Guest post by Megan Totka
There are countless signs that the workforce is really ready for women leaders. However, female entrepreneurs still have trouble securing business loans. A study done by the California Reinvestment Coalition found that in California, small business loans given to women dropped by 70 percent between 2007 and 2009 – this included women who were financially secure. For female-owned small businesses hoping to receive a loan, take a look at these five tips to help you streamline the process.
Have Your Finances in Line
The fastest way to get denied is to meet with lenders with your financial information in disorder. As an applicant, keep in mind that lenders have to verify all information you documented and the better organized the statements are, the easier the process is on the lender.
This also means you must make sure you pay your bills in a timely manner, report your income and have an explanation of how your small business will use its loan. Don’t forget to have some money stashed away as collateral to put down on the loan – it’s usually a requirement.
Explore Your Lender Options
Prior to making a final choice, it’s smart to consider all available financial options to find the right funding for your small business. Business owners should shop around for the lender that best suits their needs; not all banks have the same appetite for projects, rates, or industries. This makes it important to look at the costs of a relationship in its entirety, not just the rate of the loan. Both chain banks and independent lenders are good options.
Build Strong Community Relationships
Small business lenders want to feel confident that the businesses they are investing in are on their way to success. It takes time and concentrated effort to establish yourself as a trusted business in your community.
To begin, seek small business support organizations like small business development centers. Oftentimes, advisers at this type of organization work with lenders – this professional relationship can benefit you as you begin the small business loan process.
Seek Women-Specific Lending Options
Female entrepreneurs face an abundance of competition regardless of where they apply for a business loan. Luckily, there are lenders who have loan programs devoted to small businesses owned by women to make the process a little simpler for these businesses to receive funding. It’s a good idea to apply both for standard loans and women-specific programs at the same time to increase your chances of securing the money you need.
Understand What You Need and Confirm You Will Use it the Best Way
Prior to meeting with the lender, make sure you can explain the exact amount and reason you need the loan – it’s one of the most vital factors that lead to approval behind proof of financial stability. Loan requests that are vague make a lender cautious, so prepare yourself and have all information clear and concise to help streamline the loan application process.
Securing a small business loan is an uphill battle but with the right preparation, you will have a better shot at landing it.
Female entrepreneurs, what tips can you share to help other women get small business loans?
Megan Totka is the Chief Editor for ChamberofCommerce.com. She specializes on the topic of small business tips and resources. ChamberofCommerce.com helps small businesses grow their business on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.
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