Challenges and Opportunities for Women Business Owners
With 7.8 million women-owned businesses in the US bringing in $1.2 trillion each year, companies held by women are a major economic force in the country. Yet, according to Biz2Credit’s recent analysis of 14,000 businesses who applied for funding on its’ platform during the second half of 2012, women-owned businesses still face greater difficulties securing financing than their male-owned counterparts.
According to the analysis, women-owned businesses have credit scores on average 40 points lower than male-owned businesses, revenues 15% lower, and operating expenses 21% higher—the result being small loan approval rates at 15-20% lower than for male-owned businesses. To make matters worse, overall tightening of credit at banks has made accessing capital more difficult across the board. According to Women Impacting Public Policy’s 2012 National Survey of Women Business Owners, women-owned businesses made an average of 2 attempts that year to secure loans or lines of credit, with only 59% successful after 2 attempts.
Fortunately, there are a number of valuable resources that women-owned businesses can take advantage of to help get the mentoring support and financing they need. Many organizations offer guidance and mentorship for women-owned businesses. In addition to WIPP, the National Women’s Business Council, the National Association of Women Business Owners, and the National Association for Female Executives provide valuable networking and support opportunities as well as advocacy for women-owned business issues.
For startups and new businesses looking to expand, SCORE offers free business tools, counseling, and workshops for female entrepreneurs. Many nonprofits and foundations also provide grants for women-owned businesses and women entrepreneurs, especially for companies whose goals are socially or environmentally motivated.
There’s help for women-owned businesses from the government, too. The 2013 National Defense Authorization Act gives women-owned small businesses more access to federal contracting opportunities, removing the caps on anticipated award prices and allowing officials to relegate specific contracts for women-owned small businesses. This is progress towards the wider goal of awarding 5% of all government contracts to women-owned businesses, and follows 2011’s Women-Owned Small Business Federal Contract Program. WIPP’s Give Me 5 program provides training and resources for women business owners who want to take advantage of the contracting opportunities being allocated to WOBs.
Though women have traditionally had a more difficult time obtaining loans than their male counterparts, the topic of business loans for women is being widely addressed in the traditional and alternative lending worlds. With the right preparation, women can approach the loan application process with confidence. Knowing how a company will be evaluated by potential lenders can make the process faster and remove the stress (and damaging credit checks) of repeated rejections. Credit marketplace companies like Biz2Credit are available help women business owners through the sometimes tedious lending process. They offer numerous resources to help secure business loans for women including business plan preparation and financial consultation.
With such a wealth of organizations and initiatives to support women-owned businesses, the gap between women and men in the business world is shrinking every day.