Small Business Loans for Women in Today’s Economy

Women Are Owning and Leading Businesses in Increasingly Larger Numbers

According to the National Association of Women Business Owners, 10.1 million firms are owned by women in the US, employing more than 13 million individuals, and generating over $1.9 trillion in sales as of 2008. According to the same association, women of color are growing their businesses at a rate that outpaces all other privately held firms in the US. This statistic points to the fact that women are creating, leading and managing successful businesses like never before. In order to keep these businesses flourishing, women must consider the benefits of making strategic financing choices when faced with supporting and expanding their own companies.

When Seeking Financing in Today’s Economy, Where Should Women Look?

Banks and credit unions are steadfast examples of large organizations that change slowly. Most banks and credit unions operate in largely the same manner as they did fifty years ago – lending only to those who have flawless credit, serious time in business, and who own the tangible security that a financial institution can use as collateral.

For those female business owners who don’t have absolutely perfect credit and are looking for a way to support their individual businesses, a loan based on the future receivables of the business can be a safe and responsible way to secure financing. Banks and credit unions can take weeks, even months, to approve an applicant for a small business loan. Plus, the majority of applicants who have even minor blemishes in their credit file, or have less than two years in business, are turned down.

Asset-Based Lenders Can Provide Financing Solutions For Most Business Owners

Asset-based lending is based on a simple concept – the future receivables of your business have a value that can be lent against. While many lenders who provide small business funding require the business owner to provide some type of collateral, an asset-based loan uses your future revenues as the security instrument for the loan. This allows most borrowers to qualify for significantly more money than if they had applied for traditional financing or were seeking an unsecured business loan.

In fact, many lenders require a small business owner to sign a “personal guarantee,” which states that if the business loan isn’t paid back according to the terms of the loan agreement, the personal property of the business owner (like their car, house, or cash in the bank) can be seized and used to repay the loan. Asset-based loans or no collateral loans require a simple application, no credit check, and are based on the future sales of your business. Cash is available within days – not weeks or months, and payments are based on your daily sales. So, if you have a slow day in sales, your payment will be low. Having a great sales day? Your payment will be a little higher and will help to accelerate paying off the loan.

For those women who have decided to create, manage and own their own businesses, an asset-based loan can help manage those short to medium-term financial situations that can arise unexpectedly.

Learn more about business loans for women.