Women-owned businesses are a $3 trillion economic force and support 23 million jobs but still face significant barriers compared to their male-owned counterparts when it comes to obtaining loans and growing their businesses, according to a report released today by U.S. Senator Maria Cantwell (D-WA), Chairwoman of the Senate Committee on Small Business and Entrepreneurship.
Women entrepreneurs account for just $1 out of every $23 in small business lending, despite representing 30 percent of all small companies. Women also are more likely to be turned down for loans or receive less favorable terms than men, according to the report.
"In the 21st Century, women entrepreneurs still face a glass ceiling," the committee majority report says. "While women-owned businesses are the fastest-growing segment of businesses, and many succeed, women must overcome barriers their male competitors do not face."
The report, entitled 21st Century Barriers to Women's Entrepreneurship, was presented Wednesday during a hearing led by Cantwell and Senator James Risch (R-ID), ranking member on the committee. Testifying before the committee were several distinguished businesswomen such as U.S. Small Business Administration (SBA) Administrator Maria Contreras-Sweet, Barbara Corcoran of ABC's Shark Tank, and former Telemundo president Nely Galán. The hearing focused on the unique challenges that women face in starting their own businesses and legislative solutions that could help boost women-owned small businesses and create jobs.
"Just 26 years ago, Congress enacted landmark legislation that established a woman's ability to establish business credit without requiring a signature of a male relative," Cantwell said. "Even 26 years after the Women's Business Ownership Act, significant barriers still exist to women entrepreneurs. As Congress looks for ways to help entrepreneurs and our economy, we want to make sure that women are able to play an important role."
"Issues facing the small business community are not a partisan matter -- it is bipartisan, it is nonpartisan," Risch said. "We want to always and continually examine any barriers there are to loaning to women. Any gender bias has no place whatsoever in the lending process."
"There is still so much work to be done," SBA Administrator Contreras-Sweet said. "We must give women the choice to be what their skills and hearts desire -- be it a homemaker who stays at home with the kids, or a "homemaker,' who owns the construction company that is building the next residential development."
According to the report, women still face significant challenges, including:
-Access to lending: Women receive just 4 percent of the total value of all conventional small business loans, and only 7 percent of venture capital funding. In addition, women face difficulty in getting right-sized loans that fit their needs. "Women are forced to rely on personal credit, loans from family and friends, and credit with high interest rates instead of getting traditional bank lending," Cantwell said.
-Equal access to federal contracts: The federal government has never met its goal of awarding 5 percent of contracts to women-owned businesses -- a goal enacted by legislation 20 years ago. This results in women-owned businesses missing at least $4 billion annually in contracting opportunities.
-Getting relevant business training and counseling: The SBA-operated Women Business Center program was created to help support women-owned businesses get off the ground and has successfully provided training to thousands of women entrepreneurs each year. But Congress has not provided new funding for the program since 1999, despite an increasing need.
The report recommends three remedies to improve the business climate for women entrepreneurs:
-Modernize and expand the SBA's Microloan Program to reach borrowers that need up to $50,000, and reauthorize the Intermediary Loan Program to allow more women to access capital between $50,000 and $200,000.
-Enact legislation that would allow sole-source contracting to women-owned businesses through the Women-Owned Small Business Procurement Program, which would give them the same access to federal contracts as other disadvantaged groups.
-Reauthorize the Women Business Center program, which issues grants to nonprofit organizations to provide specialized counseling and training, and increase funding to potentially help more women entrepreneurs, especially in low-income areas. The program already has demonstrated success -- Women Business Centers helped clients access more than $25 million in capital and open more than 630 businesses in fiscal year 2013.
Despite the barriers, women-owned firms are growing at a rate exceeding the national average, according to the report. Some of the positive trends include:
-Women's business-ownership grew from 4.1 million small businesses in 1987 to 8.6 million in 2013.
-Women-owned businesses in the United States also emerged from the recession as second only to publicly traded companies in job growth, with 274,000 net new jobs since 2007.
-The share of revenue generated by women-owned firms rose from 0.3 percent of all receipts in 1972 to 3.9 percent in 2007.
-African-American women are starting businesses at six times the national average, generating $226 billion in annual revenue and employing almost 1.4 million.