Banking tips for women business owners.

Here are some practical strategies for dealing with a person we all come face-to- face with sooner or later: our banker.

While all small businesses may face problems with their bankers from time to time, women small business owners seem to encounter all of the usual problems, plus a few more. Recent research into the credit situation for small firms has revealed a number of unique problems faced by women business owners. Knowing what to watch out for, and possible ways to handle certain problems if they arise, can go a long way toward helping women business owners reduce their banking costs while maximizing the quality of service received from their banker.

As a starting point, all of the advice normally given to small business owners naturally applies to women business owners as well. In fact, since many lenders do seem to be more wary of women as good credit risks, women would be well-advised to be especially well-prepared for that first encounter with a prospective lender.

Choose your banker carefully

The initial selection of a financial institution is crucial. Once your business accounts are established with a particular institution, it is quite time-consuming and potentially costly to contemplate a move, not to mention aggravating. Furthermore, lenders all talk to one another, especially if you are located in a community where there are few financial institutions. So although there are some areas in which the financial institutions do compete, the continued dominance of a few very large banks means that the general environment is not truly competitive--especially for the small business client.

Your best source of information on choosing a financial institution is other businesses especially those similar to yours in terms of age, size, and sector. Research indicates that the services offered by most financial institutions are very similar, and that the most important variable is the individual you will be dealing with most often--notably their competence, sensitivity, and responsiveness. Surveys have shown that women business owners put an especially high value on having an account manager who has a good operating knowledge of the industry, the local market area, and the business owner herself.

Access to term loans and lines of credit

Most businesses maintain an operating credit line on an ongoing basis, and may also hold a term loan at any given time for a specific purpose such as the purchase of a new piece of capital equipment. Data shows that women have a more difficult time than men in obtaining a credit line from a bank, whereas the experience of the two groups with term loans seems to be fairly similar. Other studies have also shown that women face more obstacles than men in obtaining credit lines.

A term loan is a more rigid form of credit than a credit line, has a fixed repayment schedule and is usually secured several times over by hard assets. On the other hand, a line of credit tends to be a floating form of credit with a maximum amount, which is also secured with collateral but because of its floating character is less fixed and predictable for the banker.

Research has repeatedly shown that when the perception of risk is higher, such as a credit line being considered riskier than a term loan, women tend to be treated differently than their male counterparts. This is borne out by the greater difficulty women business owners seem to face in establishing credit lines as opposed to term loans. A floating credit line is a very important component of a well-rounded overall financing package for a small firm.

The best advice in this instance is to be well-prepared for more resistance from your lender when you seek a credit line than when you want a term loan, and counter that resistance with thorough information on your business, its plans, financial projections and its financing needs. As always, it is helpful to know what other businesses comparable to yours are receiving in the way of financial treatment.

Andrea Sandor is a freelance writer.