Women who are in business understand the many challenges they face in maintaining their business. There are maintenance issues with equipment. Their employees need support. Building maintenance and upkeep are prime concerns. Women-owned business needs differ slightly from traditional male dominated business needs. Female entrepreneurs report that one of the biggest challenges is financial. Unlike male dominated businesses that usually have a proven track record of success, women-owned businesses struggle to prove that they got what it takes to succeed.
Traditional Business Loans
Women business owners, even those women that have been in business for years, often have difficulties securing traditional business loans. Banks do expect their borrowers to have sufficient collateral before they’ll lend any money. It is important for anyone expecting to borrow money to have documentation that cites how they will pay off the loan.
Traditional business loans are the most stable business loans entrepreneurs can get. Female entrepreneurs shouldn’t shy away from obtaining this type of loan. Traditional business loans allow for a good rapport and can be a catalyst for success. They also provide a simplified term loan that usually offers long term financing at low rates.
The small business administration (SBA) offers support through their loan programs for female entrepreneurs through traditional business loans. The SBA doesn’t actively lend money to small business owners but a SBA loan guarantees the lender will receive payment through these government backed loans. In essence lenders such as banks and other financial institutions face less risk while borrowers enjoy the security of a traditional business loan.
It is good to keep in mind that there are still banks and financial institutions that believe women business owners default on loans more often than their male counterparts. It is for this reason that securing loans for woman owned business can be quite difficult.
Alternative Business Financing
It is important to have some options when traditional business loans just don’t fit your business needs. A good financing option for women entrepreneurs is to utilize a business financing service like Go Kapital.com. Go Kapital.com (www.gokapital.com) provides options that women can use to make intelligent decisions.
Many business loans for women through these non-bank entities provide quick cash for emergency expenses. It is prudent to understand before securing a loan through these non-bank entities what criteria is needed for the loans. Go Kapital.com has many funding programs available for a diverse set of needs. These funding programs quite often have different criteria that lenders need to meet in order to secure a business loan.
Common criteria include:
• Gross Revenue-SBA 7a loans require a minimum gross revenue of $120,000
• Stable credit history and good credit rating
Important Considerations for Securing a Business Loan
Women-owned businesses get funded every day. Good documentation is critical for any business loan. There are many types of business loans for women. Government agencies such as the SBA and the Community Development Financial Institutions Fund (CDFI) are good resources to tap for needed revenue for operating expenses and maintenance costs.
The CDFI provides connections for disenfranchised business owners that don’t qualify for either traditional bank loans or SBA loans. The major factor in this type of loan is that it is community based. That means that the lender is more likely to loan money to businesses in their community.
In some instances it might be more prudent to start with a business line of credit before trying to secure a business loan. Proper maintenance of the line of credit provides proof that your business can handle money. It also provides some needed documentation to help secure the loan.
Financial advisors can help sort through the documentation and offer advice for your needs. Women-owned business needs can often get sidetracked because of the many “hoops” than women still have to jump in order to qualify for business loans.
Traditional or Alternate Financing
It is important to understand that traditional business loans do provide the needed stability that businesses need. Traditional business loans are often quite difficult to obtain because of the strict criteria for lending money. The reason is quite simple. Stability is achieved when both the lender and borrower can be confident that the money is secure. Borrowers understand that lessening the criteria could jeopardize the lender’s ability to lend money and increase risk.
Traditional business loans through banks and other reputable financial institutions are usually not granted to women entrepreneurs. The reason is that there are not many women that are in a high income bracket, but this is changing.
Many women rely on alternate financing through SBA or CDFI loans. These small business loans for women are less strict than traditional business loans while providing the similar support features. It is prudent and sometimes necessary to seek the advice of a financial advisor before trying to secure any business loan. A financial advisor, either through a service such as Go Kapital.com or through an accounting agency can help you weed through your options.
Final Thoughts
Your business is unique. Your business needs are as unique as your business. Only you know what you need to maintain your business. The very first thing you should do before making this important decision is to analyze your current status. The best financing option you can make is one that gives you the best results for you.