Leveling the field: small-business initiatives target women businesses.

Access to capital is a hurdle every new small-business owner has trouble overcoming. For women entrepreneurs, it's an obstacle that appears to be even more formidable. While women own 38% of some 20 million U.S. small businesses, only a fraction receive bank loans.

To help up their ante, the U.S. Small Business Administration's Office of Women's Business Ownership (OWBO) has a new pilot loan program allowing the SBA to guarantee a loan before the entrepreneur even approaches a bank. Normally, the bank requests an SBA guarantee, which serves as an enhancement that lessens the bank's liability. Should the business borrower default, the SBA would pay the lender 85% to 90% of the loan's face value.

Women business owners now receive 8% to 10% of SBA guaranteed loans. The program aims to raise that to at least 15%, says OWBO Director Betsy Myers. To accomplish this goal, the agency is streamlining the application process for loans of $250,000 or less for businesses that are 51% owned and managed by women, and that have annual sales under $5 million.

There's a different review mechanism in place under the pre-qualification loan program. Women business owners must first go through a nonprofit intermediary agency in their region, namely business development centers.

"We work with the client to obtain the proper documents for an SBA loan guarantee, including a detailed business plan and personal financial statements," says Paula S. Carlin, a director with the Chicago Women's Business Development Center.

The intermediary fills out the prequalification application and submits it to the SBA, which makes a decision within three days. An approved prequalification letter basically says the borrower is deemed worthy of a guaranteed loan. The intermediary is then responsible for helping the entrepreneur find a private lender who will approve an SBA guaranteed loan.

The program views equity and collateral requirements on more of a case-by-case basis, says Janet S. Leong, vice president with the Metropolitan Business Unit at First Chicago Bank. Essentially, "the SBA will rely on the related experience and credit history of the individual as an indicator of her ability to repay the loan, versus the historical financial data of the business."

A primary reason start-ups have a hard time securing loans is they don't have a demonstrated track record. The pilot program gives entrepreneurs an edge, Leong notes, since the SBA will focus on the owner's ability to sustain a new venture.

OWBO's program officially kicked off this past April in Chicago and has since gone to other cities, including Charlotte, N.C.; Columbus, Ohio; New Orleans; Denver; Louisville, Ky.; San Francisco; Salt Lake City; Augusta, Maine; and Albuquerque, N.M. The pilot will last one year, and become permanent if successful.

For businesses needing smaller loan amounts (up to $25,000), the SBA offers the Microloan Program. Roughly 60% of these loans go to women and minorities.

Soyini R. Walton, 49, owner of Chicago-based Asset Environmental Services, launched her environmental assessment firm in 1993 with $3,000 in personal savings and a $3,500 microloan. "A microloan is a good starting point for a business because it allows you to build up a track record," says Walton. She adds that having paid back the loan in a year puts her in a better light with future lenders.

Other funding sources include: National Federation of Business and Professional Women's Clubs (202-293-1100), Women's World Banking (212-768-8513) and Women's Self-Employment Project (312-606-8255).