WomenVenture, adviser and small lender to fledgling female-owned businesses, is expanding its portfolio, thanks partly to a $250,000 Wells Fargo grant, one of only 12 awarded nationally to 98 “Community Development Financial Institution” applicants that assist “underserved populations.’’

That means we can expect to see more Yolanda Maxwells. And that is a good thing.

Maxwell is owner of St. Paul’s Little Steps Childcare Center. She benefited this year from a small loan and consulting from nonprofit WomenVenture.

“Yolanda is the ideal client,” said WomenVenture Executive Director Elaine Wyatt. “She was struggling.

“She has a business that she knows how to run, but she was undercapitalized. She didn’t have enough to get her through the bumps.

Maxwell, 45, is an experienced day care worker who had a home-based care center. She knew she could grow based on the number of parents she was turning away. She jumped at the chance to rent a building owned by a church on North Dale earlier this year.

Maxwell also, essentially, jumped into the start-up quicksand that slows or kills many inexperienced entrepreneurs.

Maxwell took over the space and started paying rent last December. But it took her until February to get all the requisite city licenses. Meanwhile, she struggled with start-up expenses, and she had fewer kids than she expected off the bat.

At WomenVenture, a staff business analyst and volunteer attorney vetted her business model, trained her to manage the books and loaned her $9,000 to cover several months rent and other expenses. The conclusion was Maxwell had the experience and capacity to grow the business. She just needed a cash infusion to get her through the first few months.

Roseanne Hope, a volunteer WomenVenture attorney, also helped Maxwell renegotiate her lease.

Wyatt, a former CPA and business manager, said Maxwell is an ideal candidate for WomenVenture, which has shed ancillary services in recent years to focus on the growing number of female entrepreneurs who boast experience and great work ethic, but not much capital.

“Yolanda was struggling a year ago,” Wyatt said. “She had only six kids in the day care. Now she’s at 28 and there are people vying for open spots.

“You don’t want to make a loan that makes a family’s situation worse. But we have stopped looking [just] at credit scores and assets. Some of these people don’t own houses. We look at the people. And household cash flow. We underwrote based on Yolanda, her business and her family. She had experience and character. We believe the business had the ability to pay the loan. We have many successful child care businesses in our portfolio.’’

This also is a smart move by Wells Fargo and the other financial institutions, corporate, foundation and individual donors who support WomenVenture.

A disproportionate number of start-up small businesses in the Twin Cities are headed by women and minorities, including immigrants, who are long on talent but short on capital. They are not “bankable” by federally insured depositories.

Banks and foundations fund outfits such as WomenVenture, Neighborhood Development Center, Northside Economic Opportunity Network, and other nonprofits that provide training and small operating loans to help the businesses develop. Most of them are located in frayed-edged, business-hungry cities, small towns and inner-ring suburbs.

“The growth and success of diverse-owned small businesses depends on the entire ecosystem of organizations that work with and support these businesses,” said Joe Ravens, Wells Fargo’s Minnesota president, who also lauded WomenVenture.

Wyatt said the Wells grant, its single-largest private grant ever, validates its approach.

“In Minnesota, women own 35 percent all small businesses, yet they access only 4 percent of all bank capital,” Wyatt said. “And while the number of African-American women-owned business has increased by 79 percent, the average median income for African-American Minnesotans has fallen 14 percent and the poverty rate has increased.

“We have an incredible opportunity to help these women start and grow profitable, sustainable businesses.”

 

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.