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Over the last few decades, women have risen in the ranks to start and operate their own designer jewelry businesses. Many have taken out small business loans to open their own jewelry stores, started entirely new lines of work-friendly jewelry, or simply shared their love of everything sparkly with friends on e-commerce sites like Etsy. The jewelry business is projected to be worth an astounding $270 billion worldwide by the year 2020 – owing to the never ending demand for beautiful items that help celebrate every life achievement.

Women are experiencing success in the jewelry business

Earlier this year, a Forbes article highlighted the story of Jennifer Fisher, a successful entrepreneur in the highly competitive New York City jewelry market, who just celebrated 10 years of being in business. When asked what helped her to achieve success in this market, Fisher said that she, “created a strong business model from the start”, and that her customer needs have directed her designs. Creative and determined women can learn from the example that Fisher and other pioneers in the jewelry world can provide.

Jewelry stores need working capital for a strong foundation

What makes a jewelry store different is that this type of business takes a great deal of working capital to maintain the kinds of fashionable and trendy pieces that consumers desire. The costs of precious metals and gems for jewelry making have risen, and changes in the retail market to more blended jewelry (fine and costume) can make it challenging to stay afloat. Still, a talented jewelry designer and retailer can make a hefty profit with the right financial practices, of which small business loans are a part.

Hidden reasons your jewelry store was denied a small business loan

However, this method is not always foolproof as women may face rejection when trying to obtain a small business loan to fund a jewelry store. If you are facing this issue, here are a dozen reasons why you may be getting denied a small business loan for your jewelry store.

  1. There is a lack of business credit history. A good many small business owners do not realize that in addition to personal credit, their business also needs to generate its own credit score. If you have been funding your business out of your own pockets and not separating business income from personal, it’s impossible to establish this business credit.
  2. Your jewelry business doesn’t have a convincing business plan. Every business needs to have a basic business plan before approaching a financial institution for a small business loan. The bank or lender needs to see that a business owner has carefully researched the market, the risk factors, costs, marketing needs and competition to develop a strong business.
  3. You have far too much money tied up in inventory. It’s easy to sink all of your money into buying inventory for your jewelry store, but this means that you have less cash flow than you need in your business. Jewelry does hold its value for longer, but as styles and consumer tastes change, this inventory gets less and less valuable. It is far better to reduce inventory and increase the working revenues coming into your business before asking for a small business loan.
  4. The way you handle receivables leads to cash flow issues. Another common problem with many jewelry businesses is the practice of financing jewelry purchases in-store for consumers. This ties up your collections for months, while you are out of the product. Not handling receivables well can be a negative mark on an otherwise great business, so get into the practice of having customers use their own credit cards to pay for jewelry upfront.
  5. You’ve overestimated your assets. There is money tied up on jewelry materials, equipment, displays and fixtures in your business. However, your estimation of the worth is far from accurate when applying for a small business loan. Err on the side of being more conservative.
  6. It’s not clear how you will use the small business loan. You may have been rejected for a small business loan because you haven’t indicated how you will be putting the money to best use to grow or improve things.
  7. Overhead and expenses are out of control. In addition to inventory, you may be in a high-rent district or be paying too much in terms of expenses to operate a profitable jewelry store. You may also be pay-rolling too many employees during slow times.
  8. There’s little in the way of financial records. When you approach a lender, you need to have at least a couple of years of records that show clear profits and losses. Did you miss this step and bring in a pile of paper that makes no sense?
  9. You owe too much money to others. Before lending your jewelry store any money, a financial institution may also verify how much you are already paying on other loans and to vendors.
  10. It’s too early in your startup phase. Small home-based jewelry businesses don’t need much to get started, but a jewelry store can set you back as much as $20,000, according to some experts. A hidden reason your small business loan was denied is because it’s too early in your business to determine if this risk is worth it.
  11. The financial firm doesn’t know how much money you are putting up. Banks and other lenders very often want to see jewelry store owners putting up at least 10 to 20 percent of the money when asking for a small business loan.
  12. There’s some bad credit lurking in your past. Uh, oh…did you run a personal credit history with the three major credit bureaus before you applied for the small business loan? Make sure you do before you apply again in the future if you want one from a traditional bank.

While you may have made one of these mistakes when trying to qualify for a small business loan for your jewelry store, take heart by knowing that United Capital Source is a company that can help you achieve your dream of operating a successful venture. There are small business loans for women in business, merchant cash advances, and even small business loans for bad credit. Be sure to talk with one of our caring financial representatives to learn more.


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