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Over the past few decades, the percentage of businesses owned by women has shot up, from 4.6 percent in 1972 to nearly 29 percent in 2007. But loans and government contracts haven't kept pace, with women getting just $1 for every $23 of conventional small-business loans given:
In terms of numbers of loans, businesses owned by women receive only 16 percent of all conventional small-business loans, and 17 percent of loans backed by the Small Business Administration. Their loan applications 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 percent of venture-capital funding. [...]

Women are also falling short in receiving government contracts. Although Congress in 1994 set a governmentwide goal of awarding 5 percent of federal contract dollars to small businesses owned by women, it hasn't met that goal. The closest it has come is 4 percent, in the fiscal year that ended Sept. 30, 2012, the report said. Failing to meet the goal costs women-owned businesses nearly $5.7 billion in government contracts each year, it said.

The good news is that this information is coming from Democrats on the Senate Small Business & Entrepreneurship Committee, so the issue is getting some congressional attention. The bad news is fairly obvious—both in the funding numbers and in the likelihood that the current Congress, with Republicans controlling the House and choking up the Senate via filibuster, will actually do anything about anything of importance.

Originally posted to Daily Kos Labor on Wed Jul 23, 2014 at 09:33 AM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Is There a Breakdown of Sectors of Businesses They (4+ / 0-)

    are in? Is there a higher fraction of theirs than men's businesses on a scale, or in some kinds of activities that don't typically need much lending?

    Obviously that would have no bearing on higher application rejection rates of course.

    I've been in business full time nearly 20 years and never needed a loan, even though I manufacture and need to buy raw materials, had to acquire tools and machinery. But thanks to spouse working back in the beginning, and my keeping away from maintaining an out-of-house shop or retail store or hiring employees, I've never needed financing.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Jul 23, 2014 at 10:14:32 AM PDT

    •  This was my thought as well (3+ / 0-)
      Recommended by:
      Odysseus, Samer, Yo Bubba

      I would bet nearly all small day cares and crafting concerns are run by women, which by nature are businesses that don't get federal government contracts, because why would they?  Similarly, I bet most small construction companies are run by men.  I'd love to see a sector by sector breakdown here, and if the man/woman dichotomy for loans vanishes if they're reviewed by a neutral third party who is blind to the gender of the applicant.  

      •  Women may be turned down at a higher (1+ / 0-)
        Recommended by:
        Samer

        rate, but this is likely due to variables other than their gender. Perhaps the categories of businesses that are more likely to be rejected, as you suggest, are more likely to be women-owned. The idea that the SBA tosses applications into the rejected pile when they see a woman's name on it would be antithetical to a modern federal agency (and likely illegal). I could see it happening in one rogue branch, but systemwide? No chance.

        •  When there's this much of a discrepancy, (1+ / 0-)
          Recommended by:
          Odysseus

          it would be counterproductive to just go in assuming that gender has nothing to do with it. We know from the data that women seeking business loans are turned down significantly more than men seeking business loans, and we know from the data that women are typically given stricter terms than men.

          Ironically, women are a much better bet on repayment. Much better.

          I will be interested to see more data on this as it comes out.

          I'm amazed by people's courage and kindness in the face of everything and life.

          by LaraJones on Wed Jul 23, 2014 at 06:30:47 PM PDT

          [ Parent ]

  •  So what are you doing to change that? (0+ / 0-)
    Their loan applications 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.
    Finding these rejected applications and funding them privately would be a great idea.  Why is nobody doing that?

    -7.75 -4.67

    "Freedom's just another word for nothing left to lose."

    There are no Christians in foxholes.

    by Odysseus on Wed Jul 23, 2014 at 12:31:38 PM PDT

    •  A lot of microcapital (1+ / 0-)
      Recommended by:
      Odysseus

      Charities are dedicated primarily to woman-owned businesses in the developing world. My understanding, which may be flawed, is that they get back their capital, but that charitable contributions fund the overhead.

      I don't know if there are any comparable charities or projects in the US.

  •  I am currently developing my small.... (1+ / 0-)
    Recommended by:
    Odysseus

    business, needless to say I am full of self imposed, self doubt and wondering how I am going to put together the cash for initial operating costs.

    One element I was looking at was the Woman Owned Business status, since we have tons of government offices in this area.  I was a little disheartened to see that that designation may or may not get me the business I would like to have.

    Thank you for this post.

    "A weed is a plant whose virtues have not yet been discovered." Ralph Waldo Emerson

    by Yo Bubba on Wed Jul 23, 2014 at 05:39:50 PM PDT

  •  I am shocked, SHOCKED! (2+ / 0-)
    Recommended by:
    Yo Bubba, LaraJones

    Actually I'm a bit depressed because, well, we all knew this already, didn't we?

    But some sunlight is a start.

    Fight them to the end, until the children of the poor eat better than the dogs of the rich.

    by raincrow on Wed Jul 23, 2014 at 05:43:50 PM PDT

  •  If you need a loan and have trouble (1+ / 0-)
    Recommended by:
    Odysseus

    with normal banks, consider talking to Accion.

    They are a lender who specializes in working with small businesses that may not have access to usual sources of credit.

    Also, from their FAQ:

    Q: Does Accion have a special program for minority and/or women-owned businesses?

    A: While Accion does not have any programs specifically targeting women or minorities, we encourage female and minority entrepreneurs to approach us for financing.  Half of our clients are female, and over 75% of our loans go to minority entrepreneurs.  Furthermore, Accion complies with the Equal Credit Opportunity Act: "The Federal Equal Opportunity Act prohibits creditors from discriminating against applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided that the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act."

  •  On a tangent, (0+ / 0-)

    Sex discrimination in lending in general - business loans, mortgages - is prevalent. It may be worse if you're single or pregnant.

    "Believe nothing, no matter where you read it or who has said it, even if I have said it, unless it agrees with your own reason and your own common sense."

    by grape crush on Wed Jul 23, 2014 at 06:29:21 PM PDT

  •  Not only does it appear to be more difficult.... (0+ / 0-)

    for a woman to apply for and receive a loan for her small business......she also better be prepared to have "set-aside" small business contracts that were put in place to help woman owned small businesses(WSOB) compete with the large contractors, given away fraudulently to firms that do not qualify.  

    That seems to be a general problem in the government contracting world nowadays, with "set-aside" contracts being fraudulently awarded to larger firms "misrepresenting" themselves.

    The problem seems to be a combination of the self-certification process for the small firms, the longer period contracts with no recertification requirements, and the lack of penalty or prosecution for firms misrepresenting themselves.  Firms that have been found to be fraudulently acquiring "set-aside" contracts, have had NO REPURCUSSIONS, and, in most cases, are allowed to continue in the 8(a) program, and continue to receive "set-aside" contracts.  

    There has been a small sliver of light shining through the storm clouds over the contracting program.  There is a small part of the National Defense Authorization Act FY15, that will up the maximum contract level for WOSB's.  This will hopefully continue to allow WOSB "set-aside" contracts to grow, and get a bigger piece of that pie.

    We have to be careful with the NDAA FY15 though, as it is hiding a cancerous "Test Program", that has been slowly allowing these "set-aside" goals to go unreported, and essentially treating them like they don't matter.  

    All in all, it shouldn't be harder for a woman to receive a loan to help start a business.....and when she starts that business, she should be entitled to all the help the government originally set aside for her and all the other QUALIFIED members of the 8(a) program.

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