Thursday, July 18, 2013

Business Lending to Female Entrepreneurs on the Rise

A recent article related to female entrepreneurs caught my eye.  In connection with National Women’s History Month this past March, Wells Fargo announced its plans to commit to lend a total of $55 billion to U.S. women-owned businesses over the next seven years. While I was excited to read about this commitment from our country’s premier small business lender, I was more interested to learn that this isn’t the first time a bank like Wells Fargo has made such a pledge. 

Apparently, Wells Fargo began making lending commitments targeted at businesses owned and operated by women almost 20 years ago, in 1995, when it strived to lend $1 billion to this segment over a three-year time span. Their goals have continually increased, with this most recent target being the most aggressive yet.

And Wells Fargo is not the only national bank that caters to specifically women-owned businesses. For example, PNC Bank has a training program tailored specifically to bankers who want to work with women-operated small businesses, and there are reportedly 900 “PNC-Certified Women’s Business Advocates” currently, nationwide. KeyBank reported in 2009 that it had provided more than $3 billion to women-owned companies since 2005, and touts its “Key4Women” mentorship program that offers members relevant publications, networking opportunities, and sponsored “relationship managers” to foster development and growth. And the Citi Foundation supports investment in organizations that seek to create opportunities for women without access to traditional credit and funding sources through its sponsorship of the “Women Investing in Women Initiative (WIN-WIN).”

These programs are credited with increasing the prevalence of female-owned businesses in the U.S. According to an article related to the Wells Fargo announcement, female-owned businesses are one of our country’s fast-growing groups. The number of women business owners in the U.S. apparently increased by approximately 20% between 2002 and 2007, and women are currently billed as owning approximately 30% of U.S. businesses. Resources provided by specific lending programs have been recognized for assisting women in obtaining the financing they need to achieve their goals. 

However, there is still room for improvement. A report also published this past March highlights the problems women continue to face in owning a business and obtaining financing. The study found that female-owned companies were up to 20% less likely to be approved for an SBA loan in the last half of 2012. Interestingly, while the statistics reflected that women-owned businesses had generally lower annual revenues and higher operating expenses, an analyst connected to the study explained that this may be because women are more likely to own retail business which historically reflect lower margins and higher operating costs. In reflecting on the findings of the study, this analyst emphasized that being approved for quality small business loans is critical for any entrepreneur – alternative lenders may have higher cost borrowing terms, or founders may even turn to using personal credit cards, both of which could lower credit scores and exacerbate the problem of finding a quality loan. 

Overall, however, the focus on financing for women-owned businesses is promising news for any female entrepreneur. The commitment from large players like Wells Fargo to help develop and grow this segment of our country’s business population is exciting, to say the least.  

A Post by Karen Wenzel, Guest Blogger

No comments :

Post a Comment