Strategies for acquiring small business loans for women
With millions of women-owned business nationwide, many have had to work diligently to acquire needed resources to launch and run their business. However, whether a woman is launching a new business for the first time or is in full operation, she needs to properly monitor her current cash position on an ongoing basis and have resources available to tap into should an unforeseen issue arise. Especially since banks has decreased new business loans for women, it’s important to seek and have alternative ways to acquire capital close at hand.
When operating a business, you never know when you’re going to experience cash flow issues resulting in cash shortages due to factors, such as:
• Not enough cash sales
• Slow or uncollectible accounts receivables
• Little to no cash reserves
Having access to cash is just as important as other aspects of the business. Especially if your business has employees, you simply can’t afford to grapple with how you’ll address cash shortage issues when the problem is upon you. Rather, it’s best to seek small business loans for women before you need them. More importantly, a loan provided by capital financial services can simplify the overall process by making obtaining access to cash easier.
Small Business Loan For Women – Planing
There are several business loans available for women. But the best way to apply for them is before you actually need them – particularly when you are in good standing with creditors, suppliers, and financial institutions and are seen favorably and in a good light. Although there are alternative lending solutions available for women-owned businesses, you don’t want to be considered a credit risk either, but rather a responsible business owner with a good, sound repayment plan.
If you start off by borrowing small amounts at a time and repaying the loan off as planned, your business will be seen as less of a credit risk and more of a sound borrower. Not only will you begin to build a strong relationship with the capital financial services, but you’ll also be able to use your recent loan as launching pad to apply for future loans.
You can also consider getting pre qualified so that all of the hard work is already done long before you even need a loan.
What to Say to Lenders
When you approach traditional lenders, you’d typically need to be prepared to discuss your current financial status, your previous historical financial data (including any noticeable trends in revenue, such as during peak or seasonal periods that may cause sales to fluctuate,) and any projected financial information. You could use your financial history and trends to discuss any financial projections that you foresee along with your ability to repay the loan based on previous sales. If however, you are just starting out, you may want to present any financial projections. Including a projected income statement (also referred to as a profit and loss statement,) a projected balance sheet and a projected statement of cash flows.
However, when applying through alternative lending solutions for women, it’s a much more simplified process, whereby capital financial services only requires that you provide some basic personal and business information, which you should also be prepared to discuss should you need to – such as your business’ sources of revenue.
Unlike obtaining equity financing, obtaining a small business loan for women is considered debt financing, and will normally have a repayment start date in as little as 30 days. You must be able to confidently explain your ability to repay the loan based on your financials.
What Alternative Lenders Look for When Reviewing Loan Applications
Lending institutions will often review both your personal (consumer) credit history as well as your business credit score, referred to as your Paydex score.
When applying for a business loan for women, you should first look at your own business credit report so that you’re well aware of what’s being reported. The best way to go about this is to obtain a copy through Dun & Bradstreet if your business has been in existence for some time and you’ve established business credit with suppliers and vendors.
Alternative lenders also review key financial ratios to compare your business to other businesses that are operating in your industry. The key financial ratios used by most lending intuitions consist of the following:
1. Leverage Ratio
2. Loan to Value Ratio
3. Debt Service Coverage Ratio
Applying for Small Business Loans For Women Should Be Simple
Unlike traditional lending institutions, where you’re typically required to put up collateral, a down payment or act as the personal guarantor, that will never be an issue with GoKapital. When applying for a small business loan with GoKapital, you’ll find our process to be simple, without the complexities associated with traditional lending institutions. Contact us today.