1. 2nd European Microfinance Conference
2nd European Microfinance Conference Workshop: Closing the Lending Gap: Are Special Programmes Needed for Europe´s female Entrepreneurs Barcelona 28the of October 2005 Anneli Soppi Finnvera Plc

2. Presentation Are there gender specific barriers in access to finance
Special loan scheme for women entrepreneurs
Service chain combining both non-financial and financial service
Targeted at enterprises owned and managed by women
What have we learned and how shall we develop

3. What do they buy – how often do they buy…
CUSTOMER SEGMENTATION
What do they buy – how often do they buy…
Down-
sizing
of SME-lending
What is the market failure. This has become an increasingly important topic. For us it is about bridging the finance gap in microfinance and enterprise financing. As far as poverty is concerned we are often dealing with people who want to improve their quality of live trough self-employment.
Finnvera´s micro-credit are very essential part of our micro-lending activities. Micro-credits were developed by down sizing the SMe-lending and specially the micro-enterprise lending. Besides it is question about small laon amounts it is a question of a service chain, where one is combining both financial and non-financial services
by specialised loan officers, financial advisers as we call them, who are experienced in dealing with small businesses, with service sector and with self-employed, enterprises owned and managed by women, by ethnic minorities or by your people.
Are there women or gender specific barriers faced by entrepreneurs?
Are entrepreneurs on equal footing ? Is customers segmentation by gender an issue?
Effective customer segmentation is critical for finance institution for many reasons:
first of all to identify your target clients? Do know what their finance demands are? How often they ask for financial services? Are additional services like non-financial services needed and for what kind of information, advice there is demand for and how long
How to manage your clientele, your portfolio. 1

4. Why do we need a special programmes for women entrepreneurs
Identify your target client - Why women - women specific barriers
Segregated labour market – segregated entrepreneurship ?
Does the demand for advice –training and mentoring differ by gender of the entrepreneurs ?
Women in small business prefer advice provided by women entrepreneur adviser
Advice of service sector – can women understand the business logistic of service sector better than their male counterparts?
Alliances with partner organisations
Women often emphasize that they face difficulties in access to finance due to their gender? Loan offices are not taking their request seriously?
One of the main reasons behind this belief is that women chose to set up their businesses in business sectors with less prestige and there fore not appealing to mainstream banking finance.
This market imperfection was one of the reasons Finnvera created a special scheme for women entrepreneurs. In the middle of 90`s 1/3 of enterprises were owned and managed by women. Government wanted to call attention of women to entrepreneurship as an opportunity to solve their unemployment or threat of unemployment by self-employment. At the time the unemployment rate was very high and the entrepreneurship as a career or way of live was less likely choice.
The development of the product In practise meant that Finnvera was downsizing its Sme-lending both products and process
This was an import miles stone in governments industry policy measure as well. By this loan those business sector women had strong bias for (like consumer service and retail became eligible to Finnvera´s finance.
At the moment 1/3 of enterprises are owned by women. This is pretty high on international comparison. How ever the proportion has remained on same level for several years.
Finnish government has an entrepreneurship policy programme: to create new jobs in practise this means to create new enterprises.
This is a challenging task. Women are in a spot light. Both start-up and existing ones.
Additional non-financial services are needed as well as venture capital finance specialised on service sector.

5. The evolution of Finnvera´s Women loan Scheme
Adopting best practise models
Reaching the target client
Self-employed, ethnical minorities unemployed or people under the employment, micro-businesses in service sector
By-product
Positive publicity in media boosted the awareness
Governments entrepreneurship policy programme
Improving know how on women specific business sectors
Special window with special prise
Monitoring and follow up by gender related factors in micro-businesses

6. Special loan to women Entrepreneurs - Soft loan (De Minimis)
Loan amount: € 3000 –
Maturity: 5 years incl. one grace period
Interest rate, variable EB %
loans subsidised by State
Interest-rate subsidy 2.25%
Loss compensation, 55% of the credit loss
No collateral
Loan portfolio at 31 December 2004
Women loans EUR 57 million
5500 loans
Loans are provided
by16 regional offices
Oulu
Kuopio
Rovaniemi
Kajaani
Seinäjoki
Jyväskylä
Mikkeli
Tampere
Lahti
Turku
Regional office
Head and regional office
Vaasa
Joensuu
A special loan at enterprises owned and managed by women. Micro-credit from 3000 – euro max.
% years maturity inclusive one grace period.
Finnvera has nearly clients, over 80% of them are micro-enterprises and If we look a bit closer to this client group we found out that 50% of them are self-employed.
80% micro-enterprises
approx. 40% micro-credit clients
Micro-credit 140 million €
Personnel: about 130 people dealing with micro-credit clients
Pori
Lappeenranta
Helsinki & Uusimaa

