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5 Business Loans Women Entrepreneurs Should Know About

Published By Janet Gershen-Siegel at November 29th, 2018

We’ve Got 5 Business Loans Women Entrepreneurs Should Know About

Here are 5 business loans women entrepreneurs should know about – and bonus loans! Our courageous research ninjas scoured the internet for the best small business loans for women.

There are a variety of great small business loans which women can make the most of today. And men can use most of many of them, too!

Business Loans Women Entrepreneurs Should Know About: 5. Cash Flow and Unsecured Financing

Cash flow financing is another good loan program for women, if you’ve been in business one year or more and have $10,000 in monthly revenue.

Unsecured financing is available for entrepreneurs who are female, up to $150,000. You can get an approval if you have good personal credit, and get 0% introductory rates for 6-18 months … even as a startup company.

Business Loans Women Entrepreneurs Should Know About: 4. Collateral-Based Financing

Collateral-based financing offers low rate funding. Personal credit quality and revenue do not determine your approval. Some appropriate collateral includes:

  • Account receivables and purchase orders
  • 401k, IRA, stocks, and bonds
  • Inventory
  • Equipment

The concept behind collateral-based funding is that a lending institution needs a guarantee. For the credit issuer, a great assurance that you will pay back financing is when your property is at stake if you do not.

Business Loans Women Entrepreneurs Should Know About: 3. the Small Business Administration

The SBA offers some terrific loan programs such as their 7(a) loan for working capital. In order to get an approval you’ll need to have:

  • 3 years of business and personal tax returns
  • Good personal, business, and bank credit
  • Collateral for 50-70% of what you’re borrowing

Business Loans Women Entrepreneurs Should Know About: 2. SBA Express

The SBA Express program is another fantastic loan program for women. You can get an approval for a loan of up to $350,000. Get rates of 4.5-6.5%. You can even get a line of credit good for seven years. You will not need to offer any collateral for loans of up to $25,000. There is a turn-around in 36 hours.

Business Loans Women Entrepreneurs Should Know About: 1. Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE)

For women who are also veterans, the Veterans Women Igniting the Spirit of Entrepreneurship (V-WISE) is an SBA funded program. It is provided by the Institute for Veterans and Military Families which includes online training.

There is also a conference that harnesses the one-of-a-kind esprit de corps of women veterans and female military spouses. And there is even a follow-on mentoring through a community of partners.

Business Loans Women Entrepreneurs Should Know About: Bonus: Alternative Lenders

If you have decent personal credit and tax returns for two years that show a profit, try alternative lenders. They may have programs that could work. You could get an approval with rates of 7% or less. Lenders will want to see some kind of profit on your tax returns.

Business Loans Women Entrepreneurs Should Know About:  Bonus: Microlenders

Microlenders do not lend a lot of cash, just as the name implies. These are small loans for generally $500 to $30,000. Here are some sources of microloans:

SBA Startup Microloans

In addition, the SBA offers Startup Microloans. The program is called 7(m). There are loans for up to $35,000 for working capital and growth. The average loan amounts are about $10,000.

These funds come directly from the SBA. This is unlike the 7(a), where the funds come from a bank.

An Alternative – Business Credit Building

Rather than going for a loan, business credit building is a long-term asset which can help a business throughout its entire life cycle.

Business credit is credit in a small business’s name. It doesn’t attach to a business owner’s individual credit, not even if the owner is a sole proprietor and the solitary employee of the corporation. Therefore, a business owner’s business and consumer credit scores can be very different.

The Advantages

Because business credit is separate from personal, it helps to safeguard a small business owner’s personal assets, in the event of a lawsuit or business insolvency. Also, with two separate credit scores, a small business owner can get two different cards from the same vendor. This effectively doubles buying power.

Another benefit is that even start-ups can do this. Heading to a bank for a business loan can be a recipe for frustration. But building small business credit, when done right, is a plan for success.

Consumer credit scores depend on payments but also various other components like credit utilization percentages. But for corporate credit, the scores truly merely hinge on whether a business pays its bills timely.

The Process

Establishing small business credit is a process, and it does not occur without effort. A small business has to proactively work to develop small business credit. However, it can be done readily and quickly, and it is much quicker than developing personal credit scores.

Vendors are a big part of this process.

