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 a loan. Many women intend to scale their small businesses and thus need to borrow a loan to finance the business.
If you are not aware, then there is a level of prejudice that women have to face. The unjust treatment that 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 due to odds. The traditional money lending methods follow the conventional practices of preferring financing businesses owned by men.
Things are slowly changing for women, but the situation is improving slowly. Several banks will not take businesses run by women as seriously as 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 that will explain why women face such a large rejection.
Start-Up Business Loans are Given on High Credit Scores
Start-up business loans are mainly rejected for women because of their low 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 women who have great credit scores. 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 trustworthy, 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 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. To get start-up business loans, one must have a 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 starting your business; rather, they will be willing to finance already thriving businesses. If your business is already profitable, only then will you be given start-up business loans; otherwise, your application will be rejected.