Women’s Business Development Council of Conn. formally launches microloan program
With the receipt of $250,000 in grants from two benefactors, the Women”™s Business Development Council has formally launched its WBDC Capital Fund, designed to provide startup and growing businesses with working capital, equipment, inventory and lease space, among other items.
The Stamford-based WBDC is the state”™s first microlender to provide loans starting at $2,500, according to President/CEO Fran Pastore, who said that loans will likely be capped at $50,000.
Providing the grants were Connecticut Innovations, one of the region”™s most notable early-stage investors and the leading source of financing for Connecticut companies, which provided $150,000; and The Barbara Benton Davis Fund at Fairfield County”™s Community Foundation, which gave $100,000.
Connecticut Innovations CEO Matt McCooe said his organization”™s grant was made to recognize that both parties focus on growing businesses and creating jobs throughout the state. “Through the WBDC”™s extensive educational programs and webinars, they reach small businesses that can benefit from the financial support of the WBDC Capital Fund,” he said.
Pastore added that since McCooe was named CI”™s chief in June 2015, “he identified a gap in what they”™ve been doing, and that”™s a lack of access of capital to women. Rather than CI launching another initiative, they decided to help the WBDC.”
According to a WBDC market analysis, conducted by a third party in 2014-15 of companies seeking business loans under $100,000, less than one-third of loan applications for women were approved in 2013. A 2014 U.S. Senate report found that women entrepreneurs received only 4 percent of the total dollar value of loans, even though they represent 30 percent of all small companies.
Pastore said her organization, founded in 1997 as a 501(c)(3) nonprofit, has had a long relationship with the Fairfield County Community Foundation. “Their trustees have been interested in doing something with a greater impact for some time,” she said. “They knew that getting this fund off the ground was one of our biggest current challenges.”
“Access to low-cost capital for Fairfield County entrepreneurs is an important component of a thriving ecosystem for entrepreneurs, especially those with very new businesses,” said Karen R. Brown, the foundation’s vice president of innovation and strategic learning. “FCCF is excited to see WBDC expand their support to their clients with this new initiative.”
Pastore said that the WBDC fund will prove to be an attractive alternative to the state Department of Economic and Community Development”™s Small Business Express Program, which while “a great program” can, in the instance of its matching grant program, be prohibitive to small businesses.
“Entrepreneurs need $30,000 to $50,000 in capital, but they don”™t have the matching funds that the state requires,” she said. “We”™re hoping we can step in and help in those cases, as well as others.” The organization has identified about 100 clients it believes to be “loan-ready.”
The term of the loans will vary between 5 to 10 years at interest rates ranging from 8 to 11 percent annually. To be considered eligible, entrepreneurs and/or companies must have a completed business plan and three years”™ worth of business financial statements if in business, or three years”™ worth of personal financial statements if an aspiring business owner.
Pastore said that throughout the term of their loans, clients will be supported by WBDC”™s array of small business development training and counseling services, financial coaching and education programs. Borrowers will enter the financial mainstream with microloans that build a positive credit history and provide the working capital needed to expand operations and hire or retain employees, she said.
From 2014-16, WBDC Capital raised $375,000, including a technical assistance grant from the U.S. Treasury Department, to begin the fund. Last year it raised $100,000 each from Connecticut Innovations and United Bank. Pastore said the group”™s goal is to raise $1 million in grants and loans to support the program in 2017-18.
The fund is now accepting applications on a rolling basis. More information and application materials can be found at ctwbdc.org/WBDCCapitalLoan.