The Oregonian, SUNRISE EDITION, BUSINESSm, August 14, 2001
Lending A Helping Hand
COUNT-ME-IN, A NONPROFIT MICROLENDER, JUMP-STARTS WOMEN-OWNED BUSINESSES
by JOAN OBRA

The women had a product and a business plan, but few sales and no business credit history. That made it tough to get a bank loan to jump-start their company. With six loan rejections in its pocket but no cash, Portland-based Urbanabox was running out of options.

Like many fledgling businesses, the gift company couldn't get the capital it needed -- until it found Count-Me-In for Women's Economic Independence, a nonprofit microlender helping would-be businesswomen in Oregon and across the nation. Launched in 1999, Count-Me-In is a lender with a goal: to provide easier access to credit for women. In addition to creating a fund specifically for women, the nonprofit evaluates loan applications according to criteria it says is more woman-friendly than those of traditional institutions.

To judge loan applicants, most traditional lenders use credit scoring, a computerized system that measures credit risk by looking at indicators such as credit history, income and length of time as a business owner.

That measurement of credit risk is too narrow and doesn't accurately reflect women's business experience, said Nell Merlino, co-founder and chief executive officer of New York City-based Count-Me-In.

"They'll ask, 'How long have you been in business?' " Merlino said. " 'Do you know what you're doing?' is what we want to know."

To answer that question, the nonprofit came up with a variation of the scoring system to evaluate loan applicants. With Fair, Isaac & Co. -- a firm based in San Rafael, Calif., that creates such credit-scoring processes for traditional lenders -- Count-Me-In crafted loan-application questions it promotes as more appropriate for women:

"Do you have family members who own their own business(es)?" reads one.

"How many years have you been making (or have experience with) your product or service?" reads another.

"Describe the support system available to you if the business has difficulty and you need assistance," reads a third.

Merlino said Count-Me-In wants to approve 2,000 loans before determining if the questions are the right measure of a woman's business experience. So far, the nonprofit has granted more than 140 loans in 39 states, including five in Oregon.

To have enough money to fund 2,000 loans, Count-Me-In needs $7 million in donations. With more than $2 million already in its coffers, Merlino expects to raise the rest in the next three years.

More women in business Count-Me-In's potential client base continues to grow.

A 2000 research report by the Milken Institute -- a Santa Monica, Calif., think tank -- revealed statistics showing the increase in women's businesses. For example, it cited Census Bureau numbers showing that women owned fewer than 5 percent of all businesses in 1972. But women's ownership grew to about 9.1 million -- or 38 percent -- of the 24 million small businesses in the United States, the National Foundation for Women's Business Owners said in 1999.

Women's credit sources haven't kept pace with that growth.

Only 12 percent of all credit provided to U.S. small businesses five years ago -- the latest figures available -- went to women-owned companies, according to a Federal Reserve Bulletin article cited by the Milken report.

For the growing group of women entrepreneurs, capital is crucial.

"Women's businesses have a harder time growing in terms of size, primarily because of the lack of access to capital, particularly equity capital," said Betsy Zeidman, director of Emerging Domestic Markets at the Milken Institute.

Part of the problem is a lack of "focus on the needs of women who want to start businesses," said Merlino, who created "Take Our Daughters to Work Day" for the Ms. Foundation.

"There's always talk about us as consumers."

Money, and a guiding hand Since Count-Me-In started granting loans a year ago, more than 2,000 requests for applications have been received. The nonprofit has reviewed between 700 and 800 applications, Merlino said.

The process takes about six weeks -- partially because many of the applications are incomplete. Because many applicants aren't yet business-savvy, they need Count-Me-In to guide them through the filing.

"It's an interesting process, because what people find out is that they're not ready yet," Merlino said.

First-time loans range between $500 and $5,000. After paying off that initial loan, business owners are eligible for as much as $10,000. Payback periods range from six months to 84 months, with interest rates from 2 percent to 4 percent over the prime rate.

Applicants fill out paper or online questionnaires. If they make the grade, the check is in the mail.

"There was nobody sitting across the table from me staring at me with a blank stare," said Salem resident Sandy Nodel, recalling the bank loan application process.

Count-Me-In "asked me if I could produce a business plan, tax records, and all I said was 'yes, yes, yes.' But they never asked to see them."

With the $3,500 loan she received in October, the 51-year-old artist launched Love is Handmade, a business selling painted and unpainted eggs at art galleries, trade shows and farmers markets. She estimates she will make from $20,000 to $25,000 a year selling emu, ostrich, goose, turkey and rhea eggs to fellow artists and art collectors.

Portland resident Kate Dyer-Seeley, who co-founded Urbanabox, said her business otherwise wouldn't have survived. In November, a month after Urbanabox founders filed an online application with Count-Me-In, the gift company received $4,000.

With the money, Urbanabox bought materials for its specialty gift boxes. Ranging in price between $40 and $85, the gift boxes contain items based on a theme.

Dyer-Seeley estimates $60,000 in Urbanabox sales since Aug. 1, 2000. She thinks the company now might qualify for a traditional loan.

It's a big change from last summer, when the bank rejections were rolling in.

"It was a great ego boost after being turned down by everyone," said Dyer-Seeley, 28. She still keeps in touch with the nonprofit about twice a month to seek business advice.

Therein lies another Count-Me-In role: mentor to the businesses it helped launch and expand.

Example of the questions business owners ask include, "I live in a city of 80,000. Would this kind of product do well here?" or "I want to change my accounting system. What kind of software would you recommend?" Merlino said.

Dyer-Seeley regularly refers potential business owners to the nonprofit. Merlino said that kind of interaction is common.

"The women that we lend to, they start helping each other."

GRAPHIC: Photo by Steve Nehl - The Oregonian