It is not always easy being a woman in business. Owning your own business is already difficult on its own, but a man dominated field is even worse. It may seem like at times the odds are stacked are against you. If you are are inquiring about a small business loan for women there are somethings you should know first. The Small Business Administration estimates that only 30 percent of the allocated business loans went to women-owned businesses in the last year. The numbers are far lower for women who have experienced financial hardship or need what the industy calls a “bad credit business loan”.
Fortunately, there are alternatives loans that allow you help grow your business or buy you some time. If you are looking to make that expensive expansion, invest in efficient equipment, or maintain a steady payroll, here are some options through direct lenders.
What is The Difference Between a Traditional Business Loan and Alternative Business Loan?
For traditional lenders the primary focus for you receiving a loan is on your credit score. If your score is below 630, your chances of getting a small business loan (SBA), decreases exponentially. It is the number one reason small businesses are not financed. When it comes to a small business loan for women with the use of alternative lenders their primary factor is on your revenue. Your credit score is not a factor in most cases. Direct lenders look at your business’ revenue over a period of usually three months. If your business is profitable, you should be able to acquire a small business loan.
Get Organized Before You Apply
Before applying for a small business loan for women, it is important to have a definite answer on exactly what you would like to do with your loan. Firstly, you do not want to take out loans if you are not financially able to pay it back. Ask yourself, will this benefit my business? Is this a repair that can wait? Is their debt that is preventing me from expanding? Not only is it important to keep you and your business financially sound, but it also lends itself to helping you determine the type of loan you should take out.
Once you figure out the answer to the questions above, determine how much money you are hoping to receive, and create a breakdown of the funds and where they will go. Having a break down helps ensure you will be using your loan smartly. Then gather your three months of bank statements and have them ready before you apply for a loan. The process for a good lender is generally painless, but staying organized helps make it even easier.
B2B Lenders and Funding Programs
You may be surprised to know that there are a number of different types of loans for obtaining a small business loan for women. We will break down all the possible options that most lenders offer. This will give you a better idea of what options are out there and what is right for your business. As always, this is a starting point. We encourage you to do additional research on lenders and investigate the different types of loans they offer.
Merchant Cash Advances
Merchant cash advances are perhaps the most popular option for small businesses owned by women who have a credit processor. This loan provides your business with up to 500,000 in the form a line of credit. After your loan has been approved and processed, you will be able to receive the money immediately, for some lenders in a span of hours. Ideal for emergency repairs or any other pressing matter, this loan is a viable option for a small business loan for women who need money quickly. In addition, business owners also prefer this method because they are skipping the use of a middleman. You do not need to wait weeks or months to find out your SBA loan was not accepted.
Business Line of Credit
Similar to a merchant line of credit in the sense that is a credit, but differs because it is a loan that is used for precautionary reasons. You never know when a natural disaster could strike and leave your business in shambles or even a lawsuit could destroy your revenue. A business line of credit is there to give you peace of mind that is something happens to your business, that you are prepared to fight it.
Banking Only Loan Programs
Despite its name, banking only loan programs do not go through the traditional banking process. Banking loan programs are mainly used for businesses that do not possess a credit card processor. Instead, direct lenders base their loan proposal on your “cash flow” combined with financial good standing. Banking Only Loans provide extra security and privacy than traditional loans and businesses who qualify. They often also have more pull with the negotiation process of their loan. This could be ideal for obtaining a small business loan for women who have a relatively good credit score.
If you own a retail or product based business this loan is ideal for you. When a busy season is approaching and you need more stock than normal. An inventory loan is intended to help you have enough stock for a shorter period. They are intended to be paid off quickly, as soon as your stock is sold. Do not lose your business because you do not have enough inventory in your warehouse.
Working Capital Loans
Working capital loans are for your day to day operational expenses. If you are relatively new business or a business that is going through the expansion process, you tend to be racking up more financial responsibilities quickly. A working capital loan can help buy you time for your business to generate extra revenue and getting you on a more consistent schedule. It is important that you understand that the old saying “you have to spend money to make money” is completely valid. Traditional lenders have their own version of a working capital loan, but they require a large collateral to provide small business with this type of loan.
Receiving a Small Business Loan for Women with Bad Credit
In summary, if you are a woman with a small business do not fret if you do not have the credit or the time to apply for the traditional business loan. Alternative lenders offer multiple options that make receiving a loan, easier than ever.