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Why alternative lending makes good cents for female & minority business owners

Feb 5, 2014

Imagine this scenario:

You’ve spent thousands of hours working on your business – perhaps more than a decade.  You recently discovered a new problem affecting your customers, and you’ve talked to several about your potential solution.  They said that if your solution existed, they would happily buy.

You have a high degree of confidence your new idea will work, but you need some additional capital to bring your business’s new idea to life.  You personally don’t have any cash to assist with the funding.

So, you propose your idea to the bank.  But the bank has a very stringent process in place – and you’re not even close to matching their criteria.  You don’t want to max out your company’s credit cards (and wisely so), you don’t want to borrow from family members, and investors – forget it.

Now you’re stuck – you already have a healthy business and a business idea you’d love to get off the ground, but you simply can’t access the capital you need to make it happen.

Fortunately, all hope isn’t lost – you do have some options.  It’s just that they’re not the traditional options.

The Realities of Getting Business Loans for Women

To top off all of those problems, you face an additional unwritten hurdle that you don’t have any control over:  you’re a woman or a minority.  This problem isn’t a perception – it’s a reality.

For example, the US Department of Commerce released a report entitled Women-Owned Businesses in the 21st Century, and the primary finding in that report was that women were less likely to get outside funding and were more likely to use their own assets to finance their business efforts.  In fact, the average business studied had just 64% of the capital that male-owned businesses typically possess.

Why don’t women get the funding they need?  A Forbes article discusses several reasons:

  1. Women tend to choose businesses that don’t produce the high returns investors seek.  An example would be a mortgage company, instead of tech.
  2. Women often don’t have good credit scores because they frequently begin their business not long after coming out of a divorce.
  3. Women many times don’t have a precise balance sheet prepared.
  4. Women do not want to lose control of their businesses.  If someone gives you a little bit of money to start your business, they’re generally going to have a ton of staying power.
  5. Discrimination still does happen, and in one unusual case, a female business owner couldn’t get funding without her husband’s signature – even though she had a multi-million dollar contract from the government in place and needed only $250,000 in financing!

Racial Minorities Have a Tough Time Securing Funding Too

But it’s not just women that have difficulties accessing the funding their business needs – it’s women who also happen to be minorities too.  The SBA’s Office of Advocacy conducted research and found that businesses owned by African-American and Hispanic entrepreneurs typically had 56% of their funding made up by internal sources, compared to just 39% for white-owned businesses.  White-owned businesses also generally started with double the capital.

There was some question as to whether the type of business and the credit score affected this disparity.  However, the researcher in charge of the project, Alicia Robb, controlled for these factors, and still found minorities were less likely to apply for loans than whites because they were afraid of being turned down.  And that fear was based on reality – the study found African-Americans and Hispanics are less likely to have their funding requests approved.

The Perfect Solution:  Alternative Lending

So it’s clear that if you’re a woman or a minority (or both), you’re at a disadvantage when it comes to securing a business loan.  But that doesn’t mean you are completely out of options.

For example, at Reliant Funding, instead of taking a close look at your credit score, we examine the overall health of your business to determine if a loan is a good solution for you.

If you meet the following criteria, you may qualify for a loan:

  • You have been successfully operating your business for 12 months
  • Your business makes at least $10,000 per month in sales
  • You do not have any open bankruptcies.  If you have a prior bankruptcy now closed, generally that’s okay.

Besides less stringent lending criteria that allows you to access the capital you need, our alternative loans also:

  • Don’t charge any up-front fees. You have to be careful with banks because you don’t know how much of the agreed-upon principal you really get.  Underwriting and doc fees often chew up some of the funds available – funds you need to make your business a success.
  • Don’t require you to risk your personal assets. Did business unexpectedly go poorly, and now you find you can’t make your monthly payment on your loan?  The bank always makes sure it gets its money.  You’ll have to pledge your house, car, or some other personal financial assets they can seize if you can’t make payments.  Our loans do not require this, as they are only based on how well your business performs.
  • Require much less paperwork.  The bank wants to know all your personal financial information and makes you have your business’s financial information audited.  You may also need to provide profit and loss statements, and other documentation.  Our application requires just a few recent statements – and you fill out an application just a single page long.
  • Give you much more – up to $300,000 per location.  Banks will rarely lend you this much, and especially so if you run a service-oriented business.
  • Get you funding fast – in as little as 5 business days.  It often takes several weeks, and up to 5 months to get your loan approved and receive funding if you opt to go through a bank.  Can your business really wait that long?  At Reliant, you can get approval in 24 hours and funding in as little as 5 days – you’ll be able to capitalize on the latest opportunity while it’s still present.

Your Business Dreams Can Happen

So if you’re a woman or minority, even though you face a tougher road to accessing business financing, there’s plenty of opportunity available.  You just have to know where to look.

At Reliant, we can help make financing available and affordable for you – regardless of your race or gender.  “The financing we provide is around a story – and it’s your story, the business’s story.” said Reliant Services Group CEO Adam Stettner.

If you’re having trouble accessing the business financing you need, call 877-850-0998 to learn more about our alternative lending solution today.


$3,098,641,569 dollars funded