Susan Matthews knew she had a great business idea back in 1990 when she invented a horseshoe-shaped support pillow for babies.

Getting a bank loan to help grow the business seemed logical. But even as sales of her Golden, CO-based firm, Camp Kazoo Ltd., soared, micro- lenders and factoring companies remained her primary funding sources. "I never got anywhere with banks," she recalls. "Not even close."

Last year, Matthews, whose firm registered $3.3 million in 1997 sales, finally landed that long-coveted banking relationship, with Norwest Corp. "It's been wonderful," she says. "But it was a long and arduous road to get here."

Matthews' frustrations are echoed by countless other women entrepreneurs, who say banks traditionally have done a poor job of meeting their needs. "Access to capital and credit has, without exception, been the biggest problem women bump into," says Lindsey Johnson Suddarth, CEO of Women Inc., a national organization of women business owners.

Changes Afoot, finally

Now, however, that appears to be changing. In recent years, banks have become more aggressive in tailoring marketing efforts and lending programs to women business owners and are becoming more sensitive to their needs. "Bankers-even senior-level people-now recognize the need to reach out to women," says Johnson Suddarth, a former national director of the Small Business Administration's Office of Women's Business Ownership. "It's a huge shift from what we saw only a few years ago."

Between 1987 and 1996, the number of women-owned businesses grew by 78 percent, or double the overall rate of growth, according to the National Foundation of Women Business Owners (NFWBO). Today, the Census Bureau reports, 15.9 percent of U.S. businesses are owned by women. Together, they employ nearly one-fourth of all Americans and generate sales of nearly $2.4 trillion. "It's become such a large segment of the market that you really can't afford to ignore it," says Jackie Baer-Cowdery, vice president of small business services for KeyCorp.

But the trick is in how to best approach this market. Bankers say it's difficult to walk the sometimes-fine line between reaching out to women entrepreneurs and coming across as patronizing. Several, including Norwest and KeyCorp, say they treat all small business owners alike and make no special efforts to court women. And even most of the so-called "women's banks" that got their starts in the 1970s have repositioned themselves as mainstream entities. "Gender-biased marketing makes people a little nervous," says Kate Carr, president of Washington, D.C.-based Abigail Adams National Bancorp, which in 1986 changed its name from The Women's National Bank. "Banks don't want to be too defined in their approach, because business is business today."

Others, however, are concluding that well-crafted messages-backed by good support programs-are the way to capture market share in a segment that, by one count, is now creating 40 percent of all new businesses.

Many banks today are using focus groups to better understand the needs of women entrepreneurs. Some are investing heavily in loan programs or venture capital funds that target such businesses.

Even those that shun direct women-oriented marketing are giving lending officers heavy doses of gender-sensitivity training. "It's about communicating an attitude that values understanding of all markets," Baer- Cowdery says.

Those that have set up special efforts say the most effective marketing tools include hands-on seminars, counseling programs and publications aimed at helping women navigate tricky business waters. "We're trying to position our message on the value-add we bring to women-owned businesses," says Jeff Gaia, general manager of business banking for Banc One Corp., which offers publications and tapes to help women understand the lending process. It also has a dedicated toll-free phone number for women to call about business loans. "We don't do a hard sell on women, because if you cross a line, you appear to be condescending," Gaia adds. "But we think if we can differentiate ourselves in terms of the value proposition we offer them, they will come to us."

Banc One also is among those partnering with women-oriented trade groups, Web sites and publications with targeted loan programs. It has marketing alliances with Women Inc. and Working Woman, seeking to leverage those organizations' contacts and identities to drum up business. Others, including Chase Manhattan Bank and Citibank, are involved in similar partnerships.

Such efforts appear to be paying off. Although banks are reluctant to divulge specific tallies of women business clients, a recent Census Bureau survey found that only 12.8 percent of women-owned firms reported feeling limited by lack of access to credit-roughly the same percentage as men.

But despite improvements, many sources say bankers still don't give women the same level of respect afforded to men. Even today, tales abound of bankers addressing questions during loan negotiations to husbands or male attorneys, when it's the woman who needs the money.

First Union recently hosted a focus group of 20 women business owners. "What came through loud and clear is that they still don't feel they're being taken seriously," says Debra Nichols, director of women's financial advisory services.

Experts say women business owners are more relationship-driven and time- sensitive than their male counterparts. They often start their own businesses because they want more control over their lives. But 80 percent of those enterprises are in the tough-to-collateralize service sector, and many women lack the financial know-how to pull all the pieces together.

This doesn't necessarily mean they need new products. But Johnson Suddarth says women reward bankers who help with nuts-and-bolts management issues and work hard to launch and maintain the relationship. "It's the communications style and presentation you use," Nichols adds.

networking is vital

Adams is among the many banks now conducting regular seminars to help women grapple with the financial side of running a business, something Carr says has helped generate loans.

At First Union, in-house consultants are seen as crucial to connecting with women entrepreneurs. "If I need help with a critical decision, I can call and get some quick advice," says First Union client Kelly Vieregg, who owns two home furnishing stores. "That's extremely valuable to me."

Such basic efforts are seen as vital for reaching out to women entrepreneurs. But perhaps nothing is as effective as good old-fashioned networking.Carr tells of a recent luncheon where she sat next to a woman whose firm was for sale. "She said, 'Gosh, I'd like to buy it, but I just don't have the money,'" Carr recalls. That conversation eventually led to Adams financing the woman's purchase. "Until we talked, she never thought about getting a bank loan."

But given recent strides in the industry, such stories will likely be harder to come by in the future.

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