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The psychological barriers women entrepreneurs face around debt

Presented by the WEOC National Loan Program

One often overlooked hurdle for women entrepreneurs is the psychological burden of debt. While debt can be a powerful tool for growth, many grapple with unique anxieties around loans. In this post we’ll debunk common fears about debt and empower you to make informed, fearless financial decisions.

Perceptions of debt

In our Bootstrap or Borrow report, we found that many entrepreneurs have a negative mental model around debt. We found that nearly 8 in 10 “hate owing money” even though they are confident in their ability to distinguish between good and bad debt.

Let’s dig into a few common misconceptions.

“I’m a failure for needing a loan.”

Believing that needing a loan is a sign of weakness or failure couldn’t be further from the truth. Taking on debt is an essential part of business for most entrepreneurs, and shows like Dragon’s Den or Shark Tank wouldn’t exist if we could all do it ourselves! Taking out a loan or accepting venture capital is how many successful businesses get off the ground or go to the next level. Remember, asking for help, in the form of loans or credit, is a sign of resourcefulness, not defeat.

“High interest rates will trap me.”

The fear of being swamped by high interest rates can be daunting. It’s key to understand that not all debt is created equal. Some loans offer reasonable rates, especially if you have a solid business plan and good credit. Shopping around and negotiating terms can lead to manageable repayments that don’t stifle your cash flow. Remember to do your research and compare your options before applying anywhere.

“I don’t want to give up control of my business.”

This is a very real concern for many women entrepreneurs. We found that 5 out of 10 women entrepreneurs felt that getting loans or business partners meant sacrificing too much control. Unlike equity financing, where you might give up a percentage of ownership in your company, debt financing allows you to retain full control of your business, as long as you meet the repayment terms of the loan. This means you get the capital you need to grow without having to answer to outside investors. It’s important to find the right type of loan and lender that aligns with your business goals and financial situation.

“I’ll never be able to pay if off.”

The fear of never escaping debt is an overwhelming form of catastrophic thinking that can paralyze potential actions to improve your business’s financial health. Instead of succumbing to this fear, focus on creating a pragmatic repayment plan. When the “never” voice creeps in, pause and question its validity. Ask yourself: “What evidence supports this belief?” Often, you’ll find the evidence shaky at best.

“What if I get ripped off?”

It’s hard to shake the feeling that you might be getting a bad deal, especially with stories of predatory lending practices. Protect yourself by doing your homework. Understand every term in the agreement, seek advice from trusted financial advisors, and always keep an eye out for transparent, reputable lenders. Knowledge is power when it comes to negotiating and handling financial agreements.

“Debt makes me less attractive to investors”

Investors typically look for evidence that you can handle financial commitments and use resources wisely to grow your business. Controlled amounts of debt used for strategic investments, such as expanding operations or scaling production, can actually make your company more appealing because it shows ambition, financial acumen and strategic thinking.

While some anxieties might arise when applying for a small business loan, understanding them allows you to transform debt into a springboard propelling your business forward.

WEOC’s National Loan Program is specially designed to support female entrepreneurs like you. Learn more about how our loans can help you scale and succeed.

Disclaimer: This article contains general information only, and is not general advice or personal advice.