Performing the steps out of order will result in repetitive denials. Nobody can start at the top with business credit. For example, you can’t start with store or cash credit from your bank. If you do you’ll get a rejection 100% of the time.

Company Fundability

A company has to be fundable to lending institutions and merchants. Due to this fact, a corporation will need a professional-looking website and email address, with website hosting bought from a vendor such as GoDaddy.

And also company phone and fax numbers need to have a listing on 411.com.

At the same time the company telephone number should be toll-free (800 exchange or similar).

A company will also need a bank account devoted solely to it, and it must have every one of the licenses essential for operating. These licenses all must be in the specific, accurate name of the small business, with the same corporate address and telephone numbers.

So note that this means not just state licenses, but possibly also city licenses.

Working with the IRS

Visit the Internal Revenue Service web site and acquire an EIN for the small business. They’re free. Select a business entity like corporation, LLC, etc.

A small business can begin as a sole proprietor. But they will most likely wish to change to a type of corporation or partnership to diminish risk and take full advantage of tax benefits.

A business entity will matter when it concerns tax obligations and liability in case of a lawsuit. A sole proprietorship means the owner is it when it comes to liability and taxes. No one else is responsible.

Sole Proprietors Take Note

If you operate a corporation as a sole proprietor, then at the very least be sure to file for a DBA (‘doing business as’) status.

If you do not, then your personal name is the same as the business name. Because of this, you can end up being personally liable for all company financial obligations.

Also, per the IRS, with this structure there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 probability for corporations! Steer clear of confusion and noticeably lower the chances of an Internal Revenue Service audit at the same time.

Beginning the Business Credit Reporting Process

Start at the D&B web site and obtain a totally free DUNS number. A DUNS number is how D&B gets a company in their system, to produce a PAYDEX score. If there is no DUNS number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the company. You can do this at https://www.creditsuite.com/reports/. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

This way, Experian and Equifax will have something to report on.

Vendor Credit Tier

First you ought to build trade lines that report. This is also called the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start acquiring retail store and cash credit.

These kinds of accounts tend to be for the things bought all the time, like coffee, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But to start with, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are commonly Net 30, instead of revolving.

Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid completely within 60 days. In contrast to with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To kick off your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting agencies. When that’s done, you can then use the credit.

Then repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Helps

Not every vendor can help like true starter credit can. These are merchants that will grant an approval with a minimum of effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

But you may have to apply more than once to these vendors, and you may need to buy some things you do not need, to prove you are responsible and will pay in a timely manner. Consider donating nonessential items to charitable organizations.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then progress to the retail credit tier. These are businesses like Office Depot and Staples. These companies are likelier to have products you need.

Use the company’s EIN on these credit applications.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are businesses like BP and Conoco. Use this credit to purchase fuel, and to repair and maintain vehicles. Make certain to apply using the small business’s EIN.

Cash Credit Tier

Have you been responsibly managing the credit you’ve up to this point? Then move to the cash credit tier. These are service providers like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.

These are companies such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are commonly MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any mistakes as soon as possible. Get in the habit of checking credit reports and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian and D&B for only $24/month. See: https://www.creditsuite.com/business-credit-monitoring. Update the information if there are mistakes or the data is incomplete.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any problems in your records. Errors in your credit report(s) can be fixed. But the CRAs normally want you to dispute in a particular way.

Disputing credit report inaccuracies generally means you send a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always mail copies and keep the originals.

Fixing credit report inaccuracies also means you precisely detail any charges you dispute. Make your dispute letter as understandable as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you sent in your dispute.

A Word about Building Business Credit

Always use credit sensibly! Don’t borrow beyond what you can pay off. Track balances and deadlines for payments. Paying off punctually and in full will do more to increase business credit scores than nearly anything else.

Establishing corporate credit pays off. Good business credit scores help a business get loans. Your lending institution knows the business can pay its financial obligations. They recognize the business is bona fide.

The small business’s EIN links to high scores and lenders won’t feel the need to require a personal guarantee.

Business credit is an asset which can help your business for years to come.

Business Loans Women Entrepreneurs Should Know About: the Takeaways

The very best small business loans for women are available. Check out these 5 business loans women entrepreneurs should know about and get the financing your small business needs!

And, for both male and female business owners, building business credit means you can get more and better loan opportunities. Business credit is an asset and it will pay dividends for years to come.

Learn more here and get business loans women entrepreneurs should know about.

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