Hello ladies. As a woman working in finance, I am always keeping an eye out for information that can help my fellow females secure financing, customers and success in their small businesses. In that search, I came across an article last week that I found super helpful, entitled How to Get a Small Business Loan: Tips for a Female Entrepreneur.
As women business owners, you now represent 60% of all privately-held companies in the US. Yet, you only receive 5% of traditional loans. If you have been frustrated in trying to secure a loan for your small business, you are not alone. Fox Business reported that:
“Loans given to female-owned businesses in California have dropped 70 percent since 2007… Even if a female business owner is financially secure, it’s more than likely that she’ll be turned away.”
When I interview traditional bankers about this phenomenon, they say that 1) women don’t apply for loans as often as their male counterparts and 2) women submit less organized applications. Come on ladies, we can fix this!
We just need a plan. Here are some helpful tips:
- Don’t apply for a loan as a start-up. Nine out of ten times, business borrowers are turned down for their first loan request because they are applying as soon as they start their companies. While some lenders require five years in business, nearly all lenders require at least one full year, in order to prove that you have customers and the ability to repay the loan.
- Get involved and ask for help. While you are filling out that first year of business, you should take steps to get a lending relationship in place.Reach out to small business support groups, such as university mentorship programs or small business development centers. Many advisers at these organizations work with lenders, and their professional relationships can benefit you in the loan application process.
- Know exactly how much money you need and how you plan to repay it. Be able to explain to a lender the exact proposed amount and purpose of your loan. This is the most important factor in getting approved, next to proving financial stability. Vague loan requests often make a lender wary, so being prepared with specific information can only help you in the loan application process.
- Know your finances and be organized. Nothing will get your loan application denied faster than having your finances in disarray. Lenders need to verify all the information you give via documentation, so have the necessary statements and reports organized and ready for review. Make sure you’re paying your bills on time, reporting all your income, and able to explain how you will use the loan.
- Know that you have options. While chain banks are a good place to start your loan research, authorized small business lenders like Dealstruck can be much more personal, and therefore more likely to give you the money.
- Seek out women-specific lending programs. Some lenders have implemented loan programs dedicated to women-owned businesses to make it a little easier for these business owners to receive funding. I suggest applying for general loans and women-centric programs simultaneously to increase your chances of receiving the money.
It is most important to know that you are not alone, and that, with the right guidance and an organized plan, women are actually more likely to repay loans than their male counterparts, so your business is likely a better investment for lenders like us. I’m happy to help if you have any questions, and look forward to helping you through the process.