Women are struggling with trying to find loans for their small business. Whether it is perception or reality women feel they are going to be turned down by banks and so many don’t even try even though many banks are trying to reverse this trend.
The National Association of Women Business Owners reports that: “Of the 59% of NAWBO members that did not seek a new loan or line of credit in 2009, 24% did not do so because they believed they would be turned down.” And that “…in fast-growth firms, only 39% of women owners had bank loans compared to 52% of men owners.”
It’s apparent that traditional lenders are not meeting the needs of many female small business owners. So where are the rapidly growing population of women small business going? They are turning to alternative lenders to find the financing they need.
First, What is “Alternative Financing”?
The phrase “alternative financing” doesn’t really encourage confidence; in fact many industry leaders like Steve H. Green are pushing to change the title to “Innovative Lender”, but alternative financing provides a very important service for small businesses. These lenders help businesses that normally would be turned down by traditional lenders find financing in other areas.
The reason these lenders are called “alternative” is because they do not follow the same structure and traditional lenders (banks). Unlike banks alternative lenders most do not use deposits to provide finances, investors provide financing back for their loans. Another difference is the alternative lenders will look at different types of ways to evaluate your lending worthiness including your accounts receivable, credit card revenue or assets available as collateral. These difference along with others mean alternative lenders can lend to business that normally would be turned down.
The reason this is important to you as a female business owner is that if a traditional lender turned you down there are other opportunities for funding that may still be on the table. Many alternative lenders have invested in programs specifically for women, which is why many women business owners have turned to alternative lenders.
Women are More Likely to Look for Alternative Financing in the First Year of Business
Women are 11% more likely to turn to alternative lenders in the first year of business than men.
These women are not any less qualified than their male counter parts. In fact, 23% of the women looking for small business loans through our site had “good” to “excellent” credit.
Women turning to alternative lending are just like you. They represent every industry, and every state. Their situations are both different and similar. Many women first went to their bank, were turned down and then came to us. The alternative lenders that they find through our site provide new hope and new ways to fund their businesses that normally may not have gotten financing.
I recently spoke with Annie, a restaurant owner in Henderson, Nevada. Her business Annie’s Gourmet Italian was growing and needed a new location fast. Based on excellent stuffed mushrooms and lasagna I ate I can understand why her business is growing.
Of course her first stop was to her current bank, a leading national institution. She was turned down. Frustrated with her current bank she decided that she was going to switch banks with the hope that she would get a loan from the new bank. She transferred all of her deposits and services to another national bank, but was once again disappointed.
Annie turned to the Internet to see if she could find funding. Eventually she found Lendio. When I talked to her about her experience the thing she appreciated most was that she felt like Lendio believed in her. Annie didn’t just need money she need support and she found it.
Ladies there are alternative and traditional lenders out there that are looking for you and want to help your business grow. It may seem frustrating, but don’t give up. Just like Annie if you find a partner to help you find a loan can help you grow your business to the next level.