When sisters Elaina and Emily Kovach opened Intro Boutique in downtown Cleveland in 2016, they were unsure whether their small business would succeed. “We didn’t know what we were getting into,” Emily said.  

Emily and Elaina were reluctant to take out a loan to start their business. They didn’t want to be saddled with loan obligations if their business failed to take off. Also, Emily explained, she and Elaina grew up with a debt-averse mindset. 

Rather than take out a loan, they invested a small amount of their personal funds into starting their business. As their business has grown over the past nine years, they have largely avoided applying for external financing. Instead, they have continued to reinvest their profits into expanding their business. 

Mending the gap in downtown retail 

At the first business Elaina owned, a blow-dry bar, customers often asked her where to shop for women’s clothes in downtown Cleveland. Seeing an opportunity, Elaina and Emily took a leap of faith and started their boutique in November 2016.  

The sisters first opened the boutique in a small space in downtown’s 5th Street Arcades. As the business quickly grew, they moved to a larger storefront in the same arcade in 2018. The arcade is an ideal location for foot traffic because it neighbors vibrant East 4^th Street’s restaurants and bars. Intro Boutique focuses on selling what Emily described as “well-made, washable, wearable, timeless basics” at an affordable price point.  

“Some people get scared away thinking a boutique is going to be this super high-end, very expensive place,” Elaina said. “We’re not! We’re here for everyone.” 

The sisters recall friends and family doubting their decision on where to locate their business. However, Emily and Elaina have no regrets about locating downtown instead of in Cleveland’s suburbs. They are proud to be the only women’s boutique in downtown Cleveland, playing an important role in revitalizing downtown retail.  

“We watch places open and close in the suburbs all the time. I love being a part of downtown,” Emily said. Elaina agrees, saying she feels like their business “is a part of the city.”  

Data provide insight into financing challenges 

In addition to location, a strong relationship with a financial services provider is important for small businesses. Like the majority of women-owned businesses, Emily and Elaina work with a bank for their financing needs. What drew them to that bank, they said, were favorable interest rates and its small business programs. 

More broadly, access to financing products such as loans and lines of credit affects the health of small businesses. According to the survey, 64 percent of women-owned firms applied for some type of financing in the prior year, compared with 58 percent of men-owned firms.  

There are multiple reasons why businesses may seek out financing. Some businesses apply for financing in order to fund an expansion, while others need financing in order to meet their operating expenses. While Emily and Elaina have not applied for financing in the past year, managing and meeting expenses has been a challenge for them. Elaina recounted a recent unexpected increase in Intro Boutique’s electric bill. Fluctuating bills create difficulties, they said. 

Survey data shows that their experience with operating expenses is typical. Paying operating expenses is the second most commonly reported financial challenge faced by women-owned firms. Women-owned firms are much more likely than men-owned firms to report this as a challenge; 63 percent of women-owned firms experienced this challenge compared to just 52 percent of men-owned firms. 

Furthermore, women-owned firms are more likely than men-owned firms to state that they applied for financing in order to meet their operating expenses. For both men-owned and women-owned firms, this was the most commonly reported reason for applying for financing. However, while almost two-thirds of women-owned firms applied for financing to meet operating expenses, only just over half of men-owned firms did the same. 

A closer look at financing trends 

While women-owned businesses face greater difficulties meeting operating expenses, their chances of getting the credit they apply for has gone up. In 2023, the survey showed that women-owned firms were fully approved for loans or lines of credit just 44 percent of the time, compared to 54 percent of men-owned firms. Women’s prospects improved considerably in 2024, with women-owned firms reaching a 54 percent approval rate compared to 50 percent for men-owned firms.  

Data on firms that didn’t apply for financing in the prior year reveal additional insights on the experiences of women-owned firms.  

Men-owned firms were more likely than women-owned firms to state that their primary reason for not applying for financing was already having sufficient financing. Women-owned firms were more likely to cite debt aversion or a belief that they would not be approved as their primary reason.