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Financing tips for women entrepreneurs

Guest post by Beth Kotz, a writer from Credit.com

Women-led small businesses have a tremendously positive impact not only within their own communities, but across the small business landscape nationwide.

Even so, many obstacles remain, particularly in the area of financing. Because adequate capitalization is vital in operating and growing a company, this is a challenge which must be faced head-on for the business to succeed.

Fortunately, there are a number of steps women entrepreneurs can take to address this issue and help ensure that it doesn't become a stumbling block.

Organize Your Finances

When contemplating your financing needs, it's important to know exactly what the state of your current economic fortunes currently are. Maintain accurate documentation, including copies of your tax returns, profit and loss statements, and other money-related paperwork.

Doing so will help when it's time to seek loans or credit. Potential lenders might steer clear of your organization if you don't have all the pertinent information readily at hand. A key step to take is to make sure you're not commingling your personal and business finances. Otherwise, expenses in your personal life might begin to affect the way your business is perceived by others.

Investigate Lending Opportunities Specifically for Women

Some institutions have instituted lending programs that are designed to cater specifically to women’s business enterprises. Looking into these types of loans may allow you to expand your possibilities. There's no need to eschew more traditional avenues at all; you can apply for both women-centered and gender-neutral loans and then select the ones that best fit your situation.

Explore Lender Options

You may be tempted to just head over to your local bank whenever your business requires some extra cash, and this is certainly a valid choice. Remember though that the small business financing landscape has developed to the point where there are plenty of loan options available to your business, as well as alternate resources to consider. Microloans are a popular type of financing product, as is online crowdfunding.

You'll have to balance numerous factors, such as the rigor of the application process, the amount of capital you can raise and the associated costs when deciding which financing option is best for you. This can involve substantial legwork, but the rewards of finding a solution that adequately addresses your unique business circumstances should make all the effort more than worthwhile.

Leverage Business Credit

As mentioned above, there are certain drawbacks to using your personal credit cards for business purposes. Instead, obtain a separate business credit card to use for your corporate purchases. In some cases, you can obtain credit from vendors under arrangements that are usually easier to enter into than a formal bank loan. Trade credit provides the additional benefit of buttressing your business credit profile.

Join Networking Groups

You don't have to reinvent the wheel when it comes to running your firm because you can gain from the experiences of other successful woman entrepreneurs. Join your Chamber of Commerce and other local gatherings of businesspeople. You'll be able to make connections in your immediate area, which may prove valuable down the road.

Don't neglect the advantages of joining national organizations, like the U.S. Small Business Administration, which runs dedicated centers across the country that focus on assisting women in their business pursuits. That National Association of Women Business Owners offers professional development education to help women enhance their success in the marketplace.

Examine Your Business Credit Profile

Just as there are agencies that rate the creditworthiness of private individuals, there are also similar organizations that do so with businesses. Consider getting a copy of your report from Dun & Bradstreet, one of the largest credit bureaus for businesses.

Once you have the report in your hands, you can contact the rating firms to correct any inaccuracies that are present. This could be critical when it's time for you to seek financing because lenders frequently employ these reports as a way of assessing the risks involved in lending to any particular business.

Spending cash reserves and charging expenses to personal credit cards are popular methods for female business owners to fund their initial operations. They work well up to a point, but when it's time to bring your company to the next level, you'll want to seek financing from elsewhere. Take charge of your own destiny by acting to increase the appeal of your business in the eyes of lenders and by thoroughly scrutinizing the many possibilities available to you.


Beth Kotz is a business writer and contributor to Credit.com. She has also been featured as a writer and editor for numerous blogs in the energy, entertainment and home verticals.