Corinne Goble remembers when her mother tried to secure a loan for her trucking business in the late 1970s. 

In addition to calling her loan a “leg loan,” an expression bankers at that time used to describe loans made to women based on attractiveness, her bankers said her husband would have to cosign.

“What the bankers didn’t know was my mom was running the trucking company and she and my dad were going through a divorce, and there was no way he was going to cosign on that loan,” said Goble, now the CEO of the Association of Women’s Business Centers. 

Her mother’s experience as a female business owner trying to access capital was not unique, Goble said, adding that the struggles women have historically faced when trying to secure loans is “really why we exist.”

Goble joined the AWBC in 2019. The organization operates 145 women's business centers funded through the Small Business Administration that provide coaching, education and access to capital for women entrepreneurs.

Helping women business owners access capital is in the organization’s DNA, Goble said. 

“It's the reason why we're here. I just wish that 35 years later, we could tell you that we've overcome those barriers that women were experiencing back then,” Goble said. “We still hear stories across America of women being asked for their husband or for a man to cosign on a commercial loan, where a man presenting on paper, the same business, wouldn't be asked for a cosigner.”

Financial firms are addressing this disparity, attempting to break down some of the barriers that women business owners face when trying to secure a loan. While some of the nation’s largest lenders have dedicated resources and launched initiatives aimed at increasing access to capital for female entrepreneurs, a new crop of women-owned de novos has emerged in the past several years, in an effort to help fill the gap.

New players

When First Women’s Bank received regulatory approval to begin doing business in 2021, Marianne Markowitz, the bank’s president and CEO, touted the firm as the “the only bank in the country that is women-owned and women-led with a strategic focus on the women’s economy.”

The Chicago-based firm, which has garnered investment from legendary tennis player Billie Jean King, Bank of America and Fidelity Investments, has since been joined by several other de novos that have also made servicing female entrepreneurs a central mission at their respective firms. 

After experiencing pandemic-related delays, Houston-based Agility Bank, a women-owned and women-run commercial community bank, opened in May 2022. More recently, Grandview Heights, Ohio-based Fortuna, another women-owned de novo, received conditional approval by state regulators to begin fundraising.

The interest in women-owned firms with a mission to serve female business owners is a response to the nation’s growing desire to see more financial institutions with bankers and boards who resemble the country’s demographic makeup, said Lauren Sparks, Agility Bank’s founder and CEO.

Sparks, who led a Houston-based risk management firm for nine years before launching Agility, said having women at the table in all major parts of business and finance can be a “great equalizer” in female entrepreneurs’ pursuit of capital. 

“Out of some of the social turmoil of the last 10 years, you see people saying, ‘Why don't bankers look like me? Why don't the people in charge look like me, or sound like me? Or why am I so uncomfortable in those circles? Why can't it be more reflective of the diversity of the community I live in?” she said. “We're more than half the population, depending on the age group, or we're half the population, generally. And yet, we're not the people in the boardrooms, making the decisions, and we're not the people who are deciding who gets access to capital, generally, and it needs to change.”

The bank’s business plan was originally focused on advancing opportunities for women-owned businesses, increasing their access to capital and on women in financial services, Sparks said. 

But Agility has evolved and expanded its focus to include nonwhite populations in general, Sparks said. 

“Because we've created this inclusive environment, our mission is becoming a little broader,” she said. “We offered shares and sold opportunity in owning the bank to people who've never been offered that opportunity before, so our shareholder base is very diverse.”

While the majority of the bank’s shareholders are women, Sparks said a large portion of the bank is owned by nonwhite people. 

“I've lived the experience of having to build my business by talking to people who didn't understand me. So what I'm compelled to do and create change around, is finding ways to create access to capital by talking to people who understand your circumstances,” she said. “I'm really happy to be part of this class of banks that is saying, ‘We believe in the financial system, we believe in the economy, but we want it to be a level playing field.”

A helping hand

Sparks said she is encouraged by the support her firm has received from some larger incumbent banks.

“Bank of America has been a partner with us since the beginning. They've helped us on an operational level to be more cost-effective in the way we're able to deliver access to cash, even just for our clients, through their ATM network,” she said.

