Do women face discrimination when applying for business loans? Well, it certainly seems like it. According to a new survey, small business loan approval rates for women are 15 to 20 percent lower than for men. This has prompted Senator Maria Cantwell, chairwoman of the Senate Committee on Small Business & Entrepreneurship, to state:
We see (lending) issues with minorities the same way we’ve seen them with women.Sen. Maria Cantwell (D-WA
Women have long struggled to get access to loans. In fact, it was only 26 years ago that the Women’s Business Ownership Act of 1988 passed, prohibiting the practice that required women owners to have their husband or other male relatives co-sign business loans.
Big contrast in small business lending
With small businesses being major contributors to job creation across the country, it is crucial that they are afforded access to the capital they need to expand and grow. Yet, despite the many success stories of women entrepreneurs, a large number of them face difficulties expanding their businesses because they are unable to secure the type of funding that would allow them to do so.
Furthermore, If you compare the charts below, you will notice that the contrast between the number of women operated businesses and those that get approved for loans is quite staggering:
The data, taken from a report by the committee’s Democratic members, shows that even though there are 7.8 million women-owned businesses in the United States (making up close to a third of all businesses), they only received 4.4 percent of business loans.
To correct this, Senator Cantwell introduced legislation last month intended to make it easier for women-owned businesses to get loans and government contracts by making more Small Business Administration-backed small business loans for women of up to $200,000 available, as well as allowing lenders to provide women owned business more flexible loan terms.
Women’s credit is better than men’s
What is even more interesting is that in 2013, data from Experian has shown that women are better at managing their money and debt, leading their credit to be in better shape than men’s. With their average VantageScore slightly higher at 675, versus 674 for men:
- VantageScore – Women: 675
- VantageScore – Men: 674
Turned down for a loan? there are better alternatives
Luckily, with the process of applying for a business loan at a bank taking months only to have close to 80% of small business loan applications being rejected, women can look for alternative sources of financing. Even if they have been turned down by a bank, services like Fundivo can often get them the financing they need to grow their small business.
Additionally, by connecting small businesses with a network of pre-screened lenders, Fundivo makes the process of finding the ideal loan that allows small business to grow simple and straightforward.