Wondering why it is hard for women to get business loans? There are several reasons. The most obvious reason that comes after many surveys is the level of seriousness. Men are taken more seriously than women.
Women mostly run small businesses thus it becomes quite hard for them to produce decent bank statements that could qualify for the loan. Many women intend to scale the small business and thus need to borrow the loan for financing the business.
If you are not aware then there is a level of prejudice that women have to face. The unjust treatment which women have to face is due to the very fact that the majority of businesses are run by men.
This has been unusual and thus all the unusual are denied out of odds. The traditional money lending methods follow the conventional practices of preferring financing business owned by men.
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Things are slowly changing for women but the situation is only improving slowly. There are several banks that will not take the businesses run by women as seriously as the businesses run by men. One will still find a few banks that reject the application of women entirely. Let’s dig into the further reasons which will explain why women face such a large rejection.
Start-Up Business Loans are Given on High Credit Scores
The start-up business loans are mainly rejected for women because of their personal credit scores being low. Many banks deem credit scores as a universal standard when processing the application. It is not hard to digest that banks will want to stay on the safer side.
They will want to expose themselves to the least risk possible thus they only cater to the women who own a great credit score. This criterion becomes quite hard to meet thus start-up business loans get rejected.
Many banks will see your history before giving start-up business loans to create a perfect future. If your past finances are not trustable then there is a high probability that you will not be getting start-up business loans from the majority of the operational banks.
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Start-Up Business Loans are Given to Established Businesses
Another factor that several banks rely upon is the time frame. They look at how long you have been in business. If they will see that you have not invested enough time in business then your application will be simply rejected.
They will also see any possible pauses. For some banks, if your business has not been running for at least 2 years then you will face rejection. In order to get start-up business loans, one must have verifiable business history and good cash flow coming in.
You need to realize that the majority of the banks will not give start-up business loans for making your business rather they will be willing to finance already thriving businesses. If your business is already profitable only then you will be given start-up business loans else your application will be rejected.