apply for an equipment loan with a cosigner, lenders will consider their financial situation in addition to yours. This can increase your chances of approval and potentially lead to lower rates and better terms. However, the downside of this strategy is that, if you don’t make your payments, the cosigner will be responsible for them.

Equipment loans for bad credit are available.

Don’t let bad credit prevent you from locking in the equipment loans you need. With a bit of creativity and patience, you can qualify for equipment financing with bad credit. As long as you choose a lender who reports on-time payments, an equipment loan can also give you the chance to improve your credit. Best of luck in your search for bad credit equipment financing.

*The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (January 2, 2024). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.