That banks are turning women small business owners away is no secret. Women tend to be overlooked for loans in the prevailing banking climate for a number of reasons. Here we look at some of the main reasons behind the plight of women with regards to credit services.
Perceived risk on the lender’s side
Lenders are very wary of any deals that may lead to losses on their end. Banks in particular are traditionally less willing to administer loans to small-to-medium sized businesses.
For women, this suspicion seems to multiply, perhaps because few women have followed new ventures such as tech startups through. The lenders tend to perceive women business owners as risky. They evaluate women critically on the grounds of their age and credit worthiness.
The perspective is never completely objective. Lenders seem to simply remain influenced by subjectivities that the industry has historically held. Male entrepreneurs are assumed to be less risky and are likely to get credit services more easily compared to women.
Lack of collateral
This is a common problem with online based businesses.
Many people will get behind the idea that online business are escalating. And a lot of women get so many opportunities to enter this niche. The problem comes in on financing.
Being online based means most of these companies have no physical businesses that sell directly to the consumer – that they can show a lender as collateral. Even though most of these businesses may be highly profitable with millions of US dollars in sales, banks will often perceive such a business as risky. In this business ecosystem, women entrepreneurs struggle to obtain business loans.
Thankfully, there are currently many financiers that do not consider a lack of brick-and-mortar location as a risk.
Strict banking regulations
We’ve said before that banks are traditionally hesitant as far as lending money to a small business is concerned. They have reasons for that. And while they might not tell you “No!” using the word, they set bottlenecks that openly inhibit women business owners from acquiring the loans.
As woman though, you can ditch the banks and resort to a suitable alternative lending service that are willing to administer loans to businesses considered high risk. FAM is one such lender that will readily offer you a merchant cash advance to kick start your business. It can be easier than you thought. Just get in touch with us for details.