Commentary: For women entrepreneurs to succeed, they need banks to capitalize their businesses
In a Hollywood depiction, a multi-million-dollar businesswoman walking into a meeting with a bank loan officer would stride into the room in killer heels, crush the man’s hand in a handshake and maybe even stub out his cigar before laying down her terms.
In every sound and gesture, you would feel her million-dollar power.
As usual, real life just doesn’t track with the movies. When I was seeking a line of credit for my Laguna Beach-based business, EventMover Inc., which had crossed the million-dollar threshold 10 years before, I came to the table with $3.5 million in annual revenue and was looking for upwards of three-quarters of a million dollars in credit.
Founded here in Orange County in 2001, EventMover is a transportation logistics company that moves corporate assets for trade and auto shows, domestically and internationally. I needed a line of credit to grow and felt pretty good about my chances given my success.
I knew banks didn’t like to lend less than $250,000, because they felt those loans weren’t worth the risk, but I had a long-established, thriving business and was looking for a loan amount that should have been attractive to them.
Then reality set in.
I went to 25 lenders in Orange County and every single one said no. I came prepared with my ledger open and even had my accountant join me.
No luck. I finally offered to put up my house as collateral, and they simply said they weren’t in the real estate business.
Judging by a recent survey from the Invest in Women Entrepreneurs Initiative, my experience is hardly unique. The survey found that women who own well-established companies — in business for at least 10 years and with annual revenue between $250,000 and $5 million — are struggling to secure loans.
The downstream effect, the researchers note, is creating an under-capitalized group of successful entrepreneurs without access to the financial tools they need to expand their businesses, create jobs and contribute to the country’s economic output.
The organization conservatively estimates this lack of capital access creates a $500 million financing gap for these women. If closed, they estimate the growth potential could lead to 10,000 new jobs.
This is not only wrong-headed from a parity perspective, it essentially puts up a roadblock in one of the fastest-growing sectors of American entrepreneurship.
Over the past 50 years women have gone from owning 4.6% of all businesses to 40%, according to the American Express 2018 Report on the State of Women-Owned Businesses. This roadblock requires far too much effort to overcome and it needs to be removed. Well-qualified women business owners shouldn’t have to go to the lengths I did to raise capital.
I finally got my line of credit, but only after my accountant approached a lender he had done business with for years. I felt like I had traveled back in time, before 1988 and the passage of the Women’s Business Ownership Act — when women were required to have a male relative sign a business loan.
Although my accountant wasn’t there to cosign the loan, the echoes were there. The banker in question didn’t trust me — he trusted him.
My business is still going strong, but there are plenty of women business owners who can’t grow their businesses past the million-dollar mark because they can’t get the kind of loans they need to expand.
If established women entrepreneurs like me are having difficulty accessing capital in a pro-business environment like Orange County, imagine how tough it is for women with new or fledgling businesses in less affluent or rural areas.
When you deny women the chance to responsibly grow their firms, you potentially rob entire communities of new and needed services, of upward mobility, of greater family security and of job creation.
In short, we all pay a price when well-qualified women entrepreneurs can’t get their businesses funded.
Lisa Michele Chretien is the owner of EventMover Inc., an event logistics company based in Laguna Beach, and a member of the Invest in Women Entrepreneurs Initiative.
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