This article originally appeared in Independent Banker.
In the past half of a century, women have gone from a small part of the business community to a significant—and fast-growing—segment. In fact, women start an average of more than 1,800 businesses across the country each day. How can community banks form mutually beneficial relationships with this burgeoning group of business owners?
By William Atkinson
Several years ago, when Ashley Horner was new to banking, she began working with the creator of a doggy day care and boarding business. “She started with one location and ended up opening two more,” says Horner, vice president and Small Business Administration program administrator at $460 million-asset Summit Bank in Eugene, Ore. “We worked closely together in the early years. Then, I eventually helped her sell the business, and, ironically, Summit Bank helped finance the acquisition of the business to another female business owner.”
What Horner learned most from this experience was that she wasn’t just making a loan; she was building friendships and giving back to the community. “It is such a rewarding experience,” she says.
In the past 50 years, the business landscape has shifted dramatically and reflects the general population much more closely. The 2018 State of Women-Owned Businesses Report, commissioned by American Express, reveals that there are now 12.3 million women-owned businesses in the U.S., accounting for 40% of businesses—and roughly 1,800 more are being added each day. That’s more than 3,000% more women-owned businesses than there were back in 1972, when the U.S. Census Bureau began surveying for such data.
And the general business case for lending to these firms is clear. Women-owned businesses employ 9.2 million people and generate $1.8 trillion in annual revenue.
But what can community banks do to help foster this growing demographic of business leaders? The American Express report suggests a number of ways to not only increase the number of women becoming entrepreneurs, but increase their chances of success, too.
“Support can take the form of training that addresses both hard and soft skills, networking events, mentorship, access to markets (such as through women-owned certification programs) and access to finance,” the report authors write. “Support should also take the form of policies, such as affordable child care and increased access to capital.”
Opportunities to aid entrepreneurs
There are several ways community banks are helping to mentor women entrepreneurs. Some of this occurs via one-on-one interaction, in groups or even outside of the bank.
Horner has opportunities to mentor women entrepreneurs directly at Summit Bank in her role as SBA program administrator. In fact, the SBA lending department is made up of four women and two men.
“We do a lot of loans to majority female-owned businesses,” she says. “Having a female lender on the other side of the table makes it more personal and approachable for them. It also allows more of a relationship to develop between us.”
“Having a female lender on the other side of the table makes it more personal and approachable for them. It also allows more of a relationship to develop between us.”
—Ashley Horner, Summit Bank
In fact, Horner is so passionate about her job that she has helped Summit Bank become the No. 1 SBA community bank lender in Oregon, and more than half of these loans are being made to women-owned businesses. “This is somewhat unusual for SBA financing,” she says.
The program is growing. “We are not only making loans to new businesses, but also to women who are wanting to expand their existing businesses, as well as women who are purchasing businesses where they worked themselves for years,” she says.
By the numbers: Women-owned businesses
- 40% of U.S. businesses were owned by women in 2018. Of those, 47% were owned by women of color
- 12.3 million The number of women-owned businesses in 2018. That’s a 31-fold increase since 1972
- 1,821 businesses are started by women each day, on average
- $1.8 trillion The revenue of all women-owned businesses in 2018, which is 217 times greater than 48 years earlier
- 9.2 million people were employed by women-owned businesses in 2018
The states showing the highest employment vitality, a measure of employment growth rate from 2007 to 2018 at women-owned firms and their average number of employees, are:
2. Maine + North Dakota (tie)
5. Delaware + Virginia (tie)
Passing on business best practices
In Hanover, N.H., $500 million-asset Ledyard National Bank offers an education and networking program called Leading Women: Empowering Women in Business. It is available to all of the bank’s women-owned and -managed businesses, as well as some who are not bank clients.
The community bank designed the program as a forum for women to share success stories. Throughout the events, participants learn about online marketing, human resources, conflict management, success strategies, speed networking, writing an effective elevator speech, the art and science of branding, legal compliance updates, cybersecurity, strategies for growth and year-end tax planning.
Presentations are often made by bank employees, but Ledyard National Bank also invites outside speakers. The forum is held quarterly, with an average of 40 to 50 women attending each session. Three of the meetings occur during morning hours, and these sessions include breakfast and networking opportunities, presentations and Q&As, and then another hour of networking following the presentations. The fourth is an evening session for those who can’t make a morning meeting. The bank also records a number of these meetings and makes them available on its website for those who are unable to participate in person.
“We launched the program as a way to give women who own or manage a business an opportunity to learn best business practices that will help them succeed,” says Kathy Underwood, Ledyard National Bank’s president and CEO. “Many of these businesses are smaller and don’t have the expert resources needed.”
