There is an uncomfortable but no less true reality: women entrepreneurs in Latin America and the Caribbean continue to face greater challenges than their male counterparts because of their gender. 

This inequality has specific impacts for women who lead their own businesses, including limitations in accessing financing. The informality in which most women-owned businesses subsist and their lack of credit history also make them less attractive to financing institutions such as commercial banks.

Another obstacle that women face in raising capital is related to the social and cultural valuations of women. This is gender bias, as it is called, the inclination -conscious or not- towards a person or group based on whether they are male or female, and which stems from certain social and cultural norms that assign certain roles to each.

In the area of credit opportunities, this bias translates into a lower probability of loan approval, lower loan amounts, worse credit conditions and even the possibility that their applications will be rejected, as indicated by IDB Invest. Research by ProMujer, the FAIR Center, Zona Shero and Tecnológico de Monterrey indicates that 73% of small and medium-sized enterprises (SMEs) led by women do not manage to obtain sufficient economic resources to boost the growth of their businesses.

Although this reality is undeniable, it is also true that things have begun to change in the region and there are various efforts to offer financial solutions to women entrepreneurs, as well as a greater willingness on their part to seek resources to grow their businesses.

If you are one of these women, in this article we would like to share with you some aspects to keep in mind before and during your search for financing, as well as options aimed at women entrepreneurs like you.

Although there are many options, choosing the best one for your business will depend on knowing what they are and what each one offers and is looking for. During your search, keep in mind the objective for which you require the funds, the moment of evolution of your company and the resources you have available.

The most common options are banking institutions, among them: 

• Commercial banks 
• Development banks

You can also turn to non-bank financial entities, such as cooperatives, financial institutions or technological financial services (fintech).

Although there are multiple banking institutions in the financial systems of the countries of the region, consider that if you are just starting your business, it is likely that obtaining resources from these types of entities will be more difficult, due to lack of credit history.

If this is your case, another option may be private capital. Consider among these sources especially friends, family, and angel investors. 

If your company is in a growth phase, you can explore options such as venture capital and strategic investors.

Keep in mind that private equity will be looking for a return on their investment, so they will bet on companies with high growth potential and a proven business model. In addition, each private equity source has its own criteria to measure the return on its investment.

Before starting the search for resources, we recommend you to make an evaluation map of the possible sources of financing, identify the requirements of each one, their associated costs and what they are looking for. This will help you not only to know which ones are best suited to your business profile, but also to adjust your message when approaching each one of them.

A comprehensive list of financing options for SMEs and resources to help you in your search is available in this guide that we have prepared at ConnectAmericas.

Opportunities in the region

Given that for women entrepreneurs there is an invisible barrier, based on gender bias, that can limit their possibilities of accessing traditional financing entities, it is important to be aware of all the options available, but above all to take advantage of those focused or specialized in supporting projects led by women.

For example, the Centro Regional de Promoción de la MiPyME (Cenpromype) has different financial solutions programs focused on women entrepreneurs in the Central American region. Learn more about them here.

In the Caribbean, the regional trade promotion agency Caribbean Export offers financing solutions for companies in the region and in 2018 launched the We-Xport program to support Caribbean women entrepreneurs in their export processes.

In countries such as Mexico, there are several options, such as the Training Program for Women Entrepreneurs of the Mexican Association of Entrepreneurs and the Crezcamos Juntas program of Nacional Financiera, a development banking institution.

The Mexican federal government also has a program focused on MSMEs led by women called Mujeres PyME, while at the local level several states have similar projects, such as this one in the country's capital.

Chile also has financing programs focused on women entrepreneurs, such as CreceMujer of its state bank or Capital Abeja Emprende, which supports women who want to start their own business. There is also the Fondo Esperanza, which provides microfinancing for entrepreneurship.  

In Ecuador you can find Banco Pichincha's SER program, while Colombia has several programs, such as Fondo Mujer Emprende, Núcleo E Fondo Mujer Emprende and Mujeres Empresarias-Fondo Mujer Emprende.

If you want to know what other options exist in your country, we suggest you use the Financiate tool. It is a search engine on the ConnectAmericas platform, which contains aggregated information by country of the banks that offer loans for SMEs, as well as the different financial services available.

For its members, ConnectAmericas offers, in addition to a complete list of partner banks by country, information to internationalize your business according to the sector in which you operate and a system to directly send your company's requirements to the partner banks. You can open your account here, it's easy, fast and free of charge.

Regardless of the source you want to turn to for funding for your business, it is essential to be prepared to get the attention of your potential funders before you start your search.

How to prepare?

1. First, conduct an internal review of your business. This process can take anywhere from three to nine months. Remember that the time you spend on this internal review is also an investment in your business and will improve your chances of getting the financing you seek. Rushing your search without due preparation can work against you in achieving your goal.
2. Verify that you meet the characteristics desired by your potential funder. This does not mean that you have to modify the vision and objectives of your business. Rather, it is about being aware that any person or entity that plans to invest in your company has their own expectations and objectives of the companies they wish to support. Ask yourself how you can adapt your proposal to the profile of that potential investor, based on the characteristics they are looking for.
3. Last, but by no means least, prepare the presentation of your pitch deck or executive summary. Keep in mind that it is in this last stage where many proposals fall through, so it is important to dedicate enough time to prepare the presentation material for your potential investors. Also remember to adapt it to digital media.

What should it include?

• Executive summary: two pages maximum, with key aspects and without including confidential information.
• Pitch deck: develop it in presentation format and no longer than 40 pages.
• Projected cash flow: spreadsheets detailing your business plan.
• Financial statements: include them if you have them.
• You can also include a demo of your product or service or a video or multimedia presentation. Consider this as a plus that you give to project your company. Check out our course "Business Plan in 7 steps"

Attention to terms and conditions

Another important aspect to keep in mind is the terms and conditions. Although this stage of a negotiation is usually handled by each company's lawyers, it is important that you get involved in the detail.

What does that mean?

In every potential investment there are legal documents that are discussed and negotiated between the potential financier or investor and the owner of the company, in this case you. Some are prior to the transaction, such as the letter of intent, letter of terms or confidentiality agreement, and others are subsequent, including debt agreements, stock or asset transfer agreements and meeting minutes.

You can find out what other documents exist at each stage in this list, but we want to emphasize the letter of terms, since the negotiation process of this document will define the conditions and key aspects of the relationship that you will establish with your investor from that moment on.

It is essential that you pay close attention to this process, even if you have legal counsel. Remember that the objective of negotiating terms is to find a middle ground between what the investor wants (to receive what he expects, to recover his investment, to avoid contingencies) and what you want (certainty in the transaction, to avoid additional risks to the investment, freedom of action).

You can learn more about the process of preparing for the search for financing in the LEADS Mujer Virtual Accelerator, where you will also learn about growth strategies, sales, marketplace and talent management, among other useful topics. 

Also consider that it is a process that takes time and it is not always a direct path and it does not always work the first time. Be patient and do not lose focus of your goal when looking for it.