Small Business

5 Valuable Tips For Female Entrepreneurs Seeking Loans

Even in good times, requests for bank credit from women are routinely denied

Written by Alexandra Bosanac

Many small business owners (and aspiring ones, too) are finding it tougher than ever to secure financing from Canadian banks. With low interest rates are eating away at profits, banks are slashing costs and lowering their exposure to risk. The end result? Credit pools are drying up for small to medium-sized enterprises.

The effects are especially discouraging for women entrepreneurs, who, even in more prosperous times, are more likely than their male counterparts to have a loan application denied. Many resort to using their personal line of credit to fund their business—a strategy that carries huge risk and could impact their ability to get funding later on.

Peer-to-peer lenders (P2P) have been heralded as a way to level the playing field. This emerging industry connects borrowers with lenders, bypassing the banks altogether. Loan amounts are smaller than what banks offer and the terms are shorter, but are also easier to secure and entrepreneurs can expect a response within days of applying. Andrea Gellert, chief marketing officer of OnDeck, an American P2P lender which officially launched in Canada in May, offers her tips on how women can best position themselves to get approved for a loan, either with a commercial bank or a P2P lending service.

Presentation matters

Be able to clearly articulate why you need the financing for and having whatever documents you may need organized, so you can access them quickly. “You’re asking somebody to give you something like $50,000 with a promise to pay,” notes Gellert. “Even with services like OnDeck, there is a certain amount of rigour they’re going to expect in the presentation of your business.”

Prepare, then prepare some more

If you think you’re walking into a situation where your gender might come into play “just be doubly-prepared,” says Geller.”That preparation element, the presentation element, the reference element—the tighter that all is for you, the better.”

Don’t ignore your bank account activity

With banks, personal credit scores factor more heavily when an applicant doesn’t have sufficient collateral to offer. However, if you’re going the P2P route, your account activity matters a lot more. “Your bank account is really your most important credit reference,” Gellert says. Strong cash flow speaks louder than your credit report. “Focus your business into one account and manage it really tightly. Try not to have too many insufficient funds situations and the like.”

Use common sense

Don’t hide any stains on your record as it’s sure to backfire. “Sometimes people try to hide a lien they might have had or a dispute that they might have had that’s a matter of public record,” she says. “Lenders are going to find it. And it looks worse [if you hide it].”

Be up front about any past difficulties and you’ll be in a better position than if you hide it and have to explain it later. And always let your references know to expect a call about your loan application.

Don’t go in assuming you’re doomed

“When small business have been through the bank lending process they’re so overwhlemingy jaded by the experience,” says Gellert. “So whenever they have a growth opportunity they say, €˜No way, I’m not going to go through it again.'”

If you’re confident about your business, don’t let one rejection discourage you from applying again in the future. Revisit your business plan. Take some time to reflect and work on troubleshooting. In the end, it may just be that traditional lenders are not the right option for you at the moment. “If you’ve gone to traditional financing, and you’ve been at a disadvantage, don’t assume that’s going to be the case everywhere,” Gellert says.


Have you had trouble securing a bank loan? Share your experiences and strategies using the comments section below.

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