Underwood and her colleagues have heard a number of stories of how this program has helped small business owners. She recalls one woman who, prior to the meeting, told Underwood that she had no interest in the topic because it didn’t apply to her, and that she was there to network. “After the program, though, she told me that she was thankful she had come, as she learned that there were things she needed to do to protect her systems that contained confidential client data,” she says.
Ledyard National Bank took a year off from the program recently because of a number of large projects in which it was involved. However, because of the number of calls it received from interested women, the program is up and running again.
Resources for your community bank and your customers
There is an array of resources and organizations out there to support women entrepreneurs, as well as the financial institutions that work with them. They include:
- U.S. Small Business Administration’s Office of Women’s Business Ownership: sba.gov
- National Women’s Business Council: nwbc.gov
- Association of Women’s Business Centers: awbc.org
- National Association of Women in Construction: nawic.org
- Women in the Housing & Real Estate Ecosystem: nawrb.com
- National Association of Women Business Owners: nawbo.org
- U.S. Women’s Chamber of Commerce: uswcc.org
Finding community outside the branch
At the University of Oregon in Eugene, the business school formed a women’s business group. Horner and one of her colleagues, Jenny Bennett, began to make presentations to the women in the school’s business program, including presenting and playing an active role in the advanced entrepreneurship class. The presentations have covered topics such as career, business obstacles, rewards and life balance. Horner says women in the classes who have ideas for businesses approach her and want to meet with her afterward to discuss funding and working capital.
“Being a community bank, we feel we need to give back to all areas of our community, including educational institutions,” Horner says. “We began our relationship with the university when we started to partner with the professor who was part of the business banking school, which began about four or five years ago.”
In early 2019, Summit Bank entered the Portland, Ore., market. “We are excited to begin to serve this market, including getting involved in working with the local community colleges and universities,” she says.
What does Horner suggest to other community bank executives who are interested in tapping into the growing women-led business market?
“Don’t look at the financial cost of having your staff leave for a day or two to serve in educational capacities in your community,” she says. “What they end up doing will come back tenfold, because many of these women will end up becoming customers of the bank.”
While some community banks provide in-house one-on-one mentoring, others provide in-house group mentoring, and still others mentor outside of the bank. Several community banks provide information to women entrepreneurs on mentoring resources available in their communities.
One of these is $1.2 billion-asset Gorham Savings Bank in Portland, Maine, which works to connect women entrepreneurs with a wide array of resources in the community that are specifically tailored to provide mentoring services and other information they will need as they are starting and building their businesses.
One of these is SCORE, or Service Corps of Retired Executives, which helps them put together business plans and projections. “We also help them find CPAs and attorneys,” says Kim Donnelly, senior vice president and director of business banking at Gorham Savings Bank. “We also connect them with the Economic Development Council of Maine and individual municipalities, as well as the Maine Technology Institute.”
One of the most important resources Donnelly connects entrepreneurs with is Coastal Enterprises, Inc., which has a women’s business center. “This center schedules monthly peer facilitation group meetings, as well as access to specialists,” she says. Other resources include free business plan development and a wide array of workshops.
Another community bank that connects women entrepreneurs with outside mentoring resources is $1.5 billion-asset Investors Community Bank in Manitowoc, Wis. About two years ago, the bank began investing in the Wisconsin Women’s Business Initiative Corporation, a support organization for women entrepreneurs.
“This allows us to partner with an organization that provides quality business and financial education,” says Dave Coggins, the bank’s executive vice president and chief banking officer. “We realized that it made more sense to do this than to try to build these kinds of resources within our own bank. We are happy with the partnership, and it is working well for us.”
What can community banks do to support women entrepreneurs?
The Center for Women’s Entrepreneurial Leadership at Babson College in Wellesley, Mass., offers many programs supporting women leaders. For example, the center’s Women Innovating Now (WIN) Lab supports women entrepreneurs looking to scale their startups via an intensive five-month program covering everything from early stage customer acquisition to identifying sources of capital.
“We have come to realize that a lot of experiences for women business founders are similar to those for men, and many of them are different, so we created an accelerator process to help women deal with all of these issues,” says Susan Duffy, executive director of the Center for Women’s Entrepreneurial Leadership and cofounder of WIN Lab. “We use a self-efficacy model, which helps to create a community to support women and help them understand that it really can open doors and close deals.”
On the topic of access to capital, for example, the program discusses the environment in general: not only that capital is much less likely to go to women founders, whether debt or equity, but also how to create successful pitches. “Research has shown that, if [women] utilize traditional presentations, they are less likely to get funded,” Duffy says. “However, if they can change the conversation in their presentations, they are just as likely to receive funding as men are.”
What can community banks do to help? Besides lending money, Duffy believes they can play a huge role in helping to connect women entrepreneurs with relevant resources in their communities that can provide training, education, coaching and mentoring. “In other words, banks can become the center points of larger cohesive systems in the community that are in place to support women in business,” she says.