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Business Loans for Women

Around a third of small businesses in New Zealand are now owned or operated by women, and the trend has been increasing over the last two decades - slowly, but steadily .

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The number of women business operators increased by 46% in the last two decades.

Women operating their own businesses now make up about 13% of employed New Zealand women.

But where do we stand in comparison to other countries? Just below average…

According to the ABS, female entrepreneurs generate less income than their male counterparts.
Women also tend to start businesses with less capital than men and find it harder to secure both venture capital funding and business finance.

But women that do access capital are likely to make more revenue. In 2011, the New Zealand Women’s Chamber of Commerce and Industry survey found women business operators with access to start-up capital had a higher turnover. Learn how to fund a startup here

Many women business owners are also juggling work with being a mum, with 33% in a family with children under 15 year of age, and 4% in single parent households.

How can you, as a female business owner, secure finance for your small business?

The good news is that business loans are much easier to access these days, thanks to the booming alternative loan market in New Zealand.

Whilst you may not find many lenders that offer business loans exclusively for women - you may find lenders who prefer lending to businesses in your specific industry, or who are committed to supporting businesses within your local community. These lenders may offer favourable rates, so it’s a good idea to approach them first.

PRO Tip: Reach out to your local and State Governments - for instance in NSW, the Government is actively increasing participation of women in entrepreneurial endeavours. Read more here

Otherwise, a quick internet search will reveal scores of online lenders offering finance to small businesses - and your gender should play no part in the application assessment process!

Note: if yours is a start-up business you may not yet qualify for a loan, as most lenders, even risk-tolerant fintech ones, will require you to have been in business for at least six months before they’ll offer you finance. But you’ll find some valuable information here on how to fund your fledgling business. In some instances you are able even able to get a business loan with bad credit as lenders look at your business health, not your individual credit score.

Where to go for a small business loan

Most SMEs are unable to get a loan from traditional banks. Banks are notoriously conservative and tend to lend only to businesses with two or even three years’ profitable trading, collateral to offer, and a top-notch credit rating.

Even if your business does meet those criteria you’ll find that the application process can be arduous and time-consuming, as they’ll expect to see comprehensive supportive documents including detailed business plans, full financial statements and cash flow projections.

On the other hand, most alternative lenders have a quick and easy online application and a fast and efficient approvals process.

Accessibility, speed and ease are the three main reasons New Zealand small business owners - both men and women - are increasingly turning to the fintech market for unsecured business loans.

How to get an unsecured small business loan

How to get an unsecured small business loan

1

Prepare a business case

Your lender will want to know why you need to borrow, so preparing a business case is an important part of your preparations. But the main reason for doing this is to make sure that taking out a loan is the right decision for your business.

There are many reasons small businesses seek finance - to pursue acquisition opportunities, expand their operations, new equipment or simply shore up fluctuating working capital.

A loan can help you keep your business running smoothly when cash flow is lumpy, or take it to the next level - but borrowing always comes at a cost. If the funds you borrow aren’t going to help you generate enough extra profits to cover that cost, then a business loan could quickly lead you into financial difficulties. Many businesses fail because they prioritise growth over profits - or use debt to fund unnecessary expenses, like moving to bigger premises or over-buying stock.

As part of this process you will need to calculate how much your business can afford to repay, which will dictate how much you’ll be able to borrow. This will only be a rough guide as each lender will use their own formula to calculate your borrowing capacity - but it’s a useful starting place.

2

Prepare your supporting documents

If you’re applying to an online lender, you can expect to be asked for the following supporting documents when you make your application:

  • 6 to 12 months’ bank statements
  • Proof that you have been in business for the lender’s minimum required period
  • Identity documents

Your lender may ask you to provide a personal guarantee of your business loan depending on the value of the loan.

3

Choose a lender and loan product

This can be much trickier than it sounds. There are so many to choose from and comparing them involves much more than simply looking at interest rates.

You’re about to enter into an ongoing financial relationship, so it’s a good idea to seek recommendations and check the reputation of your potential finance provider. Be aware that alternative lenders aren’t regulated in the same way as big banks in New Zealand, so you need to be wary of unfair or restrictive conditions and be sure to check both the terms and the cost of each loan carefully.

Unsecured business loans include:

Or of course you can always consider a business credit card to help with cash flow. Remember to always pay it off in full each month!

The cost includes the interest rate (which for unsecured business loans may be calculated as a ‘factor rate’ rather than an APR) plus any set-up fees, ongoing administration charges, transaction fees and penalties. Added together these form a ‘comparison rate’ you can use when evaluating the merits of different loan options.

Note: you may not be able to secure finance at the rate you’ll see advertised - lenders will decide if and how much they are willing to lend to you, and the amount they’ll charge you, based on how much risk you present.

Your personal and business credit rating, how long you’ve been in business, your industry and market position, how much capital you have in your business may all play a factor in their assessments. For example, you may be able to successfully apply for a loan even if your credit rating is poor, if you are willing to pay more to compensate for the increased risk.

Each lender will have a different risk appetite, and many prefer businesses in specific industries or with a particular business model, so you may be able to access a better deal if you find a lender that is a good fit for your business.

A reputable loan broker will be able to help you compare products and find a lender suited to your specific needs, as well as helping you access any special offers such as cash-back deals.

4

Apply

If you’ve done all your preparations in advance, you may be able to complete your application in less than half an hour.

Simply fill out a form with your personal and business details and your reason for borrowing, upload your supporting documents and submit.

Some lenders will give you an instant decision on the spot. Others will follow up with a call from a lending advisor to talk about your needs or gather more information.

Alternative lenders tend to make fast decisions, so you could have same-day approval and funds in your account within days or even hours.

Learn more about getting a business loan.

Higher levels of satisfaction for women business owners

Women in business are more likely to be satisfied than their male counterparts.

According to the Global Entrepreneurship Monitor, women entrepreneurs are generally more satisfied and have a higher level of well-being and work-life balance.

The following graph shows 57% of New Zealand women business operators were delighted or pleased with the quality of their lives.

Further reading for women entrepreneurs

For further reading and inspiration on business loans for women there are a number of “women in business” websites that are worth checking out:

Know of more? Contact us and we will add it to the list.

Grow the business you want.

One application, multiple lenders. Totally free and it will not affect your credit rating.

See if you qualify