Owning a business is a dream for many women but not everyone is capable enough to turn their dream into a reality. It takes a lot of financial capital to start a business. And getting a business loan is no child’s play. Under such unique circumstances, it is really difficult for women entrepreneurs to acquire funds and use them to start their businesses or to develop their already existing ones. Through this article, we intend to guide all women entrepreneurs about the process, advantages, and shortcomings of a business loan.
Challenges Faced by Women Entrepreneurs
On a day-to-day basis, women entrepreneurs have to face a lot of challenges when they look for funding. They are as follows:
- Discrimination: Discrimination against women entrepreneurs has been a drawback in every industry and the financial industry is no different. Sadly, money lenders may persive women entrepreneurs as less confident business individuals so the lenders find it difficult to take risk by giving them money. That is why they offer a stricter loan policy and charge an increased rate of interest to women entrepreneurs.
- Limitations on assets: Women entrepreneurs more often than not faces the challenge of limitations on assets. That is because, women entrepreneurs usually doen’t have huge assets like properties to put it as a security against loan. As a result they find it difficult to acquire a large amount as loan there by creating a hindrance in business operations.
- Lacks networking: A lof of women entrepreneurs find it difficult to get professional mentorship and networking opportunities which can come in handy during a fund raiser.
- Limited Information: Many women entrepreneurs does not have the financial literacy to understand the different types of loan options available to them. So, it becomes difficult for them to choose the appropriate loan, that’ll help them to grow in future.
Benefits of Business Loans for Women Entrepreneurs
For a woman entrepreneur it is really difficult to obtain a business loan but once they get the loan it becomes absolutely pivotal. The benefits of msme loan for women entrepreneurs are as follows:
- Financing Expansion: A loan helps in injecting positive inflow of cash in the organisation. It helps to fund important business requirements like, buying of assets and many other business requirements.
- Good Credit Score: Timely payment of the loan EMI, helps an ogranisation to maintain a healthy credit score which eventually helps in getting future fundings as well.
- Boost in Confidence: Obtaining multiple loans from the market induces a feeling of validation which helps in boosting the confidence of the entrepreneur. As a result businesses urge to take more risks when it come to business strategies and operations
- Boosting the operations: A loan bring in positive in flow of cash which in turn helps to boost financial operations thereby helping the organisation to explore different markets and contribute to the boost of the overall economy.
How to Apply for Business Loans for Women Entrepreneurs?
With right research and outlook even Women Entrepreneurs can transcend all hurdles and obtain multiple loans for themselves. The step-by-step guide to apply for Business Loans for Women is as follows:
- Research work
- Identify Your Requirement: It is very important for women enterpreneurs understand their needs in the first place. So, it is better to identify the type of business loan, loan amount, the payment policy of the loan to be taken.
- Navigate Different Loan Programs: Look for different business loan options available at your disposal and coparte their policy and rate of interests.
- Look for Women-cenric Loan Programs: Many financial institutions, be it government or private, provides loan specifically tailorled for women entrepreneurs. Look for programs of such sort.
- Make the Application Strong:
- Develop an impactful business model: Developing an impactful business plan will serve as an example of you competency and in turn will convince the money lender to lend you money.
- Maintain a Good credit score: Timely payments of loan EMIs help in maintain a good credit score. A good credit score helps an organization or secure more funds in the future.
- Prepare the necessary documents: Keep all the business documents up-to-date like: licenses of the business, tax returns, personal identification proofs and financial statements,
- Connect and look for guidance: Use the loan application to connect with other women entrepreneurs and look for mentors who can help you on a professional capacity.
- Confidence is the Key:
- Select the lender wisely: Be careful while selecting the lender. Make sure that the lender has a good history with women entrepreneur and at the same time choose a leader who can give you valuable insights about your organisation.
- Put forward your ideas effectively: Make sure that your put forward your business ideas confidently and effectively in front of the lender.
- Negotiate: Do not stop yourself from negotiating in order to get a better deal as far as rate, interest rate, terms of the loan and repayment policy is concerned.
- Utilize additional resources:
- Government agencies: Government agencies provide business loan programs that are specifically designed for women entrepreneurs. Make use of those programs.
- Non-profit organizations: Non-profit organizations also helps women entrepreneurs with monetary guidence, coaching, and mentoring programs. Look for those programs.
Conclusion
In essence, it might be a challenging task for a women of acquire a business loan but once they obtain the loan, it is a much more rewarding experience. But overcoming the challenges and going through the process of applying for a loan, a women entrepreneur become financially literate which in turn helps then to turn their dreams into a reality. So, if you are a women entrepreneurz, use the available resources, connect with female industry leaders and believe in yourself. Because you are born to succeed.