Women-Owned Businesses Lack Access to Capital

According to the 2012 Census report, women own 36% of all privately held businesses. They account for an economic impact of $3 trillion due to jobs they create and maintain. That's 16 percent of all U.S. jobs! Yet, one of the biggest issues for women-owned businesses is lack of access to capital.

Women-Owned Businesses Lack Access to Capital

According to a report issued by the U.S. Senate Committee on Small Business and Entrepreneurship, "women account for only 16 percent of conventional small business loans and 17 percent of SBA loans even though they represent 30 percent of all small companies. Of conventional small business loans, women only account for 4.4 percent of total dollar value of loans from all sources. In other words, just $1 of every $23 in conventional small business loans goes to a woman-owned business."

And that's not the only issue women have with access to funds. Women receive just 7 percent of venture funds, and the percent of female venture capitalists has actually declined from previous years. That decline means less women are in the position to support women entrepreneurs by investing in their growth.

Why Aren't Women Business-Owners Accessing Capital?

There are a few reasons why women aren't accessing capital. The National Women's Business Council report on Access to Capital by High-Growth Women-Owned Businesses shows that women lack the qualities typically associated with innovation and high growth entrepreneurship. That includes self-confidence and a willingness to assume risks that may accompany failure.

A study by Women Entrepreneurs in New York City shows that male business-owners don't seem to struggle as much with lack of confidence and unwillingness to take risks. The study says, "Though men also cite funding as a significant challenge, they are twice as likely to use traditional banks to fund and launch their businesses with as much as double the capital."

According to that same WENYC study, 90% of women business owners say they use their personal savings as the main source of capital. Besides not wanting to take a risk, they say it's due to a lack of knowledge about alternative funding sources as well as banks' limited interest in lending to low-capital industries (where many women entrepreneurs are concentrated). Other studies show that women lag men in the area of self-efficacy around their own success. That means women just don't believe in they have the skills necessary to create a successful business.

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