Women entrepreneurs still face big lending gap
Wednesday, July 30, 2014 11:34 AM
Women who own small businesses are still far behind their male counterparts when it comes to obtaining loans and securing government contracts, according to a new congressional report.
While the number of U.S. women-owned businesses increased from 4.6 percent of all firms in 1972 to 27.8 percent of all firms in 2007, just 4.4 percent of the total dollars in conventional small business loans go to women-owned businesses, according to the report released July 23 by the Senate Small Business and Entrepreneurship Committee. The committee, chaired by Sen. Maria Cantwell, a Washington Democrat, also found that women face challenges getting equal access to federal contracts and relevant business training and counseling.
Amelia Lobo, director of the ISED Women's Business Center in Des Moines, is urging women business owners to contact Iowa's senators to voice their support for the report's recommendations, which include reauthorizing and increasing funding for the program. The Des Moines center, a subsidiary of the nonprofit ISED Ventures, is the only federally funded Women's Business Center in the state.
According to the report, only 17 percent of the loans backed by the Small Business Administration are for women-owned businesses. The report also found that women are more likely to have their loan applications rejected or face more stringent terms than men. And despite a government-wide goal set in 1994 that 5 percent of federal contracting dollars be awarded to women-owned businesses, the closest the government has come to meeting that goal is 4 percent in the 2012 fiscal year.
To combat these disappointing statistics, the report urges Congress to take a number of crucial next steps:
- 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 between $50,000 and $200,000 of capital.
- 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.
Established in 1998, the Women's Business Centers program has not had an increase in funding since its creation, despite the increase in women-owned businesses and their importance to the national economy. Nationwide, the program has helped clients access more than $25 million in capital and open more than 630 businesses in fiscal year 2013.
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