Women biz owners: Build credit, access capital

It’s a great time to celebrate the progress of women-owned businesses in northern Nevada.

The latest Census data shows women-owned businesses nationally increased by more than 20 percent from 2002 to 2007. According to the U.S. Small Business Administration, women-owned firms make up almost a third (29 percent) of all non-farm businesses across the country, generating a total of $1.2 trillion annually and employing 7.6 million people.

Like all businesses, women-owned companies right here in northern Nevada face unique challenges, and in today’s economic environment, acquiring capital to operate and grow their businesses can be one of them.

At Wells Fargo, we have the opportunity to work with local women entrepreneurs on a daily basis. We know the important role women-run businesses play in the northern Nevada economy and we want to make sure that women have the financial guidance and tools they need to succeed financially, including access to capital.

Here are five key financial tips to help women entrepreneurs in our community build their credit profiles and obtain the financing they need to grow their businesses:

• Get to know your lender. Establishing a relationship with a banker is the first step to helping you get credit-ready because a banker can help identify financial solutions that meet your business needs and work with you to determine your long-term business goals. Bankers have experience working with a variety of businesses, so they can be your best resource when it comes to business financing. Once you have established a working relationship with a banker, it’s important to keep them informed as your business and financing needs change.

• Build a strong credit profile. Good credit is one of a business owner’s most valuable assets. As more women follow the path of entrepreneurship, it’s important that good personal financial habits transfer over to their businesses. When applying for financing, lenders will look beyond just the credit score to understand if your business is thriving; they’ll also review your debt-to-income ratio and whether you have a history of on-time payments.

• Explore financing options. According to the National Association of Women Business Owners (NAWBO), the major sources of funding that women business owners rely on are personal savings, reinvested business earnings, lines of credit, equity financing and venture capital. Business owners have many financing options to consider these days. If a conventional business loan or government-guaranteed loan doesn’t meet your specific needs, you may want to explore a SBA 7(a) loan. Talk with your banker about which credit option is best for your business.

• Maintain a positive cash flow. Profitability and cash flow are essential components of credit capacity, and showing that your business has enough cash on hand to meet both short- and long-term commitments demonstrates to lenders that you have the ability to repay a loan. Achieving and maintaining positive cash flow takes hard work. Set aside time for regular cash flow analyses and keep your financial information up-to-date so it can be easily referenced.

• Separate business and personal accounts. Your business credit profile begins when you establish dedicated business accounts. While many small business owners use personal finances to pay for business expenses, it’s important to establish separate business accounts. Having separate business accounts is one of the first steps to show your business is sound and well-managed when applying for business credit, and helps you maintain accurate and complete records of all business-related income and expenses.

As the number of women-owned businesses grows in northern Nevada and the economy improves every day, the opportunity for women entrepreneurs to succeed in business ventures continues to grow. There are many local resources that provide mentoring, professional, and financial guidance to women business owners, such as the U.S. Small Business Administration, NAWBO and the National Women’s Business Council (NWBC).

From building your network of women mentors and financial experts who will help you gain new skills and knowledge for your business, to learning about the steps needed to build a good credit profile, be sure to take the time to put yourself in the best position to access capital to help start, run or grow your business when you’re ready.

Lisa Speth Jones is a district manager for Wells Fargo in northern Nevada