About 40% of new entrepreneurs in the United States are now women making it one of the fastest-growing segments of entrepreneurs. Women owned businesses have been growing at double the rate than those of male owned businesses. However, it can be difficult for women to get financing for their small business. Compared to men, women are less likely to be approved or receive the full amount of the loan according to a report by the Federal Reserve. In order to improve the chances of being approved, doing your research is extremely important. Fortunately, there are small business loans designed specifically for women.
Knowing which small business loans are available for women will increase the chances of being approved. It is also important for women entrepreneurs to understand how the use of business credit may benefit their operations. In this article, we are sharing tips to help women-owned business prepare for the application process and get funds they need to help their business thrive.
Do not use your personal credit to pay for business expenses
To build business credit you should consider using business credit when possible instead of using personal credit. By using personal credit, women business owners are less likely to seek commercial credit. Doing this will make it difficult to get business loans because you are not building your business credit. Applying for a business credit card and using the card for business expenses will help you build a solid business profile.
Ask suppliers if they offer payment terms
Another way to build a strong business credit profile is by taking advantage of trade credit. Suppliers typically offer 30-, 60-, or 90-day terms to their customers. Make sure your supplier reports your timely payments to the business credit bureaus.
Have a strong relationship with a banker
A banker can help you build a strong credit profile and help you gain access to funds your business needs. A strong relationship will help the banker be more understanding of what kind of financial support your business will need to help it grow.
Look at other places instead of banks
If you have a new business, you can consider other options instead of banks for loans. Crowdfunding or nonprofit lenders often offer low or no interest microloans for startups. If you go to your bank where you have other business accounts, they might be hesitant to work with you. Other types of places you can get financing is by using your personal cash or savings, using financial gifts or any support from family or friends.
Look for lenders who are committed to women-owned businesses
Consider lenders that have committed to working with women-owned business and who have lending programs for women business owners. Do some research and see if there are any lenders in your area that have programs for women entrepreneurs.
Know more about business credit
You should know and learn more about what your business credit profile looks like. Reviewing your profile and making sure the information on it is correct will improve your chances of getting approved. You can see your business credit report by using Experian, Equifax, and Dunn and Bradstreet. If there are any mistakes that have not been taken care if it can affect your ability of getting a small business loan.
Connect with other women business owners
Networking with other women business owners is a great way to get tips on financing. The SBA has a network of more than 100 business centers across the United States to help women business owners. Another networking group that you can check out is the National Association of Women Business Owners (NAWBO). These organizations are specifically designed to help women find the right tools to grow and run their business.
Organize your financial information
Each lender has different requirements but if you have the right financial information ready it will make the process a lot faster. Some financial information you might need include tax returns, P & L statements, and any other documents related to your business finances.
Know what you need
If you are vague with your loan requests, it can hinder your chances of getting approved because it will make the lender wary and uneasy. Being prepared and able to explain to a lender the amount you are looking for and the purpose of your loan will increase your chances of approval. You will also need full financial information and current debt service for your business.
Despite the difficulty that women face when finding the right type of financing for their business, the tips in this article will ensure you get the financing you need. It will help you create a strong business profile to improve your chances of receiving the funds your business needs.