Women are more likely to start a small business than men, but they are more likely to struggle obtaining financing. Our content partner Nav.com explains why women-owned businesses hit a financial glass ceiling and how you can break it.

 

A new report released by SCORE reveals some interesting data regarding small businesses, particularly women-owned small businesses. Of the 28 million small businesses in the United States, 39% are owned by women, which increased by 45% from 2007 to 2016 and continues to rise. Women are more likely to start a business than men, enjoy equal success as measured by business starts, revenue growth, job creation, and time in business. And while men are more likely to operate in the construction and manufacturing industries, women are more likely to open businesses in healthcare or education. Women-owned businesses employ almost 9 million people and bring in over $1.6 trillion in revenue. While these figures are impressive, there are some concerns found in the data.

Despite the growth in the number of women-owned businesses, these entities have remained static in revenue shares at only 4% of the nation’s business revenues, a point which hasn’t seen much growth if any over the last 20 years. In contrast, businesses owned by men have declined in their share of U.S. enterprises since the early 2000s, but their revenue shares have stayed consistent in relation to the changing number of entities. Of the businesses that responded to the survey, 34% of men-owned businesses have been in business for more than 10 years, compared to only 28% of women-owned businesses.

These numbers certainly raise concerns about the longevity and sustainability of women-owned businesses. Could this be a product of a lack of mentorship or other barriers to success?

The Glass Ceiling of Financing

In addition to revenue and years in business, the study highlighted several key indicators to determine how successful a business is, including hiring rates and access to financing. Over the last year, a larger proportion of men-owned businesses (30%) saw an increase in hiring compared to women-owned businesses (27%). Some of the women entrepreneurs responded that they would like to hire more full-time employees, but have to stick with interns, contractors, or part-time employees because funds are low in their business.

When asked why they sought out financing, a nearly equal proportion of men and women responded that they needed financing to hire a new employee. The statistics show that 34% of men compared to 25% of women search out financing, and that 38% of men versus 31% of women who apply for financing actually obtain it.

Women-owned businesses are slightly more likely to depend on credit cards or non-SBA loans for financing as opposed to men-owned businesses, whereas men are more likely to use equity raised from investors to fund their business. While experience and networking can help find better financing options, it’s always important to make sure your business credit profile is in tip-top shape. You can check your business and personal credit score for free with Nav before you seek better financing options.

Some of the differences between men and women business owners may boil down to mentoring, a topic the study addressed. The numbers clearly suggest that small business owners who work with a mentor or are under a mentorship program enjoy more success than those who don’t. While the numbers pertaining to revenue, hiring, and access to financing show that women-owned businesses are at a disadvantage, there are indeed resources available to help them take the next step forward.

 

This article originally appeared on Nav.com and was re-purposed with their permission.

 

We look forward to helping your business succeed. Right now, if you sign up for free mentoring assistance, you’ll receive up to a 2% discount on your loan’s annual interest rate. If you have questions about this loan offer or other small-business loans for women, visit ofew.org, or contact us at ofew@opportunityfund.org.

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.

Loans are subject to credit review. Additional documentation may be required for credit approval. We are an Equal Opportunity Lender. Loans will be made or arranged pursuant to California Department of Corporations Finance Lenders License #6050609.


Opportunity Fund is tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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