Entrepreneurship means the starting of a new business venture. An entrepreneur can be described as a person who is able to convert an original idea to a successful innovation. A promising entrepreneur should be self-reliant and capable of dealing with adverse situation.
In case of women entrepreneurs, they usually start off using money collected by savings from family expenditure, relatives or other sources. To get a bank loan, women have to put collateral. But they do not have sufficient fixed capital to place as collateral or a guarantor to get a small loan from the bank. For female entrepreneurs in a male-dominated society can be challenging to have a claim in the business world.Some tips that can be followed are as follows:
Build Relationships in The Community Of Business.
Business lenders want assurance that the companies they are investing in are going to be a success. That is the reason it is important for a woman to establish themselves in the local business circle before applying for a loan. The approval process usually takes a lot of time to process through, so it is always advisable to start ahead and plan ahead. If there is any experience relation to the niche, always mention it in the loan application, it puts in a lot of weight to it.
Women-specific Lending Programs.
Look for programs that are specific for women. Despite all the progress, women entrepreneur face many problems while looking for loans. However, there are many lenders that have loan program specially designed to cater women-owned businesses. When looking for a lender, consider financial institutions that have previously shown commitment. If a government loan is sought after then process will be faster if the business is anyway beneficial to the society in some way or the other. Like perhaps giving employment to the underprivileged. If the business is in an economically backward area, the prospect of application already has a boost from the government.
Relationship With The Banker
Building a strong relation with the banker is very important in while getting loan approvals. The stronger the relation the better will be the understanding of the banker of one’s business. Therefore, getting the support and financial help will become easier.
Deal With The Credit History.
The previous credit history will always be a factor in getting small business loans. While a separation between the business and personal finances maybe sought after, it is not always feasible for the lender. Have your financial information organized. Nothing will get a loan application denied quicker than having the finances mismanaged. Make sure to pay all the bills on time, reporting all income, paying taxes. Improving credit score is highly important. Lenders also generally require to keep some collateral to put down on their loan.
Plan The Use.
Have a well thought out plan for using the money, be very clear while making conversation with the lender. The chances of getting an approval increases when the lender is sure that the money in going in the right hands. Generic and vague responses are never appreciated. Organization is of vital importance in deciding whether or not the loan will be approved for a small business. A lack of organization shows a sense of risk. Being over prepared can never be a bad thing, have every possible piece of information, documents required of you and more. It is not unknown that securing a small business loan is a difficult battle. Out of all the businesses that apply, only a few receive the money that they need from banks and small business lenders.
It is always advisable for any financial decision to explore all the possible options before fixing one. It is very important to choose the correct plan and type of loan. The future needs to be thought of before making a decision. Chain banks are always a good place to start looking for loans, independent lenders are usually kept as a second option. When seeking out the different options, a few things must be kept in mind: minimum and maximum amount offered, the terms of loan repayment, whether the lender charges variable or fixed rate, the qualifications required, revenues, time in business, fees of paying the penalties.
Make a very clean and concise business proposal. Outline the theme of the business very distinctly while making the proposal to the lender. Mention the industry, and submit the business plan along with the proposal if necessary. During an initial meeting, many questions can be asked, so full preparation must be taken.
A very important thing to keep in mind is one’s own qualifications and eligibilities. Educational qualifications and otherwise, everything factors into while giving a loan approval. Mention the qualification of the partners and managers as well, if there are any.