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Loans for disadvantaged up
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November 3, 2000: 11:46 a.m. ET
SBA lending set record last year, and larger share went to women, minorities
By Staff Writer Steve Bills
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NEW YORK (CNNfn) - Renee Hudgens had done her homework -- working in the industry, developing a business plan, gradually building up her retail store, then expanding into a new location -- when a competing bank called her to pitch its small-business program.
Hudgens decided to take the chance, and in fairly short order she obtained a line of credit from FleetBoston Financial, backed by the federal Small Business Administration, that enabled her to rent a warehouse to serve her home-furnishings business, Chez Renee's of Bangor, Maine, and provided the working capital so her husband could quit his job and join her in the family business.
"It's taking some nice steps, which is good," said Hudgens, who sells mostly contemporary style furniture and accessories from a 4,500-square-foot store near a mall. "We're hoping it will be there for our daughters down the road, if they want it."
Boosted by the strong U.S. economy, entrepreneurs in the past year received a record $17.96 billion in SBA-backed financing, exceeding the previous year's total by more than $1.5 billion.
More financing for minority borrowers
Perhaps more striking, a record 30 percent of those loans went to minority borrowers -- more than $3.7 billion to 13,184 minority-owned businesses. SBA also made almost $2 billion in loans to small companies owned by women, also a record.
Fleet received special recognition from the federal agency for providing more SBA loans than any other financial institution in the nation during the federal fiscal year that ended Sept. 30, and it was the leading "new markets" SBA lender in the Northeast, serving minority-, women- and veteran-owned businesses.
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"I can move a little faster since I have the credit line."
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Barbara Thornton, DesignerShoes.com |
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"It's a very good partnership," said Bill Samuelson, a Fleet senior vice president who heads specialty business programs such as SBA lending. But the bank has had to make special efforts to meet the needs of busy entrepreneurs.
Business owners are typically swamped by work, dealing with a large number of time-consuming issues all at the same time, Samuelson said. Thus, it is hard for them to carve out time to work up the kind of business plans and financial projections that banks typically rely on.
Loans for the historically disadvantaged
As an SBA preferred lender, Fleet -- like other banks in the program -- can get 36-hour turnaround from the agency for bank-approved loans. And the bank has pushed aggressively to seek out historically disadvantaged borrowers. For instance, it launched a loan program in June to support women-owned businesses.
Barbara Thornton, a shoe e-tailer in Boston, got an SBA-backed $87,000 line of credit in October after a friend referred her to the program. "I was probably the nastiest customer they've ever given money too," she said.
Thornton launched her Designer Shoes e-commerce site in 1997 to offer fashionable footwear in hard-to-find sizes, both very narrow and very large.
A former city planner and Harvard MBA who became frustrated finding shoes that fit, she had received one round of private equity financing early in her company's history, but she felt she was at a disadvantage because she was a woman.
"I feel I've been so mistreated by the world of finance," she said, "I've become sort of nasty about it."
But the new line of credit has eased a lot of her financial concerns, and now she wants to move more aggressively to expand her business, both online and at her inVestments retail store in Boston.
"We have primarily bootstrapped" the company financially, she said. That meant the company had to allow some opportunities to pass by, because "I had to know I had money in hand by the end of the month."
With the cash flow problem now in hand, "I can move a little faster since I have the credit line," Thornton said. "I can take a little more risk." 
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