Financing for Women-Owned Businesses
How to Secure Financing for a Woman-Owned Business
The business world is often considered a dog eat dog world. In today’s weak economy, it can be difficult to secure financing for any business endeavor. Women often have a more difficult time securing the needed funds than men for the same type of business. Programs are in place, however, that are designed to provide assistance for women seeking to start a business or expand an existing business they own.
The government Small Business Administration (SBA) has programs that allow it to act as a guarantee agency to assist women business owners in securing loans from financial institutions. The SBA does not make the loans directly, but having its backing can make getting a loan much for a woman in business. The SBA can be contacted at www.sba.gov to ask questions or apply for one of their programs.
Some banks have affirmative action programs that are designed to help women and other minorities in securing financing for businesses. The requirements to qualify for special financing under these programs are typically not difficult. One key item to watch is when a husband and wife start a business together, if financing is secured under a program for woman owned businesses, the woman must be the one actually in charge. These institutions will often employ inspectors to look into businesses financed under special programs to ensure that the conditions for qualification are indeed being met.
While it may be more difficult, a woman can secure financing for a new or existing business on her own merit without using any type of special programs for women. The keys to doing so successfully are having a solid, well written business plan, being able to show realistic projections of anticipated income with loan payments scheduled in, and she must have a reasonable amount of her own money to invest along with the borrowed amount. A good personal credit rating is a must in these situations.
Most banks will deny loan applications made by anyone, man or woman, who has too low a credit score and/or does not have a sufficient amount of capital on hand to assure the bank that one is not just risking the bank’s money. They are even more difficult to obtain financing from given the number of business failures and banks requiring government assistance to stay open today. The current financial climate is not great for starting a new business and seeking financing for anyone and it can be more difficult for women.
Beware of scams when seeking to obtain financing for a woman owned business. A large number of ads claim to be able to sell a kit that can help secure a government grant for the purpose of starting a business. The government does have a wide variety of programs that provide grants for many different purposes pertaining to education, housing, and other needs. There are, however, no programs under which the government provides grants for the purpose of starting a business. If it did, everyone in the country would own their own government sponsored business.Posted on: April 3, 2012, by : AfricanSisters