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Why Is It Difficult For Women Entrepreneurs To Get Approved For A Business Loan?

Very often, women business owners struggle to get business loans and are turned away by banks because of this or that reason. Some of the reasons for such refusal have to do with the fact that women may not have collateral, may have low or negative cash flow or revenue and lack enough preparation. Also, they may be rejected due to rigorous banking regulations.

  1. No Collateral

There are cases when a woman business owner turns to a bank for a loan but gets refusal because her business is considered risky and she lacks collateral. In one case, a company was classified as risky because it didn’t have a physical business that sold directly to the consumer. Even though the company had enough revenue in sales, it couldn’t get approved for a business loan.

  1. Rigorous Banking Requirements

As a rule, banks stay away from small businesses. When it comes to women entrepreneurs, banks become even more hesitant. The financial crisis of 2008 made banks set strict lending guidelines more often. This is rather bad for small businesses, especially the ones owned by women entrepreneurs since they count for 30% of all small to medium-sized businesses.

  1. Risk Factor

Lenders consider businesses owned by women entrepreneurs to be risky. This leads to potential discrimination. Such approach seems to be offensive taking into account the fact that women entrepreneurs have so many male entrepreneur competitors in their business fields. As a result, you can see many tech startups created by male entrepreneurs and not women as lenders think it would be too risky to approve women business owners for business funding.

  1. Low Revenue and Lack of Cash Flow

Low or negative cash flow and revenue are among the factors why women business owners get rejected when applying for a business loan. According to banks, such businesses won’t be able to pay back the loans. However, women entrepreneurs can apply for small business loans and microloans. A reputable business loan provider like (FAM) can get you approved for business funding without challenges. First American Merchant specializes in the high risk sector and offers the best small business funding options in the industry.

  1. Lack of Preparation

If a woman entrepreneur meets with banking lending professionals without proper preparation, she is likely to be rejected. It’s important to be confident during the meeting, be able to explain the reason why you’re trying to get funding and provide all the necessary documents.

As a woman business owner, you should never feel desperate. Research all your options, including your bank and alternative lenders, to get funding for your business. Compare all the available options to get the best for your business needs.