Special Report: Women Entrepreneurs: She Calls All the Shots

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To help improve commercial credit for women entrepreneurs, the House Small Business Committee has included new lending incentives for banks in an authorization bill for the Small Business Administration. Under the bill, the banks would earn a small fee for granting SBA-guaranteed loans of up to $50,000. While the plan, which must still pass the full House and Senate, would be open to all small businesses, it would be especially helpful to service companies. Reason: in some cases, creditworthiness could be based on cash flow rather than assets.

Small Business Committee Chairman John LaFalce, a New York Democrat, is set to introduce the Women's Business Ownership bill, which will include the recommendations in his committee's report. Among other things, the bill would require the Federal Reserve to limit the circumstances under which bankers could question women entrepreneurs about their marital status. When banks turn down commercial-loan applicants, the institutions would be required to notify the companies of their right to obtain in writing the bank's reasons for doing so.

In addition, the legislation would help women entrepreneurs win a bigger slice of the Government procurement pie. Of the $177 billion in prime federal contracts awarded to companies last year, firms owned by women won 1% of the business. The LaFalce bill would require federal agencies to set numerical goals for awarding contracts to women. Prime contractors would have to set similar goals in awarding work to subcontractors. But LaFalce's bill would have no effect on state government procurement, where conditions are also rough. Mildred Green, 55, founder of Accounting Data Systems of Caro, Mich. (1987 revenues: $2.5 million), recalls one of her bids being spurned by a state contracting officer with the remark, "We don't do women."

LaFalce also wants the Government to match private contributions for the purpose of setting up new management-training programs for women entrepreneurs in several U.S. cities. The leading operation of this type: the American Woman's Economic Development Corp. (AWED). A nonprofit Manhattan center, AWED offers courses in marketing, finance and other business basics. Says Beatrice Fitzpatrick, founder and president of AWED: "We're teaching women the rules of the game." Since 1977, 1,267 entrepreneurs have graduated from AWED's 18- month program. Only seven of the AWED-guided start-ups (0.6%) have declared bankruptcy. Bootstrap programs for would-be entrepreneurs have also sprung up in Illinois, Pennsylvania, Minnesota and other states.

As more and more women set up companies, female versions of the old-boy network are developing. The 3,000-member National Association of Women Business Owners, for example, successfully lobbied the House committee to hold its hearings on female entrepreneurs. Businesswomen who belong to the Committee of 200, an elite Chicago-based group of top executives from 70 different industries, discuss everything at their meetings, from where to find the best office computer system to how to balance a demanding career with a marriage. Says Member Joan Helpern, chief executive of the manufacturer of Joan and David shoes (1987 revenues: $100 million), located in Everett, Mass.: "We're trying to learn from each other."