Want to expand the economy and boost women in start-ups? Expand the child tax credit. 

Imagine you’re an entrepreneur with a brilliant business idea. Inspiration has struck. Your right-to-win is clear. What do you need in place to begin to sell goods or services, hire employees, create value for the American economy, and bring this genius idea to life?  

Child care.  

If the thought of child care as a critical business imperative wasn’t top of mind, you can be forgiven. For decades, the cost of doing business has not counted the expense of watching children in order to launch and grow that next great venture. Why? Because for the men who largely started and ran companies of the past, child care was a given, an afterthought — they almost certainly weren’t going to be the primary caretakers of their children.  

But for millions of American women today — arguably the most entrepreneurial generation of women in history — the reality is that the child care crisis is a direct impediment to business growth.  

That’s why 60 women entrepreneurs and ecosystem leaders from 26 states wrote to Congress, calling on lawmakers to permanently expand the child tax credit, which would help women across the U.S. from all backgrounds have more funds to care for their families and pursue their professional goals.  

These women know first-hand the struggle of raising a family while nurturing a growing business. Many founders who are fathers can readily access the capital, resources and network they need to grow their businesses — and typically handle a disproportionately smaller amount of work at home — while many founders who are mothers face a much tougher path. Mothers overwhelmingly shoulder child care responsibilities — 58 percent report they are primarily responsible for child care and household duties, while only 32 percent report sharing responsibilities — and are often forced to opt out of the workplace or limit their careers in order to take care of their children.  

The impending child care cliff only makes this crisis more urgent. As billions of dollars in federal funds for the child care industry are set to run out by Sept. 30, thousands of child care facilities are expected to shutter. Available care spaces will become more scarce and the cost of child care will increase. Without dedicated attention from policymakers, women in the workplace may no longer be able to afford to be in the workplace.  

Congress should invest in supporting women entrepreneurs, including those with children. Motherhood is a powerful catalyst for entrepreneurship; mothers see problems others cannot and often from different perspectives. And because mothers increasingly juggle the role of primary parent and breadwinner, they are experts at prioritization and delegation — essential skills when time is in short supply (62 percent of moms report having less than an hour to themselves everyday). 

Motherhood gives many women a push to leave the rigidity of working for someone else. But starting a business requires upfront capital in the form of child care that too many women cannot access. Our current lack of affordable and accessible child care means that American economic growth is stifled, innovation is paused, and women’s ambitions are restrained.  

Yet we know that women, and women of color in particular, are starting businesses at record-breaking rates. The future of business urgently requires affordable child care.     

In our economy, women-founded companies are critical. Women entrepreneurs build successful companies that create jobs and contribute to their communities, creating products, services and solutions that generate roughly $1.8 trillion per year. Despite being chronically underfunded, women-founded and co-founded companies regularly outperform their male-founded counterparts. They generate more revenue over five years and report a higher return on investment. Women entrepreneurs are also adept at creating positive company culture; companies led by women have higher employee retention.  

Simply put, women founders excel despite the system that is stacked against them.  

Women typically face a difficult path to entrepreneurship, and many would-be founders cite the burden of family management and child care as a reason they don’t take the risk of launching their own startups. A full 67 percent of women report spending at least $1,000 a month or more on child care — it is no surprise that 52 percent of working moms have considered leaving the workplace because of child care costs.  

And the lack of affordable child care just compounds the other barriers faced by women founders. In the first quarter of 2023, women-founded startups raised just 2.1 percent of the venture capital issued for the year: $800 million of $37 billion. But it’s not just venture capital — when women business owners apply for loans, on average, they receive shorter term loans, higher interest rates and lower amounts.  

We know that an enhanced child tax credit would support millions of families, including working mothers and women founders. In 2021, when Congress implemented an expanded credit, self-employment increased among members of low income families, amounting to thousands of new businesses created. The enhanced payments allowed more families to better afford food and rent, and gave many the cushion they needed to learn new professional skills and undertake the risk associated with entrepreneurship. And, importantly, it allowed parents to better afford child care so they were able to do paid work and take on more hours.  

Implementing a larger, fully refundable child tax credit that allows more families — especially low- and no-income families — to benefit is a simple step to help women enter and remain in the workplace and pursue the path of entrepreneurship.   

There’s a long list of changes policymakers should pursue to make that path easier; permanently expanding the child tax credit is just the start. There’s bipartisan, bicameral support, and it’s something Congress can do this year, especially as policymakers eye a year-end tax package. If Congress actually wants to support women — as mothers, workers, entrepreneurs and breadwinners — this is the first step. 

Liz Tenety is the cofounder of Motherly, a digital parenting platform supporting mothers, and an entrepreneur in residence at Georgetown University.  

Kate Tummarello is the executive director of Engine, a nonprofit working with start-ups across the country to advance pro-entrepreneurship and pro-innovation policy.