7. Advice, Training and Mentoring Pre-credit decision risk management strategy
Advice, Training and Mentoring is organised by different parties:
Women´s Enterprise Agency, established 1996
Job and Society Association and Agencies
Employment and Economic Development Centres - combine the regional units of three ministries
Standardised credit appraisal procedure
Credit appraisal and lending decisions are made by Finnvera´s regional offices (16) close to the clients,
Finance decisions are based on economical profitability as a social objective job creation is emphasised
We in Finnvera believe, that ”If we can measure the risks, we can better manage them”
The pre-credit risk management is important and is one of the most essential features of Finnvera´s finance policy. One of the basic facts of Finnvera´s risk management is to assess the risk by regional offices close to the clients.
As to the advice, training and mentoring Finnvera is networking with bodies who are focusing and providing those services
Finnvera can focus on financing. For micro-credits it uses a simplified procedure, a kind of scoring of clients.
Annually above profit and loss statement of the clientele are analysed by Finnvera. The summary reports of these analysed balance sheets comprise an important tool for analysing the new clients businesses.
Combining the utilisation of advise, training and mentoring with the own credit appraisal contributes to higher survival rate of clients.
As to the advice services: there are Female Entrepreneur Advisers available for women entrepreneurs. (this measure as also been listed one of the best practises promoting female entrepreneurship.
The Women's Enterprise Agency, works to promote entrepreneurship and networking among newly started entrepreneurs. It is one of the Finnish Jobs and Society Enterprise Agencies and is financed by the European Social Fund, the Finnish Ministry of Trade and Industry, and the Finnish Ministry of Education as well as by private enterprises and business organisations. The Women's Enterprise Agency provides: - information on the procedure for starting an enterprise - individual advice - classes on the different practical aspects of entrepreneurship - entrepreneurial training courses - training for business consultants - entrepreneurial mentoring
The most advanced form of co-operation and interaction between an experienced and a new entrepreneur is entrepreneurial mentoring. In 2000, the Agency published a manual for the mentoring process, which includes both a handbook and a video. The Agency also arranges training for entrepreneurs, who would like to act as mentors.
Individual advice at the Agency is available by appointment.
Networking makes the early selection of clients easier and
contributes to higher survival rate of enterprises !

8. What have we learned from our women loan clients
Most of them (70 %) are self-employed
Annually 50 – 70% are start-ups
Approx. 2% are ethnic minorities
Motive for entrepreneurship:
Unemployment or the threat of unemployment
Self-fulfilment
Their goal either income generating or …profit generating
Over 70% of them set their business to service sector
Business to business service sector 13,2 %
Consumer service sector 23 %
Catering 16,6 %
Retail 31,2 %
They enter in to the business elder than their counterparts
(they want to maintain their role as an expert not to move on to leaders…)

9. How do they succeed in their business
Higher proportion of them close down their business than their male counterparts
Survival rate of women loan start-ups is 76 % after 5 years
Survival rate of small loan clients, start-ups is 79% after 5 years
Loss given defaults less than 4 %
women loan clients: 3,5%
Small loan clients: 3,8 -4%
Higher proportion of those who failed are able to pay their loan back
If they want to grow – is the growth limited ?
Business sectors with less prestige dominate the demand
Women want to keep the risks manageable
Women have challenge to combine their family life and entrepreneurship
13% of women loan clients closed down their business in comparison to their male counterparts 7 %
Positive is that women did it by them self. They did not let the enterprise co in to bankruptcy so often than their male counterparts (11,6 vs. 14,5%)
Could the maternity leave costs be divided between the employees of the mother and father…

10. How shall we develop
To identify the growth potential and support them with non-financial services
To develop both know how and finance instruments incl. VC-finance for women specific business sectors
To simplify the lending procedure
To develop e-business
To develop delinquency management
For a financier it is important to identify those who have potential to run the business even if they have difficulties, they might overcome with help of advice and mentoring

11. The loan instrument has been a tool for promoting self-employment
The loan instrument has been a tool for promoting self-employment. The unemployment rate of Finland has been declining from 15% (1996) to 8-9 % (2004)
Loan portfolio has increased from 16,7 million to 57,5 million in 8 years
As a part of its entrepreneurship Policy programme, the Government set up in spring 2004 a working group to examine the preconditions for strengthening women entrepreneurship in Finland.
The key objective is to raise the percentage of women entrepreneurship to 40 per cent in Finland (excl. primary production) of their entire entrepreneur stock by the end of the project. This would represent the very top on the European level.
Normally in marketing the supply creates the demand. Women loans one important task has been the raise the awareness of finance facilities. And to encourage women with viable business idea to set up a business and employ them selves as well to encourage those women who already have small business but face difficulties in access to finance develop their business with help of women loan.
Women loan has been like a brand name. Our stakeholder , like banks know about it and they know that non-financial services can be combined trough networking.
A finance instrument can be a tool to promote women’s entrepreneurship. How ever like with any tool the success is dependant who is using the tool and how. This concerns both lender and borrowers.

12. Make the goals of today come true tomorrow
THANK YOU! Any questions ?
Make the goals of today come true tomorrow