With a little help, female entrepreneurs can flourish

It’s no secret that women have long faced barriers in the business world.

While today’s landscape is more embracing of women, systemic gender bias and discrimination still exist, which makes starting and growing a business difficult. One of the greatest challenges women entrepreneurs face when starting new ventures is access to capital. 

Research indicates that women start businesses with roughly half as much capital as their male counterparts; they receive just 2 percent of venture capital (VC) funds and less than 5 percent of conventional business loan dollars.

{mosads}As the aphorism goes, it takes money to make money, and according to numerous studies, including one from Babson College on VC investment, women are not getting the money.

From VC investment to traditional bank loans, a significant gender gap exists. A study conducted by Fundera found that at traditional banks, women get approved for debt funding at a lower rate, are likely to pay higher interest and receive less funding overall than their male counterparts. 

In this bleak landscape, it is pivotal that Congress step in and help even the scales of opportunity. A positive sign of progress came recently when the House of Representatives passed the Women’s Business Centers Improvement Act of 2017, which reauthorizes the Women’s Business Centers (WBC) program.

The WBC program is a public-private partnership with the Small Business Administration (SBA). It consists of a network of over 100 centers throughout the country that provide training, counseling, mentoring and access to capital to women entrepreneurs.

While this is a step in the right direction, there is still more work to be done. First, it must pass the Senate and be signed into law by the president. But beyond that, it’s important that Congress support women business owners with increased access to capital, while we make conscious decisions as consumers in the name of gender equality.

To alleviate the capital problem, the government could offer tax breaks and other incentives to venture capital firms that achieve parity in funding levels for male- and female-led ventures. This could be accomplished easily if female representation at VC firms increased, as female VCs are more likely to fund female founders.

Additional tax breaks could be offered to firms that establish mentorship programs or gender quotas that help women rise through the ranks and into executive positions.

Studies have found that lending bias at traditional banks is related to the lack of gender diversity on investment boards.

As consumers, we should all try to support banks that strive for gender parity on their boards, and we should ask Congress to require banks to publish detailed statistics that reveal any disparities in loan amounts and interest rates to male and female business owners.

This will give consumers an opportunity to “vote with their feet” by choosing banks that strive for gender equality. 

Not only do women deserve this support in the name of equality, but evidence has shown how successful they can be when given the right platform to succeed. 

Recent reports from the National Women’s Business Council and Indiana University reveal that in lieu of conventional resources, women have found success in crowdfunding to kickstart their startups. In fact, women are more successful than men at raising funds through crowdfunding.

Websites like Kickstarter, Indiegogo and Kiva are unique platforms that provide promising vehicles to pitch ideas, share personal stories and connect with the community. These are all things that women are intrinsically better at than men, given their proclivity for positive, inclusive language.

Researchers from Indiana University found that there is a gender bias that actually works in their favor. Generally, women are perceived as more trustworthy than men, and the study found that entrepreneurs that were deemed more trustworthy received the most funding on these websites. 

Several female-owned businesses that got their start on crowdfunding platforms — often out of necessity — have gone on to great success, creating jobs and fueling the economy. But imagine the economic potential unlocked if female entrepreneurs could aim for investment opportunities as easily as their male counterparts.

WBCs are trying to make that a reality and have been for nearly 30 years. Today, 38 percent of all businesses in America are female-owned, employing 9 million Americans and generating $1.6 trillion in receipts. Hundreds of these women walk through my very own center, Grand Rapids Opportunities for Women (GROW), each year.

Because of efforts like that of the WBC program, women are now starting ventures at four times the rate of men. But still, many do not get off the ground because of inadequate resources and opportunity. 

Can you imagine the achievements they could accomplish if more were done to foster their growth? According to researchers at Babson College, if women started businesses with the same amount of capital as men, they could create 6 million jobs in five years. With statistics like that, what are we waiting for?

Hopefully, there will come a time when WBCs will no longer be needed to break through the business environment that is inherently exclusionary to women and that there will be a clear and unhindered path to success for all female entrepreneurs.

Until then, GROW and the hundred other centers across the country will continue to support the aspiring female entrepreneurs that walk through our doors every day. We must call on our congressmen and congresswomen to do the same.

Bonnie Nawara is the board chair and interim president/CEO of the Association of Women’s Business Centers. She is also the CEO of Grand Rapids Opportunities for Women (GROW), a Women’s Business Center in Grand Rapids, Mich.