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Bank Loans

Text by Jelena Debeljak

Dear IFTF Learning Reader,

Let's start with something more generally known and accepted as a source of funding when starting a business. Bank loans are a credit made by a bank to a borrower which needs to be paid back to the bank enlarged by an interest rate within an agreed period of time.

Generally speaking, women use the same traditional bank loans as their malecounterparts do. Traditional banks do not design separate loans for each gender. It is still possible to talk about certain exemptions.For example, the U.S. Government’sSmall Business Administration (SBA) offers specially designed training and counseling for women business owners on available funding in their country. This is due to unique challenges women entrepreneurs run into when looking for funding, so this sort of assistance provides valuable network of support for women entrepreneurs. There are also opportunities for socially disadvantaged women offered by SBA, just as there areWomen’s Business Centers throughout the country where women can seek for advice and guidance when reaching out to SBA benefits. Definitely, a female entrepreneur should inquire if specially designed women funding assistance programs are available in her own country.

Manygovernment agencies, NGOs and professional organizations offer special business startup loans for women entrepreneurs with the aim to stimulate the economy by engaging this traditionally less business involved gender group.For example, Croatian Bank for Reconstructions and Development (HBOR)offers a special loan program for financing of female entrepreneurship due to the fact that women comprise a greater portion of the unemployed in Croatian than men do. Also, there are fewer female than male entrepreneurs.This loan is meant for companies registered and operating in Croatia having one or more women owning at least 51% share in the capital of the company or of which women are registered owners. The management of such an eligible company also must be chaired by a woman. Such a loan if meant for initial funding, land plots, buildings, equipment and devices, nucleus breeding unitand planting perennial crops.
Some university studies have revealed bank discrimination towards women when it comes to loan provision,Daily Mail reports. There were cases in the US, Britain and Europe when banks denied giving loans to women owned businesses if the owner was pregnant or on a maternity leave. Also, there was proof in the UK that female business owners tend to pay one percent higher interest rate than their male counterparts.

Regardless of owner’s gender, an issue that most early stage businesses face when looking for a bank loan, to help them overcome initial hardships in their development, is that they get refused of a traditional loan because there is noenterprise credit history yet. Kay Miranda, of SmallBusiness.chron.com, suggests four steps that can help a young enterprise to qualify for its first bank loan. They include preparation of a clear business plan with realistic market positioning and financial projections; talking to the local small business advisory center representative to seek for guidance where, how and which type of existing loans to apply for that providemost adequate funding for your particular business; refer to the representative you talked to when going the bank he/she suggested for you; and finally, make your business assets your collateral for the loan.

Jelena Debeljak

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