ARKANSAS WOMEN’S BUSINESS FUND

by Deborah Temple Financing Strategies

Small businesses are the backbone of our communities, driving economic growth, generating employment opportunities, and fostering innovation. Women entrepreneurs are at the core of this dynamic ecosystem, and their contributions are vital to community prosperity. However, despite their indispensable role, women-owned businesses often encounter obstacles when accessing the capital necessary for success.

As advocates for financial inclusion and economic empowerment, banks play a crucial role in dismantling these barriers and supporting the aspirations of women entrepreneurs. Enter the Arkansas Women’s Business Fund (AWBF), a new initiative to help transform the lending landscape of women-owned businesses in our state.

BUILDING ON BANK ON ARKANSAS+ PROGRESS: THE PIVOTAL ROLE OF COMMUNITY BANKS

The Arkansas Women’s Business Fund owes its inception to the triumphs of Bank On Arkansas+, a coalition comprising over 50 Arkansas banks, credit unions, and community partners. This collaborative effort, driven by the unwavering commitment of community banks, has established vital connections to safe, affordable, and certified banking accounts across all 75 Arkansas counties.

THE ARKANSAS WOMEN’S BUSINESS FUND OWES ITS INCEPTION TO THE TRIUMPHS OF BANK ON ARKANSAS+, A COALITION COMPRISING OVER 50 ARKANSAS BANKS, CREDIT UNIONS, AND COMMUNITY PARTNERS.

A RECENT REPORT REVEALED THAT APPROXIMATELY 38% OF SMALL BUSINESSES IN ARKANSAS ARE MAJORITY-OWNED BY WOMEN, YET ONLY ABOUT 15% OF PRIVATE LOANS ARE DIRECTED TOWARD THESE BUSINESSES.

Over the past five years, Bank On Arkansas+ has delivered remarkable results, notably reducing the percentage of unbanked households in our state from 7.10% in 2019 to 3.40% in 2021. This achievement underscores the effectiveness of collaborative initiatives and emphasizes community banks' pivotal role in promoting financial inclusion and stability for all Arkansans.

Building upon this foundation, the Arkansas Women's Business Fund takes a bold leap forward in addressing the funding gap that disproportionately affects women entrepreneurs.

A Pathway To Success

A recent report revealed that approximately 38% of small businesses in Arkansas are majority-owned by women, yet only about 15% of private loans are directed toward these businesses. This disparity presents a clear market opportunity for lenders.

However, entering new markets comes with inherent risks and challenges. Research indicates that women often lack established lending networks and frequently rely on personal funds to start their businesses. When these businesses require access to capital, they often need small loans with minimal collateral, limited capital, and potentially lower credit scores, which may not align with traditional lender profiles.

The AWBF was designed to address these challenges by providing guarantees of up to 75% on loans of up to $25,000 for women-owned and operated businesses. This innovative approach, based directly on credit, collateral, and capital, mitigates risk for lenders and empowers women to pursue their entrepreneurial aspirations confidently.

The AWBF process is streamlined and cost-free for lenders, encouraging participation in a new market segment without undue risk. Moreover, borrowers are connected to networks, technical assistance providers, and training opportunities, positioning their businesses for sustainable growth.

Joining Forces For Change

As a new model, the AWBF seeks participation and input from lenders interested in supporting women-owned businesses. The goal is to expand the program over time, increasing loan sizes to reach more women-owned businesses as we learn about their specific challenges and needs. Here are two ways Arkansas bankers can help:

• If you have business clients who meet the requirements and are interested in determining their eligibility, you can complete the Lender Inquiry Form. You will receive a comprehensive workbook that includes a lender application, a borrower application, and the guarantee determination. Participation is free of charge.

• If you're aware of women business owners who could benefit from this initiative but aren't directly involved in the lending process or lack an application, you can still help by sharing the Interest Questionnaire Form with them.

Join us in empowering women entrepreneurs, fueling economic growth, and building a more prosperous Arkansas for all by getting involved with the Arkansas Women's Business Fund today.

THE AWBF ... PROVIDES GUARANTEES OF UP TO 75% ON LOANS OF UP TO $25,000 FOR WOMEN-OWNED AND OPERATED BUSINESSES.

FIND THE INEREST QUESTIONNAIRE FORM HERE: WWW.ASSETFUNDERS.ORG/RESOURCE/ARKANSAS-WOMENS-BUSINESS-FUND/

The Arkansas Women’s Business Fund is administered by the Arkansas Community Foundation and the Arkansas Asset Funders Network (AR AFN), a regional chapter of grantmakers dedicated to advancing equitable wealth building and economic mobility.