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Published By Faith Stewart at September 5th, 2019
There is a storm brewing in the distance. Can you see the clouds building? Can you hear the thunder rolling? There is electricity in the air. Animals are acting strange. They know the tide is turning. Women are taking the business world by storm as more and more women owned businesses are starting up each year. As a result, more and more are looking into how to get start up business loans for women.
The problem is, despite the growth in women owned businesses, females still seem to get an unfair slice of the funding pie. For some reason, women and women owned businesses are seen as a greater funding risk than men and businesses owned by men.
How then are female entrepreneurs ever supposed to get up and running? While we cannot erase a sexist system overnight, a lot can be said for being completely prepared when going to apply for a startup loan. If the choice is between a female applicant that has all her ducks in a row and a male applicant that just threw things together, then the female applicant at least has a better chance than she would otherwise. Consequently, it pays to be prepared.
There are a lot of things that any borrower can do to make their odds of loan approval higher. Here are just a couple:
Learn business loan secrets with our free, sure-fire guide.
Every lender is going to need to see a number of things related to finances to ensure you are able to repay the loan. Most noteworthy are the following:
Certainly, if you are planning on getting a secured loan, they will need all the information on whatever assets you intend to use for collateral. That means titles, liens, registrations, etc. Having these things ready to go can be very beneficial to you during the application process. It can make things go much smoother.
This often gets missed, even though it is vitally important. You can’t just throw it together, even more so when looking to get start up business loans for women. Sometimes an application will have a series of questions or a template to fill out meant to act as a business plan, but this is not what you want to use.
A professional small business development plan should include:
o Analysis of audience: What need will your business fill, and for who? How will your business fill the need? This is where you will include that information.
o Competitive Analysis: Is there a business already filling this need? Is there room for more? What makes your business better than theirs?
To get ahead of the competition even further, hire a professional business plan writer if you can. They can work with you to gather all the necessary information and compile it into the traditional, acceptable format. As someone trying to get start up business loans for women, you need every advantage you can get.
If you cannot hire a business plan writer however, there are a number of resources that can help you. The Small Business Administration offers a template, and your local small business development center can help as well.
Learn business loan secrets with our free, sure-fire guide
This tip is unique to women owned businesses, meaning it is another advantage you can have over businesses run primarily by male entrepreneurs. While this certification does not mean you are guaranteed anything when trying to get start up business loans for women, it could be a determining factor depending on what variables the lender may be working with.
There are two options for businesses who wish to qualify as a certified woman-owned small business (WOSB). The Federal Contract Program will let business owners self-certify. The other option is to work with one of the four SBA approved third party certifiers. There is no advantage of one over the other, except that it is free to self-certify, while there is a fee for a third-party certification.
The first step is to look over the requirements for eligibility. Number one is that a business must have one or more women who are U.S. Citizens in control through ownership (at least 51%) and management. They cannot just be an owner but the primary manager be male, nor can the primary manager be a female but the owner be a male. This ownership must be direct and non-conditional. The day to day of the business has to be handled by a woman, and a woman must make the long-term decisions related to the business. In addition, the female must hold the highest position of office and cannot be employed outside of the business. This woman must also work full time during business hours to qualify.
The certification program is designed to make women owned businesses more visible as such. It doesn’t afford these businesses any sort of special treatment and it is not a charity program. It can, however, make them stand out to those contractors and lenders who are working to reach goals specific to certain types of businesses, including those owned by women.
Okay, so if you are looking to get start up business loans for women, you probably think a traditional bank is your only option. It’s really not. In fact, depending on your situation, it may not even be your best option.
The thing about traditional loans from standard lending institutions is that you generally need to have security, a lot of income, and a stellar personal credit score. If you have all that, great! However, many entrepreneurs who want to get start up business loans for women do not have all three of these things. That can make getting loans from a regular bank difficult.
These are lenders that generally function online only. In addition to faster processing and approval times, meaning you get your funds faster, they also often have less stringent credit and income requirements. It is actually often easier to get start up business loans for women from a non-traditional lender.
The thing to remember is few lenders offer loans specifically for women. The key is to overcome the gender gap in business loan approvals as a whole.
Learn business loan secrets with our free, sure-fire guide
You need to shop around for the best options for your specific business, but this list is a great place to start.
Microloans are a great option for start up business loans for women, and Grameen is one of the few lenders that offers microloans specifically for women. The loan amounts range from $2,000 to $15,000, and they also offer financial training and support.
Payments are reported to Equifax and Experian, meaning these loans help borrowers build their credit.
These are going to be traditional lenders that partner with the Small Business Administration to offer loans to those that may not typically qualify. The SBA does not offer loans themselves, but rather they secure loans for borrowers with partner banks, thus allowing for a little more wiggle room when it comes to income and credit score.
That doesn’t mean these loans are easy mind you. While interest rates are typically lower, and the minimum credit score is somewhat lower than what a bank would typically require, the application process is notably lengthier and more complex. The reduced interest rate and lower credit minimum makes it a good option for start up business loans for women however.
There are multiple loan programs available through the SBA. The best option for many women as far as startup loans is the SBA microloan program. Similar to Grameen, it offers smaller amounts of money, up to $50,000, for micro businesses and startups.
Kiva is a rare bird. They offer loans to businesses, but their platform is much different than that of traditional or even nontraditional lenders. It is a breed of its own. Rather, it is sort of a cross breed between crowdfunding and lending. They offer loans with a 0% interest rate. Even though you have to pay it back, it is absolutely free money. They do not run a credit check either. The only requirement is that you have to get at least 5 family members or friends to donate money for your business, and you yourself have to give at least a $25 loan to another business on the platform.
Since we already gave you three ways to get start up business loans for women, I’ll offer up a bonus tip. Use all the resources available to help you find all the funding you need. There are a ton of places to find support, networking, and even money to help you get your business off the ground and growing.
This agency helps female entrepreneurs by offering programs that SBA district offices coordinate. These programs include counseling, federal contracts, business training, and access to capital and credit.
These centers seek to level the playing field for all women entrepreneurs, who still face unique obstacles in the business world.
This is a federal advisory council that is non-partisan in nature. It serves as a source of advice and counsel to the Small Business Administration, Congress, and even the President. It is the government’s only independent voice for female business owners.
Here is what it boils down to. There are not a ton of startup loans specifically for women, but there are some ways that women can increase their chances of loan approval with just a little common sense.
Of course, business credit can do a lot to boost your chances as well. And find out more about building business credit.