Female Entrepreneurs: Do They Have More Trouble Receiving Loans than Men?
The question of whether or not women entrepreneurs receive as much funding as men has been long researched, and is taken seriously by both male and female entrepreneurs.
A recent study conducted by the Senate Small Business & Entrepreneurship Committee found that women own 30% of the small businesses in this country, but typically only get about 4.4% of money being given out in small business loans. Another study confirmed that men get six times the amount of funding than women. Logic would dictate that if women own about a third of small businesses, they should be getting about a third of the funding as well. Unfortunately, as it turns out, this often isn’t the case. Statistics show that female entrepreneurs are getting fewer loans, and lenders typically offer loans for fewer amounts to women than to their male counterparts.
Starting a small business is difficult, and it can be equally as challenging for women to fight for the traditional loans they need in order to be successful, but just how bad is this problem? Of the total number of loans given, women are only getting about 17% of the loans. These are abysmal numbers considering the ratio of men to women in the small business pool and especially because the number of women-owned businesses is growing much faster than the number of men-owned small businesses.
Why do women have such a hard time achieving the same level of funding as men in the same situation?
While much of the reasons for men receiving much more funding than women continue to be largely speculation (cultural stigmas, women balancing work and family, etc.), the fact of the matter remains that lenders typically choose men over women when it comes to handing out funding. In fact, a recent study by Harvard, MIT, and Wharton School found that 68 percent of lenders choose to fund the exact same project pitched by men over women, while 31 percent funded the women.
How can we combat this inequality in the small business loan game?
While many women find getting the type of funding they need for traditional bank loans, many women find that when they turn to alternative sources of revenue, like crowdfunding, non-bank loans, or microloans, they have a higher success than males who attempt that same option. There are also venture capital firms that specialize just in lending to women who are building businesses. This means that while there are still some obstacles for women starting small businesses to get the same type of funding, there has been some progression in recent years.
It may be some time before the gap between male and female small business owners is completely bridged, but there are options, in the meantime, for women to ensure their companies are funded.
For more information about funding for female entrepreneurs from Shield Funding, please contact us today. We would be happy to help you achieve your entrepreneurial goals.