It is quite difficult for women entrepreneurs to get financial help as venture capital firms are male-dominated and most of the time they do not find the business started by women lucrative enough to finance. Such a situation can lead you to fall into debt for which you may have to search for various debt relief options.
When you start your own business it is very important that you understand the basic necessities of the business that you are about to establish.
If you don’t achieve this, you may not be able to reap the fruits of your hard work and dedication. A small business is usually a business that is not listed in the stock market and is also restricted to a few individuals.
If you are a small business owner you will understand that you may be in need of finances when your business is not doing very well. Pumping more capital into the business is very essential if you do not want to see your business shut down.
Thus, you may need to take small business loans and fall under debts. However, what you should try is to get small business loans at the best possible rates and from the best sources so that you can pay off the debts easily with the profits you make from the business in the future.
You should remember that in most cases investors are not very keen on investing in small businesses because there is a general belief that small businesses are very risky. However, there are many other sources that you can take a loan from and go under debt to make sure that your business does well.
Some of the reliable sources that you can take a small business loan from are as follows:
Banks
One of the most common sources of small business financing is banks. The financial aid that banks provide you with is in the form of loans and overdrafts.
Thus, you can borrow from this source and fund your small business. It is essential that you repay the loan out of the profits that you make from the small business.
Government agencies
Another source of revenue is government agencies. However, you should be aware that the government agencies do not provide you the loan directly. They merely act as guarantee providers. They give the guarantee that you will repay the loan and thus the risk of lending is reduced and lenders will be more willing to lend.
If you are not able to pay back the loan, then the government will pay the lenders partly. So government agencies facilitate the process of lending by providing lenders with security.
Although these agencies do not offer you the loan directly, they are still considered to be one of the most important sources from where you can get your finances.
Investors
Most investors are keen on investing in new projects that are interesting. If an investor likes your project, then you may get loans.
However, you should remember that when an investor grants you a loan you are to provide the investor with a share in your business.
This investor could be another small business or an individual. As investors will be members of your business, they will also provide you with expert advice along with the loan. You can make use of the expert advice and this could prove to be very advantageous.
These are a few sources from where you can get funds for your small business needs.
How to take out a small business loan despite being in debt
Are you worried about how being a woman, you can take out a new loan that too while in debt?
Here you go:
1. Try to make your payments on your monthly bills on time as it will help to repair your credit report.
When you make your payments on time, you will be notified on your business credit report. Prospective lenders might not consider you a high-risk borrower if you make your payments on time.
Once you pay off the owed amount then you can repair your credit report and you can successfully get a new loan for your business.
2. Try to apply for an SBA-subsidized loan from a private lender as it will not be possible to get a loan directly.
When you apply for a loan, ensure that you mention the purpose of taking out the loan as the number of funds required for the business and where you will use the fund.
Unlike private lenders, you are not required to verify credit history verification when you apply for an SBA-subsidized loan. Therefore, if you still have a poor credit report you are eligible to apply for this loan.
3. Try to maintain a record of your financial statement because the bank will be keen to verify the financial statement when you apply for the loan.
When keeping a record of your financial statement, ensure that you also incorporate your profit statement along with the statements for your debts and the amount you owe to the creditors.
4. When you apply for the loan, ensure that you fill out the loan application form properly and submit the form along with your financial documents.
Make sure that you properly state the amount that you owe to the creditors and you are required to estimate the amount you can manage to pay off.
5. If you have personal loan problems then you can look for a cosigner with a good credit rating.
You can ask your family members or friends to provide you with a loan for financing your business. A co-signer with a good credit record helps to increase the chance of getting approval for a loan.
These are the essential ways to get a loan for your small business despite your bad credit. You can keep in mind the above-mentioned points while you apply for a small business loan for future use.
Lastly, women entrepreneurship and the creation of women business networks are steadily rising, there are many women entrepreneurs who don’t follow the business strategies. Don’t fear the debt associated with the startup. Remember, starting your own small business is important to avoid a personal financial crisis.
You can achieve financial freedom and confidence once you become a successful entrepreneur. To manage your finances well to keep debts at bay and stay informed and updated on the bigger picture.
