Entrepreneurship is on the rise along with an increasing demand for small business loans for women. According to CNBC, there has been a 13% increase in the number of female entrepreneurs since 2011, while male entrepreneurs have increased by just 5%. The lure of flexible working hours and pursuing a career they are passionate about is appealing to more and more people. In the years since the economic downturn, many people have reassessed whether employment is really the stable option it once was and have decided to take control by starting their own business.
However, research indicates that women are finding it more difficult than men to secure funding. Despite the fact that 40% of American private businesses are owned by women, they receive just 7% of venture capital investment money. Accessing small business loans for women seems to be harder than for men, with loan approval rates that are 15-20% lower for female entrepreneurs than males.
It appears that the accessibility of small business loans for women does not match up to their requirements for funding. Despite the fact that it’s more likely for a female entrepreneur to start a business than a male, financial institutions don’t appear to be offering the same support. In this article, we explain the different sources of small business loans for women and how you can maximize your chances of being accepted.
Traditional Small Business Loans
When you think of small business loans then you probably think of traditional lenders like banks. These institutions have been operating for decades and offer a wide range of different loan types. They have established brands and a national presence which means it’s easy to pop into a branch and discuss your business needs.
Unfortunately, these types of lenders also have a traditional perspective of who they want to lend to. They perceive all start-ups to have a high risk of failure and generally only lend to businesses that have been trading successfully for at least three years. Most banks are not interested in revenue projections or your sales pipeline, they only make lending decisions based on your credit score or trading history.
There is often a lengthy and complex application process involved with traditional lenders. If you have the patience and can provide several years’ worth of accounting history, then you are in with a chance of securing a loan from them. By demonstrating that you deliver consistent annual revenue figures and have a strong repayment capability, you are likely to be able to access long-term loans with competitive interest rates. Women business owners with an established track record should be able to secure small business loans via this option with the right paperwork and business credit history.
If you are a brand-new start-up, have less than 3 years of trading history, or don’t have a perfect credit score, then you may be better off looking at alternative lenders. They offer small business loans for women with competitive terms but take a more practical approach to eligibility. Although some lenders will try to take advantage with extortionate interest rates, a little research will help you seek out more affordable options.
At United Business Funding, we look for 3 months of trading history rather than 3 years. We can approve your application within 24 hours so that you get access to the working capital you need in just 5 days. We don’t have strict credit history requirements and will consider most situations but do like you to have a $15,000 average monthly bank account balance. We are flexible when it comes to the industry that your business is in and offer a variety of repayment options to suit your needs.
Alternative lenders generally move more swiftly than traditional institutions. For women entrepreneurs who are growing their businesses quickly, alternative lenders can provide financial support precisely when you need it rather than several months down the line. They place less emphasis on your personal credit report and pay closer attention to how your business is performing. Alternative lenders were small businesses once, so they tend to consider every application on its individual merit instead of taking a broad strokes approach.
If You Need to Build Up Your Credit Score
If neither traditional or alternative lenders are a viable option, then you may decide to proactively build up your credit score. This process may take a few months but will allow you to access more competitive funding options in the future. Over the long term, it may save you money as you will be able to take advantage of lower interest rates and repayment terms that suit your requirements.
One step you can take to improve your credit score is to take out business credit cards. By using them to pay for essentials and paying them off each month, you can quickly build up your credit score and show that you are a reliable customer. Just be sure to make the payments on time otherwise you may actually hurt your credit instead of improving it. Creating a recurring payment that covers the minimum will ensure you don’t accidentally forget.
Another way to boost your credit history is to request trade lines from your suppliers. Business reporting requirements mean that some of these companies will inform credit bureaus of customer activity. This can help to build up a positive track record showing that you pay regularly and on time, which lenders like to see.
Summary Overview – Small Business Loans for Women
There are a growing number of options when it comes to small business loans for women. Whether you are brand new to entrepreneurship or have an established and successful business, you will find lenders who are willing to support your journey. Increasing competition between traditional institutions and alternative funding companies mean that rates and terms are getting increasingly favorable for customers. Instead of deciding an application based on trading time and credit score, alternative lenders consider a much wider variety of factors. This is helping to make small business loans for women far more accessible and competitive than they have been in the past.
How We Can Help
United Business Funding offers accessible small business loans for women (and men too) that support entrepreneurial organizations across the country. We can give you the capital you need, for today and tomorrow. While credit is a small factor, we approve your short-term business loan based on the current cash flow of your business – not years of financial history. Once funded, payback is made through a small, fixed daily or weekly payment from your business bank account. It’s that easy!
Our tailor-made packages are the ideal solution for established businesses or relatively new ventures. Unlike other lenders who require three years of trading history, we require your business to have been operating for a minimum of three months. We’ll take care of all aspects of finance, so you can focus on making your business a success. We can also help you with other areas of funding such as arranging lines of credit or equipment financing.
Get access to the working capital you need, even if you are dealing with less-than-perfect credit or have already been denied a bank loan. Whether you’re looking for a one-time cash infusion or have an ongoing need, your business opportunities can become a reality with United Business Funding.
Our hassle-free application process is fast and simple, with unrivaled support the whole way. CLICK HERE to learn more about our small business loans for women or call us FREE on 888-351-3863 to speak with one of our funding advisors today.