When Barbara Kavovit was ready to expand her business she found out that obtaining a loan for her construction company was not going to be an easy task. As president and CEO of Anchor Construction in New York, Kavovit learned why lenders are wary: according to Dun & Bradstreet, more than 90,000 contractors failed between 1990 and 1998, leaving a trail of unfinished private and public construction projects with liabilities exceeding $23 billion.

Kavovit believed in her business and herself and was determined to obtain the growth financing her nascent firm needed. So she carefully assembled her business plan and other supporting documents and was approved for a $1,000,000 business loan.

As a member of the fastest growing sector of the U.S. economy, Kavovit faced the same financial challenges that many business owners do, women especially. The situation is improving, according to Norman Scarborough, associate professor at Presbyterian College in Clinton, S.C., and author of Effective Small Business Management (Prentice Hall, 2002), who says women entrepreneurs in the past had difficulty convincing traditional lenders to grant them loans and were forced to rely on credit cards more often than their male counterparts.

“Recent studies, however, show that the trend has reversed,” says Scarborough, citing a study by the National Foundation for Women Business Owners (NFWBO) that revealed that women entrepreneurs today are as likely to obtain business financing as male entrepreneurs.

Where women are still making inroads, it seems, is in the venture capital world. While women may own 38 percent of all U.S. businesses, they receive just 5 percent of all venture capital according to a recent report from the Kauffman Center for Entrepreneurial Leadership.

Luckily, programs like Springboard 2000, an initiative launched by the National Women's Business Council, have sprung up to promote investment in women-led businesses across the country. Since January 2000, Springboard has showcased 200 women entrepreneurs at seven venture forums (presenting companies raised $650 million in equity capital) and attracted over 1000 investors to its venture programs.

Many women-owned companies are shunning the venture capital route anyway, and seeking out funding from angel investors, banks and the SBA, which often serves as the only route for startup financing. The SBA doesn’t actually fund the loans it approves, but guarantees the loans submitted to it by various lenders, such as CIT Small Business Lending Corporation. Of the numerous programs offered by the SBA, the most popular with small businesses is the 7(a) Loan Guaranty Program, the agency’s primary financing program.

Local and regional business networks and groups often provide great opportunities for women in search of business capital. In Philadelphia, for example, the Women's Investment Network (WIN) (www.winwomen.org) was established in 1996, thus creating the first major organization serving modern-day female entrepreneurs.

WIN promotes the expansion of women-led and women-owned businesses with high growth potential through education, networking, mentoring, and exposure to investment resources. During the past several years, the group has held numerous educational seminars, networking receptions and other programs throughout the greater-Philadelphia area. Topics included: determining business valuation; investing in an entrepreneurial business; carrying out due diligence; building a management team; and strategic partnering. To date, over 600 business owners, managers, service professionals and investors have participated in WIN events.

There are other women’s organizations that focus on women in business. For example, there is the Washington, DC based National Association of Women Business Owners (NAWBO) (www.nawbo.org). Established in 1974, it consisted of a group of women who began meeting informally to discuss mutual business experiences, exchange information and develop business skills. There are now more than 75 Chapters and 8,000 members. Their mission is to “strengthen the wealth creating capacity of their members and promote economic development, create innovative and effective changes in the business culture, build strategic alliances, coalitions, and affiliations, and to transform public policy and influence opinion makers.”

Reflecting on the progress that women have made in a recent BusinessWeek article, 67-year-old activist and author Gloria Steinem said access to capital is “still a problem for women.” Steinem advised women to invent new ways of moving forward and keeping the progress on track. For instance, communal capital – like three women buying a florist shop together. “There are a variety of women who come together as venture capitalists, or as angels to women who own their own businesses,” says Steinem. “We need much more of that.”

The Center for Women’s Business Research reports that as of 2002, there are an estimated 6.2 women businesses in the U.S. They currently employ 9.2 million people and generate $1.5 trillion in sales. The organization also reports that there has been significant improvement in access to capital for women business owners. This is good news, but we still have a ways to go. The Center reports that in late 1999, just 9% of the institutional investment deals and 2.3% of the dollars among the investors interviewed went to women. With the creation of several new women owned venture capital funds that only invest in women owned businesses, the number of investments should begin to increase over the next several years.