By Susan White
Struggling female entrepreneurs who can’t get a bank loan to start a business will have some help beginning this January.
Investing in Women’s Worth (IIWW), located on Bronson Avenue, is starting a micro-credit and peer-lending program to help women with low-income start their own businesses.
Cheryl Parsons, executive director of IIWW, says women face barriers to employment, such as a lack of higher education, having to care for children at home, or being new to Canada.
“We find that women in business have a lot of difficulty accessing traditional banking systems, in part because of the barriers that have isolated them,” says Parsons.
“So when they go to banks to look for loans they are unable to get the credit and the money they need to start their business.”
Parsons says lack of credit history is the main reason most women can’t get a loan from traditional financial institutions.
The program will enable IIWW to grant women small loans between $500 and $2,000, and allow them to build credit history.
Participants will first have to get their business proposal approved by a peer-lending group, which will analyse each business plan. Parsons says the group will consist of five to eight women who provide support and encouragement. They will also pay back the loan if the individual can’t.
François Lamontagne is a consultant with New Economic Development Corporation who helped design the program. He says peer-lending groups “share a collective responsibility” and that the repayment rates for the loans are about 90 per cent, which is higher than repayment rates for bank loans.
“It’s ironic really, because there’s a higher risk (with peer-lending),” says Lamontagne. “The group gives the women the incentive to pay back the loan.”
Lamontagne says one of the goals of the program is to get women off social assistance and unemployment insurance to become active members of society by providing a service to the community.
The program is an addition to the entrepreneurship program IIWW has offered since its inception in 1996, when a regional study sponsored by the Ottawa Women’s Credit Union revealed that four out of 10 women don’t feel financially independent.