Getting a bank loan is still a struggle for many women who own businesses.
Kirsten Curry has had three rejections in the past six months and is waiting to hear from a fourth bank. Curry, owner of Seattle-based Leading Retirement Solutions, has applied to national banks, a regional bank and a credit union. The problem is that her 8-year-old retirement advisory firm lost money last year as it invested in technology to help it expand. Although revenue has consistently risen and her company has no debt, her expenses last year were a red flag.
“Though we know we’re going to see growth, it’s not necessarily guaranteed,” Curry says.
A survey of businesses conducted this summer and released Wednesday found that 30 percent of companies owned by women were able to get bank loans during the previous three months, compared to half of all the owners surveyed. The survey conducted by researchers at Pepperdine University’s Graziadio School of Business and Management and Dun & Bradstreet Corp. questioned owners of companies with up to $100 million in annual revenue.
Only 21 percent of the women surveyed said they expected it will be easy to raise debt financing — essentially loans — in the next six months, compared to 44 percent of all companies. Fewer of those owners said they were likely to pursue a bank loan, at 67 percent compared to 75 percent of all owners.
Women were also more pessimistic about the impact on their companies of not being able to get financing — 64 percent predicted slower growth versus 44 percent of all business owners. Many women will turn to personal savings, friends and family, credit cards and other alternatives. Curry isn’t optimistic about an approval from the fourth bank, so she and her finance manager, Jaime Humphrey, are working with a referral program to link them up with other banks.
The number of U.S. businesses owned by women grew nearly 27 percent from 2007 to 2012, rising to nearly 10 million from 7.8 million, according to the most recent Census Bureau figures. The total number of businesses grew less than 2 percent.
There aren’t official tallies of lending to companies owned by women. Under federal anti-discrimination laws, banks cannot ask loan applicants about their gender, race or ethnic background. Agencies including the Federal Deposit Insurance Corp. compile statistics on small business lending but those don’t reflect gender or other demographic information or whether companies obtained loans or had their applications denied.
Banks track lending to women through their own surveys. Bank of Americafound this year that 11 percent of owners who are women applied for loans the past two years versus 13 percent of owners who are men. Some banks have realized they need to be more aggressive in lending to businesses owned by women; Wells Fargo set a goal of $55 billion in loans by 2020, but surpassed that number in 2013, spokesman Jim Seitz says.
The financing issues come on top of the struggles small businesses historically have had getting bank loans. It’s especially the case for the newest companies without track records showing years of rising revenue and profits — and since women have been starting companies at a high rate in the past decade, many have young businesses. They also may not have developed a long relationship with bank branch managers who might advocate for them with loan underwriters.
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