Traditional lenders are not offering the credit access that woman business owners need to grow. That is why it is time to look in the direction of alternative lending to find small business loans for women.
As a women business owner, what type of alternative lending should you be looking for, and who are the best lenders offering small business loans for women? Here is a short-listing of the best alternative women business loan options.
Why Women-Owned Businesses Experience Difficulties?
Why the big gap? What is so unique about women-owned businesses that they don’t match up with male-owned businesses?
People offer different explanations. Some people say that women business owners pick low-growth industries such as retail, with about 10% of women-owned businesses fitting into the retail industry —and making up 30% of all retail companies. Women don’t like to document themselves as millionaires, different reports say, and don’t negotiate as much as men.
In the end, it could be that while new women-owned businesses grow up every day — around 1,200 businesses, in fact—few grow as quickly and as far as male-owned businesses. Women don’t have the same type of access to the working capital and their businesses go through.
How Women-Owned Businesses Start & Grow
Odds are good that these are all troubles that women business owners experience. And there are probably even more we haven’t mentioned. But let’s focus on business growth. Why is it so tough for women-owned businesses to grow the same way male-owned businesses can? Here are some figures that can articulate a story:
Initially, women-owned businesses clearly don’t develop as much. Usually, male-owned businesses are much more likely than women-owned businesses to employ people besides the owner: a clear sign of growth.
Additionally, women-owned businesses average annual revenues of $155,000, at the same time as the overall average stands at $400,000. which means women-owned businesses tend to be smaller. The real problem comes from the next level, though: growth.
When they have 5-9 workers and make between $250,000 and $499,999 annually, women-owned businesses exhibit a lot of problem moving forward and upward. Securing funding is an essential part of evolving a small business for nearly all small business owners, but Forbes articulate that women get only 80% of the capital men do when looking for funding.
Here are some alternative lending options that women business owners can use;
The SBA has possibly the largest array of small business resources for women business owners. We will get into those many small business funding resources below. SBA loans are basically loans guaranteed by the government. That means lenders experience less risk lending to you, and you qualify for better loan options than you would otherwise. SBA loans are excellent financing options for people who can qualify — you may get low-rate and long-term funding.
SBA loans especially the microloans are particularly good options in case you’re looking for business loans for women to start a business. For the right type of business owner, the microloan provides the small amount of capital many business owners need to get the business running.
Business term loans are the small business loans. They are lump sum loans which you pay back, plus interest, over a set fixed term. You’re probably aware of term loans from traditional lenders. But banks are not the most effective term loan lenders. Many alternative lenders provide low-rate, long-term financing and do so at a much quicker funding pace.
Business Lines of Credit
In case you are searching out for small business loans for women then you definitely need to consider a business line of credit.
A business line of credit is a flexible funding for your small business. A business line of credit sits in your back pocket—you only pay interest on the funds you get, and once you have paid back what you get your credit line is topped up to its actual amount. There are some lenders who offer low-rate lines of credit, however are difficult to qualify for.
Short-Term Business Loans
Short-term loans can be excellent small business loans for women business owners who only require a small amount of capital. For this reason, short-time loans can be appropriate for women to start their business.
Short-term business loans commonly come with terms between 3-18 months, and loan amounts can be anywhere from $500 to $250,000. Short-term business loans are also ideal options if you don’t have strong credit or have only been in business for short time.