When it comes to small businesses, it seems that women largely aren’t as involved with entrepreneurship in general as their male counterparts, and this is true in a lot of ways. Not only are there fewer owners, but they’re also less active in seeking assistance to obtain financing.
New data from the federal government shows that women only make up about 30 percent of all small business owners nationwide, according to a report from the Associated Press. However, when it comes to the amount of funding they receive in the form of small business loans, they only get about 4.4 percent of all small business funding. That means one out of every 23 dollars or so, or $44 of every $1,000, in this type of loan goes to independent enterprises owned by women.
But the reason for this is that it seems small businesses owned by women get disproportionately smaller loans overall, the report said. That 4.4 percent share of dollars comes despite the fact that they receive 16 percent of all such loans from traditional lenders, and 17 percent from the Small Business Administration. Further, they will typically face higher rates of rejection on their applications, and face tougher terms when they are approved. Women also receive just 7 percent of funding from venture capital sources.
“The numbers are jarring, for sure, and we need to own up to the fact that we want to see more women entrepreneurs, and to make sure they’re getting access to capital,” Senate Small Business and Entrepreneurship Committee chair Maria Cantwell, a Washington Democrat, told the news organization.
What can the government do?
Another issue plaguing companies owned by women is that the federal rules for contracting with small business mandate that 5 percent of all deals must be made with female-owned firms, the report said. However, in the 2012 fiscal year – the most recent period for which data was available – even that relatively simple goal was not met, because the level was 4 percent. It’s believed that this lack of funding costs women’s firms some $5.7 billion annually.
Women who own their companies but want to put them in a better position to succeed might want to think about the ways they can cut costs, such as finding more affordable small business insurance. By shopping around for liability insurance, for instance, they might be able to cut their costs by thousands every year.