For any small business, trying to secure a loan can be a daunting task. Of all businesses that apply, less than half are able to get the funds they need. Talk about unsettling odds.
Toss in the fact that business banking is still a male-dominated world, and finding funding as a female entrepreneur can be downright intimidating.
Difficult doesn’t mean impossible though. As the old adage goes, “preparation is the mother of victory.” By doing some prep work, you can empower yourself and conquer the funding battle. Here are five tips to help you get started:
1. Leverage your local community
At the end of the day, securing a loan is about gaining trust. Seek out small business groups in your community and get involved. These types of organizations always have room for smart, motivated talent. Trust me, they’d be happy to have you!
And since these groups attract many people who work with lenders, making connections here can boost your odds of getting a loan approval down the road.
The SBA also provides local resources to help women business owners succeed, including nearly 100 educational centers around the country. According to the SBA, these women’s business centers were specifically designed to “level the playing field” for women entrepreneurs.
2. Get your financial ducks in a row
Regardless of who you know, nothing’s going to persuade a lender as much as the raw numbers. Gather all your personal financial statements, plus your business’s Profit and Loss statement, balance sheet, and projected financials for the next year.
You’ll also need to pull together all the documentation that proves your business is legit. These include legal documents, licenses, articles of incorporation, leases, etc.
3. Lock your “story” down
Most lenders don’t care whether your male or female; they want to know why investing in your business is a solid bet. And next to proving your financial stability, being able to explain exactly how much money you need–and why you need it–is the most important factor in getting approved.
Without hesitation, you should also be able to describe why your business exists and what the opportunity is. This is where your passion can shine through and make a real difference.
If you need help creating or refining your business plan, there a some great online solutions to help you pull it together.
4. Figure out who you want to work with
Remember, you’ll likely be doing business with these people for a long time, so look for lenders with a good reputation and that support the type of funding you want. This doesn’t necessarily mean big banks. Less than half of small businesses reported having good or excellent service from large banks. Ouch.
Some lenders have even created loan programs dedicated to women-owned businesses. To boost your chances of being approved for funding, apply for loans from traditional lenders and these exclusive female programs at the same time.
5. Know where your credit stands before you go
If you don’t know where your business credit stands, you should find out before you apply for a loan. Increasingly, lenders prequalify loan applications by looking at your personal and business credit scores. In fact, the SBA now prescreens all of its most popular loans with one business credit score.
Because it helps eliminate bias, relying on business credit scores may be good news for women borrowers. Take advantage by knowing what’s on your business credit reports and ensuring it’s error-free before you start the loan application process.