Women have come a long way in terms of starting and running powerful organizations of their own design. Today, there are many women CEOs and other female leaders who are shaping the industries they work in. According to the most recent figures from the National Association of Women Business Owners, one-fifth of all privately owned forms with revenues of $1 million or more are owned by women entrepreneurs. This represents around $1.5 trillion in total sales and 7.9 million jobs. Over the decades, women have gone from being financially dependent on husbands to being independently wealthy. This has transformed society for future generations.
Even so, there are a few myths about small business loans for women that prevail. These are false ideas that don’t have to get in the way of starting and growing a small business using smart financial practices.
MYTH #1 – I DON’T NEED A BUSINESS PLAN TO GET A SMALL BUSINESS LOAN
One of the myths that women entrepreneurs fall prey to is the idea that they don’t need a written business plan in order to get a small business loan. This document is a very critical component of all startup businesses, therefore it’s a good idea to create one sometime in the first year of business. Banks and other financial institutions often ask entrepreneurs if they can review a copy when evaluating their creditworthiness. While you may not need one when you work with United Capital Source, you will want to develop this core business document early on and use it as a foundation for long term success.
Your small business plan should include your mission statement, your vision for the company, how you will meet your financial goals, how you plan to market and expand your business, and what your exit strategy will be once it reaches a certain point.
MYTH #2 – FINANCIAL ORGANIZATIONS WON’T LOAN MONEY TO WOMEN WITHOUT A HASSLE
Women entrepreneurs often go into the process of applying for small business loans with the understanding that they will be treated badly by financial institutions. This comes from generations before them that may have had issues getting loans without co-signors or male support. In the past, it was a real hassle for a woman to get a loan for any purpose, let alone a small business venture.
The truth is that today, banks and other financial institutions realize the viability of women-owned businesses. They are much more likely to approve the business capital a woman needs to run and expand her business. Keep in mind that more financial companies offer alternative funding to women because, statistically, women repay their debts on time.
MYTH 3 – I WILL NEED COLLATERAL TO GET A SMALL BUSINESS LOAN
An interesting aspect of women in business is that they are less apt to carry a lot of collateral with them, in the form of property and equipment – unless they are in an industry that requires this. More women go into businesses that are service-oriented or deal with technology so this takes less collateral. A myth that has existed for some time is that you must have a lot of business collateral to put up against a small business loan, if you want to get approved.
Instead, small business lenders look at a lot of other factors such as, length of service, monthly profits, and the small business owner’s ability to pay the loan. If you accept credit card payments and have been approved with a merchant account, often this is all you need to get a small business loan. In most cases, lack of collateral never comes up.
MYTH #4 – SMALL BUSINESS LENDERS WILL ONLY CONSIDER MY BUSINESS AS A HOBBY
Another myth that women entrepreneurs may believe when it comes to getting a small business loan is that lenders will look at their business as a hobby. Since many businesses may have started out as a casual interest (when the kids were small) and then blossomed into a full-fledged business, this can be a concern. A woman doesn’t have to prove that this is a real business. It will be evident from the time that the business has been operational, the kind of monthly profits it brings in, and the future outlook of the business.
If you find that you are dealing with a bank that is treating your business as if it’s a hobby, then by all means check out the small business loan programs for women that UCS offers. You have worked hard in your business and you deserve to be treated with respect.
MYTH #5 – BAD CREDIT DISQUALIFIES ME FROM GETTING A SMALL BUSINESS LOAN
Life can be difficult at times, especially when trying to juggle the responsibilities of a family, career, and business finances. It can be easy to dip into personal savings to pay for small business needs, only to find the money is running out to pay for other responsibilities. This vicious cycle can lead to credit challenges, including a bad credit score. The myth that many entrepreneurs believe is that there is no hope of obtaining small business loans if they have bad credit.
You may be interested in knowing is that that there are a number of small business bad credit loans available that are designed to help anyone restore their business credit rating. These programs often include flexible repayment terms and low monthly payments to make it easy to get a cash injection for the business.
Don’t believe these myths about small business loans for women. They are simply barriers to getting ahead in your business. Women are the influencers and a catalyst for positive change in every industry and community. Having a steady cash flow can make your small business flourish in uncertain times, and provide more jobs for other hard-working people.