Man or Woman?
When I decided to write a blog article about this subject I thought carefully, then decided to take Nike’s advice and ‘Just Do It’.
This post is not about who is better, it is not a debate about an ability to multi-task or who is better at parking a car. There is a genuine difference in mentality and assessment of risk between men and women, it is something I don’t think is ever really addressed in the commercial finance sector.
The Details of Business Loans
If you think a business loan agreement is the same whether the borrower is a man or woman then you be both correct and wildly wrong.
The human brain is a complicated organ, the one thing I understand is that men and women use different parts of their brains at different times. They also react differently to the same scenario, which means when both a man and woman read a business loan agreement they actually take in different parts of it.
These differences extend to applying for finance. A male and female written business plan and application can be very different, even when the actual business is exactly the same. I will explain why.
The Words Count
Write the name of a famous person on a card, then give that card to a man and a woman. Ask them to describe that person so you can guess who they are describing. Let’s assume you are given Kate Middleton to describe.
A man will say something like ‘married to Prince William’, a woman is more likely to describe her physical attributes, use more adjectives. The same applies in conversation, most men will use less adjectives. It is simply how the male and female brains work. The phrase ‘a man of few words’ is actually very true.
If you take this into business plans then the male written plan will be more factual, more specific and be more narrow in it’s focus. The female business plan will look at the wider picture, provide more detail around the edges etc.
Why Does It Matter?
When it comes to business loans then men and women read different parts. A man is more likely to look at the outline figures, the amount the basics and main facts. A woman is more likely to notice the details, the terms and the covenants etc.
It matters because the business loan agreement will be the same but the priorities of the client differ. When a lender asks you to sign then they assume;
- You have read the business loan agreement
- You understand what is within the agreement
- You agree to everything within the agreement
The thing is that it is unlikely any of the above 100% apply. How much they apply depends on the person, and their gender.
It matters because a different focus needs to be put on different parts of the agreement to ensure a full understanding.
What Next
This post is absolutely not about competition of who is better, it is simply about highlighting that men and women read business loan documents differently. Most lenders don’t get the difference, nor really do I, but by making the effort to understand it is easier to get the right solution for the client.
By Dave Farmer
Dave Farmer is founder of Lime Consultancy, an award winning business finance advisory based in Sussex. Any feedback then please add your comments above or contact us via the website.