For small-business lending, Agility has also used Citi’s Bridge, the small and medium-size business lending platform that the New York City-based bank recently sold to Foro. 

JPMorgan Chase has also partnered with Agility on an investment opportunity that the de novo can offer to its own clients, Sparks said. 

“They're each coming to the table with ways to support us as a minority depository institution, but then allows them to sit back and say, ‘Wow, Agility Bank reached into that part of the community that we couldn't reach into, and we helped them do that.’ So it's a win-win for both of us,” she said.

Pandemic impact

While the social distancing and government shutdowns brought on by the coronavirus pandemic in early 2020 ushered in a tough period for small businesses, there was a disproportionate impact on women-owned firms.

Female entrepreneurs were more likely to take on child care and homeschooling duties amid widespread school closures, meaning women had to cut back on work hours, according to research by the Federal Reserve Bank of Dallas.

The number of self-employed men working at least 30 hours dropped 22.6 %, from 7.2 million in March 2020 to 5.5 million in April 2020, according to the Dallas Fed, while the number of self-employed women decreased 34%, from 3.2 million to 2.1 million during the same period. 

Women-owned businesses were also more likely than male-owned firms to be in a financially precarious position prior to the pandemic, which also likely contributed to the disproportionate decrease in working hours among female entrepreneurs, according to the study. 

The financial hardships facing women-owned firms, such as lack of access to capital or credit, were some of the underlying reasons that led Ilaria Rawlins to launch what would be Ohio’s first women-owned bank.

“We're very intentional in understanding what their needs are, understanding how they like to be banked and what's missing today in the kinds of services that are offered,” said Rawlins, the proposed CEO for Fortuna Bank, which in August received the state’s conditional approval to begin fundraising.

Rawlins said she hopes Fortuna Bank, named after the Greek goddess of fortune, will also serve as a resource and guide for women who are looking to gain more financial confidence.

As baby boomers prepare to make one of the largest wealth transfers in history, women stand to inherit much of that wealth, Rawlins said.

“I don't know that we as an industry, but also, as women ourselves, have done a really good job of understanding, what does an investment mean? How do I save for retirement? We're way beyond budgeting and the day-to-day money management,” Rawlins said. “The majority of women in traditional households handle that function themselves. So it's taking it a step further and asking, ‘How do we set up women for financial freedom and having the confidence to be able to make decisions that will impact their financial picture throughout life?’”

Like Sparks, Rawlins said women-owned banks can help address the demographic imbalance in the small-business banking space, beginning with the fact that most commercial bankers are men.

“There's about 75% of commercial bankers out there that are men, which means that just about 25% are women,” she said. “When you think about it, a guy who wants to start a business, it is likely that someone in his friend network is a commercial banker. He can text that person, he can call the person and have a very casual conversation about what he needs to do or think about.”

Women are much less likely than their male peers to have that kind of access, Rawlins said.

“What we're trying to do, and I believe what some of the other women-owned banks are also trying to do, is make it not feel as difficult to access capital, ask questions about banking and start to build that network. I think that there's a ton of opportunity out there for that,” she said.

Good business

Serving women-owned firms makes good business sense, said Wendy Cai-Lee, founder and CEO of New York City-based Piermont Bank. Women in general have a higher payback rate than their male counterparts, according to Cai-Lee, who founded Piermont Bank in 2019.

While the firm isn’t women-owned, Piermont is a minority depository institution. Cai-Lee said more than 52% of the bank’s loans are made in low- and moderate-income communities and to women- and minority-owned businesses.

Commenting on female bankers’ efforts in recent years to establish women-owned institutions, as evidenced by First Women’s Bank, Agility Bank and Fortuna Bank, Cai-Lee said the trend is in response to a real need.

“There’s definitely a need. That’s for sure,” she said. “Do I anticipate seeing more banks that have a specific focus on this? I certainly hope so. Because if we can show that there are more of us that have a very deliberate focus on serving women, perhaps everyone else will see that this can also be a very good business. This is not checking a diversity box, this is a good business.”