How to Get More Business Loans to Women: Bill or Business Model?

    By Adrienne Burke | Small Business

    Following an analysis by her committee that found that, despite owning 30 percent of small businesses, women account for only 4.4 percent of the total dollars in small-business loans, and win only 17 percent of the total number of all SBA-backed loans, Washington Democratic Senator Maria Cantwell introduced a bill bent on changing those stats.

    Cantwell, who chairs the Senate Committee on Small Business & Entrepreneurship, last month introduced the Women's Small Business Ownership Act of 2014, "a bill to reauthorize the women's business center program of the Small Business Administration, and for other purposes." The legislation would not only improve access to lending, but would "increase business counseling and training services for women entrepreneurs, and give women-owned businesses the same level of access to federal contracts as other disadvantaged groups," according to a statement from the committee.

    Specifically with regard to lending, the bill would:

    "Expand and improve the U.S. Small Business Administration Microloan and Intermediary Lending programs to reach more women borrowers who need up to $50,000, as well as reauthorize the SBA Intermediary Lending program – now a pilot program – to provide more women access to loans between $50,000 and $200,000." And "... allow Microloan lenders to increase lending capacity from $5 million to $7 million and improve the program to better meet borrowers’ needs through more flexible terms and expanded technical assistance."

    But if the experience of SmartBiz, whose software streamlines the SBA-loan application process, is any indication, it might not be a law that's needed. Just fewer hassles. SmartBiz General Manager Evan Singer told Yahoo Small Business: "Among folks we’re loaning to, we're seeing that 21 percent of our customers are 100 percent women-owned businesses and 36 percent are at least 50 percent women-owned."

    Singer says he doesn't know why SmartBiz's rates of lending to women are so much higher than the average. The firm isn't marketing specifically to women, "but they’re coming and finding us," he says. "I’m thrilled about it, but I have no insight into why."

    In fact, in an interview with the Associated Press today, Cantwell pointed to a likely reason:

    "The No. 1 thing I heard at the hearing is you need to have financial products tailored to the interests of women. It's very clear that they're interested in microfinancing and intermediate financing, (loans ranging up to $200,000). When you think about the structure of the Small Business Administration programs or conventional financing, they're as not targeted toward the kind of products women think about."

    The SmartBiz platform, as we reported on Profit Minded earlier today, uniquely offers SBA-guaranteed loans in amounts ranging from $5,000 - $150,000. And Singer notes that traditional banks prefer to make commercial loans in much larger amounts—$1 million to $5 million.

    "We’re right on par with what the statistics," says Singer, comparing the ratio of women owned-businesses to the ratio of SmartBiz loans going to women-owned businesses. "For whatever reason the traditional banks are not."

    Given that GovTrack gives Cantwell's bill an 18 percent chance of being enacted, women business owners should hope platforms like SmartBiz, and not new laws, are the real answer to winning the financing they need to grow.

    Subscribe to our mailing list
    * indicates required
    Small Business Services