Great Ideas for your Small Business: Take Advantage of Special Lending Programs for Women
Although there are nine million women business owners in America, employing roughly 18.5 million people, women still have a tough time securing bank loans.
But there is help: the women’s prequalification program, which was launched as an experiment in 1994. The pro- gram works like this: The SBA directs women business owners to a nonprofit group that helps them write or polish up their business plan and fill out a loan application. The completed application package is then presented to the SBA. If it looks good, the SBA issues a letter stating that the applicant qualifies for a government loan guaranty. Letter in hand, the business owner goes to a commercial lender to apply for a loan of up to $250,000. “The SBA’s stamp of approval helps women get what they need,” said former SBA chief Ada Alvarez.
Fortunately, two of the nation’s largest banks are embracing women business owners by aligning with major women’s business organizations. San Francisco–based Wells Fargo Bank has teamed up with the National Association of Women Business Owners, a Washington, D.C.– based group with sixty chapters, while Bank of America linked up with Women Inc., a Los Angeles–based trade association.
Both giants have committed billions to the women’s market. “The success of our efforts has exceeded our expectations,” said Terri Dial, formerly responsible for small business and consumer lending at Wells. “What’s really exciting about reaching this goal is that we accomplished it by making lots of small loans. In fact, most of the small businesses seeking loans want $25,000 or less.”
Wells’s loans are unsecured and require a one-page application form with no tax returns or financial statements. The minimum loan amount is $5,000. To qualify for a loan, women must have good personal and business credit, be in business for two years, and be profitable.
Bank of America (BofA) jumped into the market with its own lending program targeted at women. “We are excited to be working with an organization that shares our goal of financially empowering women business owners,” said Kathleen Brown, former executive vice president of BofA. She said the bank committed to lend $10.6 billion to small business owners over a three-year period. “We expect about 30 to 40 percent of that will finance women-owned business, based on the makeup of the small business segment, but there is no upper limit.”
Before you apply for a bank loan, make sure your financial records are in good order. Minding Her Own Business: The Self-Employed Woman’s Guide to Taxes and Recordkeeping, by Jan Zobel (Adams Media Corp.; 2000), is a great addition to any woman’s business library.