Women-owned businesses on the rise, backed by SBA loans

Photo/Courtesy/Chris Arend Photography

On a sunny April afternoon, Tere Obrochta reviewed the moose plan with a group of young children at Birchwood Montessori in Anchorage’s U-MED district.

The students were to go to their teacher, and only say moose if they really saw one, Obrochta reminded them.

Preparing for moose is just a small piece of the planning Obrochta has done in the past year while developing, and opening, the new Montessori school.

The school opened March 4, just three months after Obrochta and her husband closed on the building. But getting there took much longer.

From the initial idea to opening Birchwood’s doors, Obrochta said it was a lengthy process, with many details to research and incorporate.

“I’ve always wanted to start my own preschool or daycare,” Obrochta said.

She worked in social services for more than 20 years. When she moved to Anchorage five years ago, she saw it as an opportunity to try something new.

“I’m going to find something that brings me joy,” she said.

So she started teaching Spanish at Anchorage Montessori School.

Montessori education meshed with her own personal views of child development and learning, and Obrochta decided to further her own education in the field by going Outside for training. She got her master’s degree in education with a Montessori focus at Chaminade University of Honolulu.

Montessori education centers around student-directed learning with set blocks of work time and mixed-age classrooms. It is holistic and often hands-on, as well as being fairly structured.

When she returned to Alaska, she continued teaching and began the process of getting her own school started.

All the Montessori schools in the Anchorage area had waiting lists when she opened her doors.

Birchwood is Obrochta’s first business.

“This is all very just new to me, and I was very fortunate to work with the folks at Wells Fargo,” Obrochta said.

Obrochta worked with Business Relationship Manager Jeff San Juan at Wells Fargo to secure a Small Business Administration, or SBA, loan for her endeavor.

SBA loans are intended for small businesses that cannot get conventional commercial funding. They come with certain criteria, including education or experience in the industry the business will be in.

They’re particularly good for small businesses right now because the SBA offers a 25-year fixed rate, San Juan said.

San Juan said Obrochta was well prepared when she came into Wells Fargo.

“She did her homework before she sat down with me,” he said.

Obrochta is just one of the women who has benefited from the bank’s commitment to lending to women-owned businesses.

Nationally, about 30 percent of businesses are owned by women, according to the National Women’s Business Council.

But the SBA and other partners are trying to increase that.

This March, Wells Fargo committed to increase its commitment to lending to women-owned businesses to a cumulative $55 billion by 2020.

The bank first set a goal in 1995 of lending $1 billion to women business owners over three years. Since then, the bank has lent more than $38 billion to women business owners.

Wells Fargo is the top lender to small businesses, and also a leading lender to women and minority-owned businesses.

An exact breakdown for the bank’s loans to women-owned business in Alaska isn’t available, but for the 2012 federal fiscal year, Wells Fargo made $16.9 million in SBA loans to 44 businesses. That was double its 2011 SBA lending of $8.4 million to 27 businesses.

In Alaska, the number of women-owned businesses is growing more slowly than it is in other states. The state’s growth rate ranked last out of all 50 states and the District of Columbia, according to a 2013 report by American Express OPEN, the division of that company focused on small businesses.

Since 1997, the number of women-owned businesses in the state has grown just 11.8 percent according to the OPEN report, compared to a 54 percent growth rate nationwide.

Revenue and employment at those businesses grew faster in Alaska than in other states, however. Firm revenues went up 84.9 percent over the same time period, and employment went up 19.2 percent, giving the state a rank of 29 in terms of combined economic clout.

Looking for financing

San Juan said that Obrochta was more prepared than the average person looking for a business loan.

San Juan said loans for real estate can be difficult when renovations are needed, and because of the paperwork involved in any real estate transaction, but that Obrochta’s went relatively smoothly.

“She thoroughly researched the Montessori school system,” San Juan said. “She put together a very thorough business plan.”

San Juan was Obrochta’s main point of contact, although it took a team to put together all the components of her SBA loan.

That’s a strategy that worked for Obrochta.

Working with Wells Fargo felt very personal, even though it’s a large company, she said. They asked a lot of questions that helped her develop her business plan, which was beneficial, she said.

“They did take a chance on me, and I appreciate that,” Obrochta said.

Obrochta said her final loan was particularly useful as it was structured in a way that helped leave funds available for some renovations and working capital.

Obrochta learned her own lessons throughout the process.

“You have to be patient because the process takes a while,” she said.

The budget has to work out for a plan to be feasible, she said, and flexibility is important.

“The most surprising is the amount of paperwork, the amount of reporting,” she said.

The challenges are worth it. Obrochta said she enjoys getting to craft the program she has envisioned.

She also found resources from Wells Fargo and the SBA that have helped her through the process. In addition to help with her business plan and loan, Wells Fargo has tools for payroll and other paperwork that have made the process easier, and save time every month, Obrochta said.

The SBA’s resources included ideas for writing a business plan, and webinars and videos about other aspects of owning a business, like staffing and becoming an LLC, she said.

“When you’re on a budget, those things are helpful,” Obrochta said.

Both organizations also had people who were willing to answer her questions and help her navigate the process.

“Don’t be afraid to ask for help,” she said.

The resources Obrochta consulted aren’t the only ones available. The YWCA Alaska operates the Women’s Economic Empowerment Center, which is the state’s SBA Women’s Business Center.

The center offers free and low-cost classes and seminars to help prospective entrepreneurs and new business owners learn about money management, business planning, financial literacy and other related topics. The center also offers business counseling.

Details, details

For Obrochta, writing the business plan required bringing many details together, like finding space.

Birchwood Montessori is housed in a split-level building in a mostly-residential neighborhood off Tudor Road. Prior owners converted the building from a single-family home to a Montessori school. Obrochta and her husband did some renovations to the school, mostly cosmetic changes, before opening it up to students.

Planning the school was a somewhat fluid process. The class size, 18 students, is based on licensing-based space requirements.

Obrochta said she was aware that licensing would help determine some details of the program when she started planning her school, and she shaped the program around those requirements as she went along.

In April, Obrochta had eight students in the morning, and fewer who stayed all afternoon. The program will have 18 slots for three-to-five year olds, but Birchwood opened with a smaller number of students and is growing slowly. Two students are scheduled to join the class in June. In August, Obrochta is planning for a full class of 18.

Obrochta said a toddler program will open this summer. She’s had a strong response so far.

“I already have a waiting list and we’re not even opened yet,” she said.

There’s also been interest in the preschool program for the fall, particularly from the hospital and university community, she said.

Eventually, Obrochta said she would have 8 staff members. Montessori teachers must have special Montessori training, and the schools are affiliated with or accredited by the American Montessori Society.

Obrochta designed her program around the Montessori ideals. While her own children didn’t go to a Montessori school, those values matched her own personal philosophy, she said.

A typical day at Birchwood is structured after a typical Montessori day, although she also offers before and aftercare, which is conducted in its own area of the school.

Not every Montessori school offers those, and Obrochta said she added that because she knew her clients would be working families.

San Juan said Obrochta’s knowledge of Montessori education and the demand for it in Anchorage strengthened her loan application.

San Juan had his own set of advice for women or other new entrepreneurs looking for a loan to start a business. The list isn’t so different from what Obrochta did.

Stick to what you know, and have “current industry experience” in that field, he said, and have liquidity or a secondary repayment source for the loan.

Molly Dischner can be reached at molly.dischner@alaskajournal.com.

05/08/2013 - 11:56am