by David Haber
Women entrepreneurs are the rising stars of our economy. As of 2016, they’ve grown to over 11 million strong and generate over $1.6 trillion in revenue. Women business owners are doing so well that the U.S. was named the top country for female entrepreneurs by the Global Entrepreneurship and Development Institute and Dell’s Women Entrepreneur Index. That’s something to celebrate.
Unfortunately, there’s another side to the story. While women own 38% of all businesses in the country, they receive 16% of business loans—and only 4.4% of the total dollar value of all loans. If women entrepreneurs are doing so well, why aren’t they getting funded? And, more importantly, what can we do about it?
Behind the Gender Gap: ObstaclesBond Street is on a mission to be the financial advocate for every business owner. If we don’t know why only $1 out of every $23 of business loans are going to women, we’ll be a less effective part of the solution. So we zoomed out to look at how the state of women-owned businesses affects financing. The picture is a complex one.
On average, women-owned businesses start smaller, stay smaller, and bring in less revenue than men-owned businesses. About 90% employ no one but themselves. This year was the first time that women received 5% of government contracts. Almost two-thirds of women-owned businesses survive on local sales. They’re underrepresented in high-growth industries and venture capital firms (which might explain why they only get 7% of venture funds).
Whether as a cause or result of these figures, women business owners look more to savings and personal credit to fund their ventures than men do. And when women do seek business loans, they tend to receive less capital, pay higher rates, and put up more collateral than men business owners.
How We Can Close the Gap: SolutionsClearly, there remains room for improvement; women entrepreneurs deserve our attention and our support. How can we #BeBoldForChange by forging women’s advancement—on International Women’s Day and beyond?
We can showcase women-owned companies. At Bond Street, we’ve given women entrepreneurs a platform through our blog, zine, and social media. Most recently, in partnership with Foursquare, we’ve put together HER CITY: A Guide to NYC’s Women-Owned Businesses.
Raising brand awareness and getting customers are challenges for every small business. Support local women entrepreneurs by getting everything from books to baked goods from these incredible stores.
We can lower barriers to capital for women-owned firms. At Bond Street have made it our personal responsibility to make capital accessible to the 28 million small businesses (i.e. 99% of all businesses) in the U.S. That means making the application less time-consuming and overwhelming, offering loans to a wider group of a businesses than traditional banks, and most importantly, making the entire process transparent and fair. We’re proud to have counted many women entrepreneurs among our clients, including the founders of Uprise Art, Bec Brittain and Tone Academy.
We can be a resource for women entrepreneurs. Access to capital is not the only problem business owners face. Many want better education and professional networks to boost their business. At Bond Street, we are looking for ways to leverage our expertise and network to support women business owners. We have created numerous articles on our blog for women entrepreneurs, including Small Business Loans for Women and city-specific lists of resources. We’re part of NYC Ladies of FinTech (#LiFT) with our friends at CommonBond and Orchard. And we’re not done yet!
We can keep our minds open. We’re on the hunt for new ideas about how Bond Street can make the business landscape more equitable for women. We’ve considered creating financing workshops, event series, and Skillshare courses, but only the input of business owners on the ground can help us make the best choice. How do you think we can best help women entrepreneurs grow thriving businesses? Email us at [email protected] with any suggestions, critiques or questions.
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