Being an entrepreneur is a difficult task on its own, but if you’re a woman looking to start a successful small business, you have a unique set of challenges to overcome. Luckily, you and other female entrepreneurs have an ever-widening array of financial resources at your disposal. The U.S. Small Business Administration and other organizations can help fund female entrepreneurs’ business dreams.
Small Business Administration
The Small Business Administration (SBA) should be an entrepreneur’s first resource. While it has loan programs available to anyone starting a small business, the SBA is particularly helpful for women. Rather than lending out money directly, it most commonly backs loans, acting as a co-signer to allow borrowers to receive larger loans at lower interest rates.
The SBA backed almost 10,000 loans for women entrepreneurs in fiscal year 2009, totaling about $2 billion. SBA-licensed intermediaries were responsible for lending an additional $13.8 million to female-owned businesses.
Each loan has different eligibility requirements, but most require borrowers to meet certain credit requirements. To be eligible for a small business loan, as with personal loans, you have to have a decent credit history and a high credit score. Higher scores typically mean you’ll receive your loan at a lower interest rate, meaning it will be cheaper in the long run.
Learn about specific SBA-backed loans and their requirements on the SBA website. The SBA also has Women’s Business Centers located throughout the United States that offer more specific resources, training and information.
While the SBA is the most comprehensive resource available, you may find financial and entrepreneurial help from other places. You may be eligible for government grants, which are even more beneficial than loans because they never need to be repaid. Your state or county Department of Development may be able to provide additional support, financial or otherwise.
You can also look into taking out a private loan to fund your business. Although the loan’s interest rate may be higher than rates on other loans, it can help you get the money you need for your small business.
Or consider applying for a small business credit card. As with a loan, a credit card offer depends on your credit history, and you’ll receive better offers if your credit score is higher. Although a card is likely to have an even higher interest rate than a private loan, it does have the perk of convenience. You can use a credit card to pay virtually any business expense, and you’ll only pay interest on money you actually spend rather than on a lump-sum loan.
Staying on Track
Most likely, you’ll take on at least one loan to fund the launch of your small business. If your company is successful and begins turning a profit quickly, repaying the loans should be a cinch. But remember that you are responsible for your business’s loans, despite how well your company does.
It’s important to create a budget and financial goals to help you stay on track. Know how much your company can spend per month on each expense, such as payroll and equipment, while still meeting your minimum loan payments.
If the company’s funds are not enough to cover its expenses, you may need to contribute additional money from personal savings – a common strategy among new business owners. To be able to do this, you’ll need some amount of savings and you’ll need a level of financial stability. This poses a problem for many entrepreneurs, who already have piles of personal debt to deal with.
That’s why experts strongly recommend you cut your personal debt before entering into a new business venture. If you’re looking to get out of debt quickly but don’t have the funds to repay your debts, look into debt settlement as a fast debt-resolution strategy.
About Author: Katherine Pilnick writes about issues related to credit, debt and personal finance for Debt.org, America’s Debt Help Organization.