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    A change in mindset and planning can help women’s lending struggles

    It wasn’t all too long ago when women could be legally discriminated against by lending institutions. Just more than 40 years ago, many women business owners had to turn to their husbands or sons to co-sign a loan. In 1988, HR 5050, passed by the U.S. Congress, put an end to that practice.

    But today, a disparity still remains.  

    A study conducted by Pepperdine University's Graziadio School of Business and Management and Dun and Bradstreet Corp. found that 30 percent of companies owned by women received bank loans in the previous three months, compared with 50 percent of all companies surveyed. While other studies have found the bank lending difference to be marginal between men and women, they did find that women are more likely to receive shorter-term loans with higher interest.

    In venture capital, women received only 7 percent of the funds raised in the United States between 2010 and 2015.

    The reasons for the disparity can be a variety of things: lack of a strong plan, confidence, credit history and more. Here are a few common problems and what women can do to improve their standing with lenders.

    The baby penalty

    Lisa Shimkat, the director of the Small Business Development Center in Ames, has consulted with many small business owners, including women. In the Midwest particularly, women business owners can suffer from the choice to put their careers on hold and start a family. At home, women don’t typically build up strong credit. And without significant credit history, banks and lenders are more hesitant to give out funds, or if they do, it’s at a higher interest rate.

    “Then you’re out of credit history development for a period of years, whether that’s two years, five years or 10 years,” Shimkat said. “Then you have this great plan, 20 percent money to put down, but you don’t have the credit. That can be a disadvantage.”

    Shimkat said the majority of stay-at-home mothers budget for the households, take care of the children, spend the money and more — “it’s more than a full-time job,” she said. Shimkat said lenders should start to take those aspects into consideration when pondering loan applications. Those skills can easily transition to ownership.

    Women and lending institutions may also have to get creative to make a deal work, whether that means using a co-signer or revolving loan funds. These can be win-win situations, mitigating risk while helping women business owners get the money the need.

    “We need to not discount the time that women have been out of the workforce and are coming back,” Shimkat said. “We need to put a higher value on that because that will help and add to what they’re going to do.”

    Be prepared

    Women are also more prone to try to do everything themselves rather than ask for help, Shimkat said. This can hurt when creating a solid business plan to present to lenders.

    “Many times women can feel the burden rests on them,” Shimkat said. “That’s one of the biggest hurdles I see.”

    Shimkat recommends pulling together a strong management team, whether that be through consulting or in-house hires, to create more comprehensive business proposals.

    Another key piece to pitching a business to lenders is showing solid financials, whether that be the bottom line or what receivables a company is pulling in. Women should also plan ahead and determine how much capital they’ll need for the next three to five years. Having a good plan will lead to more confidence during a pitch. It also helps paint a picture for the future of the business.

    Many women also don’t have wide, expansive networks, especially if they’ve been raising a family, to tap into when in need of funds. Before taking a business to a bank, create relationships. That way the lenders will have a deeper understanding of the business.

    “Talking on the sales side, how do you get that banker to say yes?” Shimkat said. “Have you developed a relationship? Start on that now before you start on your business so they know who you are and they understand your business and background.”

    “Let’s look at the solution”

    There are many no-fee resources women can turn to if they have trouble receiving business loans. The SBDC, which has 15 locations around Iowa, can help consult and mentor women business owners in creating a plan and finding connections in the business community.

    Another resource is the Women’s Business Center, run by the Small Business Administration. The SCORE Association, which focuses on volunteer mentoring services for business owners, also has a few strong chapters throughout Iowa.

    With all of these resources available and more, Shimkat wants women business owners and the state’s community leaders to focus on solutions. Community leaders should reach out and help prop up women with small businesses. They should provide mentorship and connections. That help can go a long way toward resolving the lending disparity we see today.

    “The mindset we need to get as a state is finding out how to move past the problem,” Shimkat said. “What sort of training or coaching are we going to put out there to help women business owners? Create networks for them, provide mentorship and encourage them. Let’s look at the solution instead of just saying it’s there.”

    Kathi Koenig creates her own track in accounting

    Kathi Koenig’s path to accounting was a bit more unconventional than most.

    Before Koenig, a partner at McGowen, Hurst, Clark and Smith, a certified public accountant firm based in Central Iowa, joined the accounting ranks, she was on track to teach elementary schoolchildren. Originally from Dallas Center, Koenig graduated from Iowa State University in 1973 with a degree in elementary education and teaching. She was a student teacher for a few months before deciding the career path wasn’t for her.

    “I knew teaching wasn’t the way I wanted to go,” Koenig said. “I grew up in that era when your parents thought you should study elementary education or nursing if you were going to have a college education. I’m the first person in my family to have college degree, and I loved children and working with them. It just wasn’t for me.”

    Koenig became a manager at a Hallmark store in Merle Hay Mall and continued working there for a couple of years before having her son and staying home with him for a year.

    Without any accounting experience, Koenig re-entered the workforce in the late 1970s, joining the accounting department at the Iowa Machinery and Supply Co. Her first job was invoicing work. Before the time of widely used computers, Koenig performed elementary math, like adding a purchase of four hammers for $10, then adding sales tax.

    “And I really enjoyed it, even without an accounting background,” Koenig said. “I think they hired me because I had a four-year degree.”

    Koenig kept rising the ranks.

    After the person in accounts receivable went on maternity leave, Koenig took over the workload. Then someone in accounts payable walked off the job, and the company asked Koenig to take over that position. Without any formal accounting training, Koenig kept taking on new jobs and tasks. She decided to attend Drake University for business and accounting classes and eventually passed the CPA exam. She was eventually promoted to controller at the company, where she stayed until 1986.

    Koenig moved into the public accounting space shortly thereafter, joining her current firm, where she has been ever since.

    “I love it,” she said. “Every day is a challenge, and every day I’m working with different clients and being a trusted adviser to them. It fulfills me to do that, and I love working with our younger CPAS and helping them.”

    Koenig learned about NAWBO Iowa through her membership with the American Society of Women Accountants. She was on track to become partner at her firm and wanted to expand her network. She was also inspired by women business owners.

    In 1993, Koenig joined the organization and fit right in.

    “At the time, we were a pretty small group,” said Koenig, who also served as NAWBO Iowa’s president. “I’ve stayed involved all of these years because I always enjoy the camaraderie with other women business owners and the things you can share. I’ve always thought of it as a one-of-a-kind organization.”

    Koenig still uses her teaching background, just in different ways. She loves to mentor young accountants at her firm. She also helps young women connect to larger networks, which can be a struggle at times for young professionals.

    “You kind of forget how long developing a network actually takes,” Koenig said. “I’m trying to transition that to my younger CPAs and I love helping them connect.”