Small Business Loans for Women: Options
Small Business Loans for Women
Small business loans are often difficult to obtain for many aspiring female entrepreneurs. Many potential business owners, especially women, have marched into a bank with a dream, a stellar business plan, and the notion that no bank would turn down such a fantastic business venture, only to leave the bank disappointed, searching for other avenues of credit. Even established female-owned businesses often have difficulty obtaining expansion loans and lines of credit. Women frequently encounter more hurdles than men do when applying for a small business loan. Small business loans for women are often denied by traditional lenders based on a number of factors that more frequently apply to female business owners.
Lack of a Solid Credit and Employment History
The absence of a solid credit and employment history can derail small business loans for women. Many women who have spent years raising children and working as homemakers have not had the opportunity to establish a personal credit history. Often, the credit cards and payment histories are in the husband's name. Women are also often unable to show a long-standing and reliable work history. Despite these facts, however, many women have been successfully running small businesses for years and managing their household finances, even where traditional banks just see zero credit and a spotty work history.
Lack of Assets
Small business loans for women are often denied over a lack of assets. Many married women do not own assets that banks can accept as collateral for a loan. More often than not, the husband will legally own residential property and other assets. Single women, meanwhile, often rent and do not own their homes. As many business loans are secured against residential property, women are often shut out from traditional business funding.
Credit Tightening
The present credit squeeze is making it even more difficult for women to obtain small business loans. A recent Federal Reserve survey reported that as many as a third of all banks have increased restrictions for small business loans. Small business loans for women have become even more difficult to obtain in tough financial times. The bad economy and the mortgage foreclosure crisis have led to an overall credit tightening throughout the lending industry.
SBA Loans Harder to Get Approved
Federally guaranteed small business loans are becoming increasingly difficult to acquire in these tough financial times. The United States Small Business Administration (SBA) has traditionally been an almost guaranteed source of funding for qualified women small business owners. The SBA pre-qualification program offers women a means to secure funding that would otherwise be denied through traditional lending sources. However, the SBA only acts as a guarantor of loans made with private lending institutions. Private banks are tightening credit standards, and the SBA has raised loan fees. SBA loans are harder to get, and it can take months before a business owner receives funding. A female business owner trying to stay afloat in a struggling economy cannot wait months for funding.
Alternative Sources of Funding
Home equity lines of credit are still available for women business owners who own real estate. However, this type of credit carries a high risk due to the bad economy and declining home valuations. Personal credit cards are another option for female business owners shut out of normal lending channels. Using personal credit cards, however, can also be risky due to higher interest rates and a rise in fees. The holder of a personal credit card is also at the complete mercy of a lender who can raise interest rates at any time.
Borrowing against Future Credit Card Receivables
Another alternative source of funding is borrowing against future credit card transactions. An established, female small business owner can often qualify for a cash advance secured by future credit card receivables. This funding is typically available to a small business owner who can demonstrate monthly credit card processing amounts of at least $3,000 to $5,000 dollars over a period of 12 months.
Borrowing against future credit card receivables is an excellent way for merchants to obtain venture capital for their businesses. The concept is simple. A business owner sells the lender a fixed dollar amount of future credit and debit sales at a discount. The lender is automatically paid when the business owner is paid. There is no fixed time for repayment, unlike with a traditional business loan. These types of cash advances secured by future credit card sales have many advantages for women borrowers. Typically, no collateral is required for this funding. Once approved, the money is immediately transferred to a checking account. A poor credit history does not automatically disqualify you from this funding. The business history and an established amount of monthly credit card transactions are most important. In short, small business loans for women can be found if a business owner is willing to consider alternative sources of funding.
Small business loans are often difficult to obtain for many aspiring female entrepreneurs. Many potential business owners, especially women, have marched into a bank with a dream, a stellar business plan, and the notion that no bank would turn down such a fantastic business venture, only to leave the bank disappointed, searching for other avenues of credit. Even established female-owned businesses often have difficulty obtaining expansion loans and lines of credit. Women frequently encounter more hurdles than men do when applying for a small business loan. Small business loans for women are often denied by traditional lenders based on a number of factors that more frequently apply to female business owners.
Lack of a Solid Credit and Employment History
The absence of a solid credit and employment history can derail small business loans for women. Many women who have spent years raising children and working as homemakers have not had the opportunity to establish a personal credit history. Often, the credit cards and payment histories are in the husband's name. Women are also often unable to show a long-standing and reliable work history. Despite these facts, however, many women have been successfully running small businesses for years and managing their household finances, even where traditional banks just see zero credit and a spotty work history.
Lack of Assets
Small business loans for women are often denied over a lack of assets. Many married women do not own assets that banks can accept as collateral for a loan. More often than not, the husband will legally own residential property and other assets. Single women, meanwhile, often rent and do not own their homes. As many business loans are secured against residential property, women are often shut out from traditional business funding.
Credit Tightening
The present credit squeeze is making it even more difficult for women to obtain small business loans. A recent Federal Reserve survey reported that as many as a third of all banks have increased restrictions for small business loans. Small business loans for women have become even more difficult to obtain in tough financial times. The bad economy and the mortgage foreclosure crisis have led to an overall credit tightening throughout the lending industry.
SBA Loans Harder to Get Approved
Federally guaranteed small business loans are becoming increasingly difficult to acquire in these tough financial times. The United States Small Business Administration (SBA) has traditionally been an almost guaranteed source of funding for qualified women small business owners. The SBA pre-qualification program offers women a means to secure funding that would otherwise be denied through traditional lending sources. However, the SBA only acts as a guarantor of loans made with private lending institutions. Private banks are tightening credit standards, and the SBA has raised loan fees. SBA loans are harder to get, and it can take months before a business owner receives funding. A female business owner trying to stay afloat in a struggling economy cannot wait months for funding.
Alternative Sources of Funding
Home equity lines of credit are still available for women business owners who own real estate. However, this type of credit carries a high risk due to the bad economy and declining home valuations. Personal credit cards are another option for female business owners shut out of normal lending channels. Using personal credit cards, however, can also be risky due to higher interest rates and a rise in fees. The holder of a personal credit card is also at the complete mercy of a lender who can raise interest rates at any time.
Borrowing against Future Credit Card Receivables
Another alternative source of funding is borrowing against future credit card transactions. An established, female small business owner can often qualify for a cash advance secured by future credit card receivables. This funding is typically available to a small business owner who can demonstrate monthly credit card processing amounts of at least $3,000 to $5,000 dollars over a period of 12 months.
Borrowing against future credit card receivables is an excellent way for merchants to obtain venture capital for their businesses. The concept is simple. A business owner sells the lender a fixed dollar amount of future credit and debit sales at a discount. The lender is automatically paid when the business owner is paid. There is no fixed time for repayment, unlike with a traditional business loan. These types of cash advances secured by future credit card sales have many advantages for women borrowers. Typically, no collateral is required for this funding. Once approved, the money is immediately transferred to a checking account. A poor credit history does not automatically disqualify you from this funding. The business history and an established amount of monthly credit card transactions are most important. In short, small business loans for women can be found if a business owner is willing to consider alternative sources of funding.
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