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Loans to help women in biz
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November 10, 2000: 1:41 p.m. ET
SBA programs and private lending initiatives support female entrepreneurs
By Jane Applegate
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NEW YORK (CNNfn) - Although there are eight 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: SBA chief Aida Alvarez said the women's prequalification program, which was launched as an experiment in 1994, handled about 700 loans totaling $70 million by 1997.
The program 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 Alvarez. She said initiatives like the prequalification program not only fuel business growth, but also "help change lives and keep families secure."
To its credit, with President Clinton's support the SBA has worked hard in
the past four years to put more bank loans in women's hands. In fiscal 1992, the SBA guaranteed 3,377 loans to women-owned businesses; in fiscal 1996, the number increased to 10,459. But, day to day, many women around the country are still having a difficult time getting bank financing.
Banks embrace women in business
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 60 chapters, while Bank of America recently 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, vice chairman 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' 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, in conjunction with Women Inc., has 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, 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."
Women Inc.'s members benefit from a discount on setup fees for new Advantage Business Credit loans of up to $100,000. The bank also offers a one-page loan application. For information, call Women Inc. at (800) 930-3993.
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 Bookkeeping, by Jan Zobel (Easthill Press; $17), is a great addition to a woman's business library. 
Excerpted from 201 Great Ideas for Your Small Business, Copyright 1998 by Jane Applegate. Published by arrangement with Bloomberg Press. Excerpts appear on Saturdays on CNNfn.com.
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