(WOMENSENEWS)--Dr. Elena Perry-Thornton, 52, a family practitioner, knew she needed money fast to pay for renovations to her medical clinic in southwest Detroit.

In 2001, she approached about five banks, but none would lend money for her facility, which serves low-income residents, many without health insurance. She approached ShoreBank, a community development financial institution--or CDFI--with an office in Detroit, and was able to borrow the $115,000 she needed in early 2002.

ShoreBank also offered Perry-Thornton marketing assistance to help build her practice.

Her practice is now thriving as she sees up to 45 patients a day.

"Without an organization like this, I don't know how my clinic would be open and operating," Perry-Thornton says. "Many banks don't take women in business seriously and don't want to lend us money. Who knows, maybe they think we have pre-menstrual syndrome all the time."

For the more than 6 million women like Perry-Thornton in businesses of all kinds across the country, obtaining financing for their ventures remains a hurdle.

While nearly half of all privately-held U.S. businesses are owned by women, only 12 percent of credit provided to small businesses actually went to women, according to the National Women's Business Council and the Milken Institute, an economic think tank.

There is where the more than 700 CDFIs--come in to play.

CDFIs (or CDEs--community development entities--as the U.S. Treasury designates them) are community organizations, separate from government control, with a mission to revitalize disadvantaged areas and provide economic opportunities for low-income people. Whether nonprofit or commercial, they have less stringent collateral and credit requirements than banks and make capital available in increments as small as $1,000, sometimes even smaller. They lend money to businesses with just a handful or even no employees.

Growing Industry

CDFIs began to emerge in the 1970s, but didn't really take off until the mid-1990s, when the government created a fund to extend money to them. Their numbers have grown quite a bit over the past few years, as more and more downsized professionals started businesses and needed new places to go for funding when traditional banks would turn them down. These organizations lend money to female-owned and minority businesses, among others, which may otherwise not be able to get assistance, according to Co-op America, a Washington, D.C., nonprofit that provides economic strategies to help businesses address social and environmental problems.

By their charters, CDFIs lend money and provide technical support to businesses--either start-ups or expansions--that provide an essential service or fulfill a need in the communities in which they are located. Just about any kind of business that helps a distressed community can qualify.

Co-op America and the Social Investment Forum Foundation, a Washington, D.C., nonprofit that provides research and educational programs on socially responsible investing, several years ago singled out and honored 11 organizations that focus on community investing. ShoreBank was one of those honored CDFIs.

"Women, traditionally, have had trouble getting business loans from banks that regard them as having a higher risk. But, community investing institutions are much more receptive," says Fran Teplitz, managing director of the Social Investment Forum Foundation. "They will even help with business plans and cash flow management."

In All Kinds of Neighborhoods

CDFIs are located throughout the nation, in all kinds of neighborhoods.

There is the Cascadia Revolving Fund in Seattle, which works with between 300 and 400 female-owned businesses annually.

Cascadia offers loans ranging from $2,000 to $800,000 and generally lends to businesses with fewer than five employees, says Executive Director and Chief Executive Officer Shaw Canale.

Loan terms generally last 15 to 20 years. Cascadia also provides assistance with items like cash flow projections, marketing and Web site development.

"It's harder these days for entrepreneurs, especially women who don't have a track record, to get financing because banks have tightened credit," Canale says. "This is due to the down economy."

She adds: "We will examine projections and lend based on that, as opposed to looking largely at past performance or lines of credit that a business owner has."

Loans as Small as $250

California's Santa Cruz Community Credit Union works with local businesses, lending an average amount of $20,000 per entrepreneur, says Sheila Schat, director of community outreach. But, the organization will offer loans as small as $250 and as high as $500,000.

"Women-owned businesses, which may find traditional banks intimidating, have historically been underserved, Schat says. "We are more open to risk, and at the same time, are looking to promote positive social and economic change in our community."

Cheryl Taylor, 46, owns ReThreads Resale Clothing Shop, a consignment clothing store in Wolfeboro, N.H. She turned to a CDFI--New Hampshire Community Loan Fund--for her growing business. "You need to do your research and connect with other women entrepreneurs to see what is available in your community," says Taylor. "Just trying telling banks that you're a single mom with four kids and see what kind of response you get if you need money," Taylor says.

Only Way to Finance Her Spa

For Chicago's Shawna Spencer-Kendall, 38, going to a local CDFI was the only way she could get financing for her business, Alise's Designer Shoe Salon and Foot Spa.

She needed money in 2001 to expand her business from her home to a storefront. Even with guarantees from the Small Business Administration, about five banks turned her down for a $120,000 loan.

She was ultimately assisted by the Women's Self-Employment Project in Chicago, a CDFI that lends a total of about $300,000 a year to female-owned businesses. Women's Self Employment lent her a smaller amount, but also provided assistance with how to price her items and with marketing. She is now looking to borrow an additional $100,000 to create her own line of shoes.

"Banks wanted my mother's house as collateral; my condo wasn't enough," Spencer-Kendall says. "It's just impossible to get money out there if you're a small business, even with SBA guarantees."

Laura Koss-Feder is a freelance business and features writer who covers small business and career/workplace topics. She has written for The New York Times, Business Week, Time, Money, Investor's Business Daily, Newsday, Family Circle, MSNBC.com, and Self.

For more information:

Social Investment Forum Foundation:
http://www.socialinvest.org

Co-op America:
http://www.coopamerica.org

The Community Investing Campaign:
http://www.communityinvest.org

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