Women's businesses boosted by program Loans: A Small Business Administration project that gives a head start to female entrepreneurs might be coming to Baltimore.

July 16, 1996|By Abbe Gluck | Abbe Gluck,SUN STAFF

Barring unlikely rejection from the Small Business Administration's national office, a loan program designed especially for women will soon be coming to Baltimore.

SBA's Women's Prequalification Pilot Loan Program provides female entrepreneurs with intermediary consultants who help them prepackage their loans before they go to the bank. The prepackaging process includes everything from formulating a business plan to analyzing the market to assembling personal financial data. When the package is ready, SBA reviews it and usually writes a "prequal letter," throwing its support behind the project.

Banks, which often approve loans pending SBA approval, are thus given a complete package and are assured of SBA support even before reviewing the loan.

"All the hard work is done ahead of time with SBA," said Sherrye Henry, director of the SBA's Office of Women's Business Ownership in Washington.

Henry called the program, now in 16 locations nationwide, "consistently responsible for putting more women into business."

Of the 713 prequal loans submitted so far by SBAs across the country, banks have approved 521, said Jane Butler, the SBA's deputy administrator for financial assistance. The result has been $53.9 million in loans since June 1994.

The proposal under consideration would authorize local SBAs to add both women's and minority prequalification programs provided they have so-called "One-Stop Capital Shops." Since the capital shops are SBA locations that centralize the resources small businesses need, adding the two programs would make the shops as complete as possible, Butler said.

Baltimore's capital shop opens in mid-August, and since the city already has a minority prequalification program, the proposal would mean adding a women's program -- which the Baltimore SBA said it will do if approved.

The proposal, which awaits approval by SBA Chief Administrator Philip Lader, will be evaluated sometime over the next two weeks, and nearly all SBA officials said they expect approval. "It's pretty likely, but not definite," said Carolyn Zeller, acting district director of the Baltimore SBA.

If the proposal does not pass, Butler said SBA might expand the women's program independently of the capital shops in the future.

The women's program offers "two real advantages from the lending institution's standpoint," said Patricia Eichhorn, Citibank's SBA relationship manager in San Francisco, where the program has been under way since June 1994.

"The SBA indicates its support, and the intermediary is there to pull the transaction together," she said. "The intermediary does a lot of the leg work, so the package is really complete by the time it comes to the lender."

Baltimore banks will likely welcome the program, said Martha Brown, the local Women's Business Ownership representative. She called Baltimore "very receptive to women business owners."

Even without the prequal program, the Baltimore SBA has helped 216 women receive $12 million in loans since 1994 through its low-documentation loan program, which streamlines the application process for loans of less than $100,000, Brown said. Twenty-eight percent of all "low-docs" have been made to women, and a women's prequal program "will definitely raise the number of loans," she said. The women's program deals with loans up to $250,000.

If approved, the women's program will open about a month after the Baltimore SBA finds an intermediary, Zeller said.

Because the Baltimore office anticipates a large response, selecting a qualified intermediary is key, members said. Intermediaries are typically nonprofit women's trade organizations or small business development centers.

"We expect it's going to be very, very busy so we need someone who can hit the ground running," said Joyce Evans, spokeswoman for the Baltimore SBA.

Zeller said the women's prequal program would closely resemble the Baltimore SBA's successful minority program.

"Women have traditionally had a difficult time getting loans from banks, just as with loans for minorities," said Sonia Stockton, executive director of the Small Business Development Center of Central Maryland, the intermediary for Baltimore's minority program. Since June 1995, banks have approved 22 out of 27 loans submitted by that program, she said.

San Francisco runs the most successful women's program in the nation. Since June 1994, that SBA has approved 101 out of 159 prequalification applications, and 79 of those have received bank approval, said Gloria Minarik, the office's assistant district director for business development. "It's not foolproof, but the program definitely helps," she said.

In Maryland, there are more than 167,000 woman-owned businesses, accounting for 39 percent of all state firms. They employ more than 301,000, or 25 percent, of state workers and generate $39 billion in sales, said the National Foundation for Women Business Owners in Silver Spring.

There are 7.95 million women-owned businesses in the nation, accounting for one-third of all U.S. business, NFWBO said.

Pub Date: 7/16/96

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