Why are Business Loans for Women So Difficult to Get?

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Monday, October 9th, 2017

Now, more than at any time in history, women of all ages have grabbed the reigns of business ownership, and are generating both direct and indirect employment and economic activity. That’s the good news!

The bad news is that women continue to face obstacles that prevent them from getting business loans, and reaching their full entrepreneurial potential. So, to figure out why business loans for women are so difficult to get, we’ve compiled the top 3 reasons why banks often deny these loan applications:

  • Low Personal Credit Scores

Banks, credit unions and many other lenders point to credit scores as a “universal standard” that prevents loans from being approved. So in order to prevent taking on more risk than they deem necessary, banks will only approve business loans for women with excellent credit scores. When only 20% of Americans have perfect or near-perfect credit, it’s surprising that banks won’t lend to the majority of the population.

At National Business Capital, we believe that your future is much more interesting than your past which is why we work with women who don’t have perfect credit scores. With a loan approval rate of 90%, we can work with almost anyone! In fact, we have a special program for low credit business loans to help business owners who may be down on their luck.

  • Not Enough Time in Business

Next, banks typically will not accept a loan application if the business has not been operating for at least two years. With at least two years of verifiable business history and positive cash flow, you may have a chance at receiving a business loan from a bank!

For everyone else who has been in business less than 24 months, this funding can actually make or break their growth and success. Instead of helping businesses “make it”, banks are interested in financing profitable businesses as they may have a better chance of repaying the loan.

However, National Business Capital knows that a cash infusion during the first two years of business can help a struggling business reach success. That’s why we only require six months in business and consistent positive cash flow is not a necessary requirement to get funding.

  • Not Enough Collateral

Lastly, all bank loans are considered secured loans, meaning that they must be backed by assets such as real estate properties, equipment, cash savings, etc. Not only do your business assets become collateral for your bank loan, but your personal assets can sometimes be included (house & car).

When evaluating the value of your collateral, many banks will undervalue assets to assume less risk. For example, if your $50,000 building is evaluated to be worth $30,000 by the bank, you will have to pledge more collateral ensuring that the bank has more assets to fall back on if a loan payment doesn’t come through.

These two issues are common problems for business owners who don’t want to sacrifice their assets or who do not have enough collateral to satisfy a bank. At National Business Capital, we offer both secured and unsecured loans so that if you do not want a loan backed by collateral, you have options!

Next Steps

Is all of this fair? No. Is there something that women can do about it? YES! The answer is to partner with a company that has proudly been approving business loans for women since it opened its doors: National Business Capital.

Unlike banks and credit unions, we don’t believe that credit scores are “the end all and be all” of a business owner’s credit worthiness. We are much more interested in what our clients are doing today, and what they have planned for the future. That is why our approval rate is around 90 percent, compared to about 20 percent at big banks.

If you’re tired of banks saying “no”, read more about their reasoning and the funding options you still have in our free eBook “How to Get Business Funding When Banks Say ‘No’” today:

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