Securing a loan for your small business may not be as easy as you think. Many businesses apply for loans every day, but only a few actually get the money from banks and other lenders.
The business world today is still male dominated, and female entrepreneurs may find it tough to compete with male loan applicants. A study by the California Reinvestment Coalition found that business loans that are given to small enterprises owned by women in the state have dropped by 70% since 2007. But there is no need to worry, because there are a few things that you can do to improve your chances of getting a loan.
Build and maintain business relationships
When you approach a bank or a small-business lender, what they want to know is that your business is poised for success. The extent of the reach that you have within your local business community is an indication of how serious you are about your business, and how well connected you are. Female business owners must be serious about building trusted relationships within their business communities. If you find it difficult to get started, look for small business support groups in your locality or mentorship programs in universities. Many people who work in these organizations also have close ties with lenders. These connections may come in handy during loan applications.
Organize your financial records
If your financial information is disorganized, it can hinder the loan application process. It is important for banks and other lenders to thoroughly verify all the information that you provide via appropriate documentation. If you do not have the necessary documents handy, it can delay the process. It may come across to lenders that you’re either not serious about maintaining financial records, or worse yet, incapable.
Explore multiple options
Don’t just apply to one bank and forget about it. Explore all the different options that are available before deciding on the final one. Spend enough time shopping around for a lender who will suit your specific needs. Remember that different banks have different rates, and different preferences for specific industries or businesses. Find one that will give you the best overall relationship, rather than just the lowest interest rate. Also don’t neglect small-business lenders who are more likely than banks to give you the money.
Lending programs for women
Some lenders offer loan programs that are specifically targeted at businesses run by female entrepreneurs. These kind of lending programs make it a little easier for your business to get the money. Apply for general loans and as well as women-oriented lending programs to improve your chances.
When you approach the lender, make sure that you know exactly what you’re going to use the proposed amount for. Vague requests for a certain sum of money and poor planning are likely to put lenders off and get your loan request rejected. Be prepared with specific information to suitably impress.
Prepare well, keep all documentation handy, explore multiple lending options, and put some collateral aside. With some effort, you will be able to find a loan for your business.