New York City Credit Program Aims to Help Female Entrepreneurs

Credit lines of up to $100,000 offered to women-owned businesses

By Kate King | Photographs by Kevin Hagen for The Wall Street Journal

Nov. 13, 2019 9:00 am ET

Female entrepreneurs are more likely than their male counterparts to see their loan applications rejected or underfunded, and New York City is launching a program to close the gap.

The Department of Small Business Services’ $5 million program will offer lines of credit up to $100,000 at about 12% interest to women-owned businesses, said Gregg Bishop, commissioner of the department. Entrepreneurs with credit scores of at least 620 who have been in business a year or longer and earn $50,000 or more in annual revenue can apply.

The department surveyed more than 1,600 entrepreneurs in New York City for a 2015 report that found women are more hesitant than men to take out high-interest loans.

“Women tend to be more risk averse,” Mr. Bishop said in an interview. “But when you ask women and male entrepreneurs where they want to be in five years, they have the same goals.”

What has been your experience in securing funding to open a small business? How do you see this program improving the growth of women entrepreneurs? Join the conversation below.

Lines of credit are particularly helpful for women entrepreneurs who only want to borrow and pay interest when they need funding, as opposed to applying for large loans, said Nancy Carin, executive director at the Business Outreach Center Network, a nonprofit small-business development organization. Lines of credit also provide fast access to cash, particularly helpful for businesses like bakeries that might need quick capital during busy holidays.

“Once you’re approved for a line of credit, you can use it strategically, and that positions a woman entrepreneur to respond to market conditions and opportunities,” said Ms. Carin, whose organization works with Small Business Services on loan and other funding programs for women entrepreneurs.

The program’s 12% interest is a reasonable rate for borrowers with a credit score of 620, Ms. Carin said.

The program is a public-private venture, with Goldman Sachs 10,000 Small Businesses contributing $5 million and Fundation, an online lender, contributing $500,000 in capital to support the lines of credit. A $1 million loan-loss reserve is being funded by Squarespace and the New York City Economic Development Corporation. The Goldman Sachs Foundation also is providing $300,000 for outreach to underserved women.

The Department of Small Business Services did a soft launch about a month ago and has received 13 applications.

Cathy LaCognata applied and was approved for a $75,000 line of credit. She had struggled for years to find affordable loans, turning instead to friends and  family when she needed money for her business, a boutique gym based in Brooklyn.

Ms. LaCognata, 51 years old, has experienced several setbacks since becoming an entrepreneur in 2011 after years as a stay-at-home mom. The building that housed her first location in the Rockaways was swamped by superstorm Sandy. Then she separated from her husband, and her credit score suffered as bills went unpaid.

“Getting funding is always a problem,” Ms. LaCognata said. “Not having a great credit score, no one was going to lend me money.”

Ms. LaCognata improved her credit score to 730 from 530 after getting guidance from the Goldman Sachs 10,000 Small Businesses program, which she completed earlier this year. She said she plans to use her new line of credit to renovate and buy equipment for her gym, Training for Warriors Brooklyn.

“It’s a lot of work, being in this business and being good at it,” she said. “But it’s so rewarding.”

Write to Kate King at [email protected]

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