How to Find Small Business Loans for Women

Funding Start Ups for Women-owned Businesses

Nov 3, 2009 Fleur Hupston

Small business loans are often the first step in turning great hobbies or ideas into successful ventures. Business loans for women are relatively easy to get.

Women who need small business loans to get started do not need to think of the process as painful, complicated or lengthy. Loans are available for women entrepreneurs in a variety of fields such as catering, consulting, beauty care, bed & breakfasts, photo studios, pet supplies, greeting cards and more.

Small Business Loans

Many lenders will approve loans up to $30,000 based on personal credit. The lender concerned may still want to see a business plan and hold the small business owner concerned personally responsible for repayments. Having a good credit score and minimal debt will increase the chances of getting small business loans approved.

For larger amounts, it may be necessary to go the route of applying for state-promoted loans for women business owners. SBA loans (Small Business Administration) loans can be applied for, but the decision makers will review the application carefully and want to see a business plan and history.

Borrowing from 401k, up to 50% of the assets in a solo 401K or $50,000, whichever is less, is a good option if really cash-strapped. The woman concerned will be borrowing her own money and paying it back with interest, usually within five years. Another advantage is that there are no taxes or penalties imposed for borrowing in this way.

Venture Capital to Raise Funds

Typically, an investor or a group of investors will lend money to women owned businesses but they will expect to have ownership over a certain portion of the business and be part of the decision making process. The advantage is that they are well-connected and will have a stake in the business, so they will help to make the business work.

Funding Start Ups with a Financial Partner

Think of finding a financial partner by approaching family members, friends or work colleagues to fund a start up business. Draw up a contract that all parties are satisfied with, detailing repayments,interest rates and/or whether the partner will get a percentage of the profits.

A financial partner will be more likely to lend money if he or she sees that there is a business plan in place, the idea is a good one with a real chance of success, and that the woman/women concerned are hard working and reliable.

Funding by Means of a Cash Advance

This is not really a loan to start up a business, it is rather for working capital requirements. Lenders offering a cash advance get their money from credit card sales. This reduces the burden of paying back a loan and the terms and conditions in order to qualify for a cash advance are relatively straightforward and simple.

Business Loans for Women Through Angel Investors

Unlike venture capitalists, angel investors don't generally insist on being decision makers, but they are interested in businesses that have very good market potential. They want to see that the product is "hot."

They want shorter returns on their money, preferably five years or less. Angel investors each have their own criteria and objectives, some want a stake in the business, others want securities. They will ask about marketing strategy, existing customers, teamwork and many more questions besides wanting to know what the business is about.

More Small Business Information that may Interest the Reader:

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The article How to get Business Loans with Bad Credit examines how to go about getting a small business loan, even with a less-than-perfect credit history.

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Source:

money.cnn.com, Article "Can I use 401(k) savings to start my own business?", by Janice Revell, information retrieved 3 November 2009.

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