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A Business Loan for Women
In the past decade, the number of women-owned businesses has
boomed, bringing the of businesses owned by women to an all-time
high. Defined by the Small Business Administration as a business
with an ownership of 51 percent or more by one or more female
persons, women-owned businesses are on the rise, ranging from
corporate firms to at-home, online retail stores. With the
increase in women owned businesses, it is obvious that the
necessity of business loans for women are also greater than ever
before.
Most commonly, women seeking capital to finance their small
business ventures tend to consider a loan. Loans are available
for women in all types of businesses, ranging from bed and
breakfasts and catering, to pet supplies and photography, to
craft businesses and consulting. Loans for women entrepreneurs
are intended for enterprises in which women are majority
shareholders, and in which the business is also managed by one
or more women.
As with any other business, loans are often required to purchase
inventory, to expand or improve a line of equipment, or to build
or remodel a building to house the business and its employees.
Business loans for women can also be used to help with marketing
the business and its products or services to the appropriate
target market.
Before jumping into applying for a loan, however, determine the
necessity of a business loan. Turn to your written business
plan, and consider the following factors when weighing out the
pros and cons of obtaining a business loan for women.
1. Is the business in need of inventory or equipment? If the
business requires additional inventory or needs new or updated
for business expansion, a loan can offer the capital needed to
purchase these items.
2. Is the business having difficulty with sales, production or
in other areas due to much-needed company updates? If business
can potentially expand and bring in more profits with additional
funding, the necessity of a business loan may be crucial for the
business to move forward and at the same time, stay competitive
with other businesses in the same field.
3. Are there new ideas, products, or areas of service to be
expanded upon to increase production and profitability of the
business? The necessity of a business loan can be very high if
there are areas in which to expand that require capital. If
obtaining a business loan for women can potentially increase
profits, and if the loan can be determined to be of low risk to
the business and the loan payments fit into the current business
budget, the necessity of a business loan for women is probably a
positive step in the right direction.
Determining the necessity of a business loan for women can also
bring other factors into consideration when actually deciding to
move forward with a business loan application, including the
following positive aspects of obtaining such a loan:
1. The risk in obtaining a loan for a business owned by a woman
may be slightly less than that for a business owned by a man.
Not only do some banks and lenders recognize this, but women
business owners also enter into loan payments due to confidence
of making business improvements through a loan. Women tend to
have a different business sense than men, and their
non-traditional choices and style of operating a company tends
to be successful. This is due to the fact that women simply tend
to have a different view on possibilities and opportunities.
2. Many loans are created especially for businesses owned by
women. In some loans, both through the Small Business
Administration and through some lenders, the application will
focus on the woman's character, credit, experience and
reliability rather than assets. Because the necessity of a
business loan for women can be crucial for a business' survival,
these such loans offer a wonderful opportunity for those women
with good credit. Additionally, women with poor credit can also
obtain these such loans, though collateral is usually required.
3. Special loans are available for more nontraditional
businesses. As an example, there are loans available for those
with young children who wish to create a small, home-based
business.
Before stepping into a loan, or even applying for a loan, look
at everything involved to determine the necessity of a business
loan.
- Carefully examine and list purchases to be made with the loan.
Remove unnecessary purchases from the list, or make a separate
list for future purchases in which can be used with money earned
by the business, or can be put on a future loan once this first
loan is paid in full.
- Consider the term of the loan, and make sure that it's not too
long or too short for your business' specific needs. If you
haven't applied for the loan already, determine an acceptable
term based on your budget and needs.
- Examine the monthly payments required, or determine a monthly
payment to present to the lender that would easily fit into the
business budget. Don't try to squeeze in a higher payment in
hopes of earning more money with the business due to obtaining
the loan. Falling behind on just one payment can eventually lead
to financial disaster for the business. Remember, it's difficult
to "catch up" on payments once they've fallen behind.
- Research the service of the lender. If you've worked with a
specific bank or other financial institution for several years
and have a good amount of trust in then, it is probably safe to
apply for the loan there. Don't apply for a loan with a bank or
financial institution that you know nothing about. Do your
homework first.
About the author:
Rebecca Game is the founder of Digital Women ®, an online
community for women in business. A 30 year entrepreneur and
dedicated to helping other women find business loans. Visit her
site: Loans
for Women
http://loans.digital-women.com
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