Time to Startup!

The BizFilings blog covering business tips and trends.

What Lenders Consider in Making an Investment

Published on Feb 10, 2011

Summary

Read our article, 'What Lenders Consider in Making an Investment' at 'Time to Start Up,' the small business blog by BizFilings.
While conditions are already difficult for small business owners in regards to achieving their credit needs, it is likely even more difficult for women-owned businesses. "Traditional lenders are requiring you to jump through more hoops, and they are applying less attractive terms after all the jumping is over," writes Entrepreneur magazine contributor Kim Kiyosaki. "Private lenders and investors are more cautious and have upped their standards, as well. What's a businesswoman to do?" When seeking credit opportunities, Kiyosaki advises women business owners to consider four basic factors that lenders - banks, microlenders, angel investors or venture capitalists - consider when deciding whether or not to approve a loan.
  1. The project. This refers to the startup, organization or business venture that is seeking funding. What is it? What will it do? Why is it unique, and why does it deserve funding over others like it?
  2. The partners. These are the main principals - initial investors, founders, managers, participatory advisers - involved in the creation of the venture.
  3. The financing. Investors, perhaps more than anything else, want to see the numbers. Such figures include growth and revenue projections, prior investments, current sales and past deals.
  4. The management. "Money follows management," Kiyosaki points out. Make sure that lenders are confident in the competence and devotion of those who will determine how their money is spent.

Loan options for woman-owned businesses

There are loan options available for woman-owned businesses. The Prequalification Pilot Loan Program uses intermediaries to assist prospective borrowers in developing loan applications and securing loans. A Women's Business Development Center or a Small Business Development Company are examples of intermediaries. Here’s how the loan process works:
  • The loan package is submitted to the SBA and a decision is generally rendered in three days.
  • If approved, the SBA issues a letter of prequalification stating the SBA's intent to guarantee the loan.
  • The maximum loan under this program is $250,000 with a guarantee of 85 percent up to $150,000 and 75 percent for loans over $150,000.
  • The intermediary can usually help the applicant find a competitive lender.

Additional resources

Business Resources for Women Entrepreneurs A Guide to Starting and Running a Woman-Owned Business