business loansBiz2Credit.com found that business loan approval rates for women are 15-20% lower than those of men. This may be attributed to reluctance to lend to small businesses, especially following the crisis of 2008, and women having an average of 20 points lower credit scores than men. Government regulations following the credit crisis have forced banks to be more discriminating, even as extreme as to turn down loan applications from businesses that are not fully understood.

According to Lisa Stevens, head of small business banking at Wells Fargo & Co, businesses owned by women tend to have under $25,000 in revenue. This is not enough revenue to handle debt. Nor does it bring in enough cash flow to convince banks that their business is worthy and stable enough to receive the loan in question.

Along with lower credit scores, women also tend to be less aggressive and lacking in confidence when applying for loans, which only adds to the bank’s reluctance to approve their applications. In order for this to change, women will need to be more specific in detailing exactly how they will be using and paying off the loan.

It has even come to the point where women are being forced to use their savings as collateral in order to receive a loan. With no surprise, these women are choosing to turn to financing companies instead – choosing to pay high rates as well rather than having to adhere to banks’ precarious demands.  .

There is still some hope, however, as the Senate Small Business & Entrepreneurship Committee presented legislation last month to make $200,000 in loans available to women business owners with flexible terms. Women should take heed and prepare with the help of experts in law and accounting before applying to ensure their small business loan has a sound chance.