Significant barriers still exist for women entrepreneurs more than 26 years after enactment of groundbreaking legislation to improve access-to-capital, federal contracting, and counseling and training for female business owners, according to a Congressional report released Wednesday. Women small business owners lag far behind their male counterparts when it comes to getting loans and government contracts, the reports states.
The report, entitled 21st Century Barriers to Women’s Entrepreneurship, found that while businesses owned by women account for 30% of small companies, they receive only 4.4% of the total dollars in conventional small-business loans. That amounts to $1 for every $23 loaned. Moreover, loan applications from women business owners are more likely to be rejected than those from businesses owned by men, and the loans they get are likely to have more stringent terms. Women also receive only 7% of venture-capital funding.
Women are also falling short in receiving government contracts. Although Congress in 1994 set a government wide goal of awarding 5% of federal contract dollars to small businesses owned by women, it hasn’t met that goal. The closest it has come is 4%, in the fiscal year that ended Sept. 30, 2012. Failing to meet the goal costs women-owned businesses nearly $5.7 billion in government contracts each year, the report stated.
The report was released during a hearing of the Senate Committee on Small Business and Entrepreneurship 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. The hearing was led by U.S. Senator Maria Cantwell (D-WA), chairwoman of the Senate Committee on Small Business and Entrepreneurship.
Businesswomen such as Barbara Corcoran of ABC’s “Shark Tank,” former Telemundo president Nely GalÃ¡n and Small Business Administration Administrator Maria Contreras-Sweet were among several witnesses to testify. Corcoran, who turned a $1,000 loan into a now-$5 billion enterprise, discussed the critical necessity of broad access-to-capital for start-up and high-growth businesses. GalÃ¡n, who built her own hit-producing media company, focused on the importance of the Women’s Business Center training program, as well as an innovative approach to supporting women’s entrepreneurship and economic advancement through her nonprofit, The Adelante Movement.
The committee discussed potential other solutions to help more women-owned businesses grow, including allowing women-owned small businesses to receive sole-source contracts from the federal government, putting them on a level playing field with other traditionally disadvantaged groups. If the federal government was meeting its small business contracting goal for women, it would mean an estimated $4 billion more work for these businesses than last year.
The report stated that Congress needs to take steps to help women-owned businesses, including making changes to the SBA’s microloan program aimed at helping companies borrow up to $50,000. It called for the reauthorization of what’s known as the Intermediary Lending Program, which allows business owners to borrow between $50,000 and $200,000. The report also called for increased funding for Women’s Business Centers, SBA-sponsored counseling programs for women owners around the country. Reduced funding and staffing at the centers has lowered the number of women owners they are able to help.
“We want to make sure women are getting appropriate counseling and training for business development,” Cantwell said.
The report also called for the Securities and Exchange Commission to complete regulations to allow small businesses to crowdfund, or solicit investor money from the public through online portals.