Women’s businesses are booming! But they could be doing even better

Women entrepreneurs are starting nearly 2,000 new businesses a day. However, hurdles remain that prevent more women from accessing capital needed to grow their ventures.

In today’s entrepreneurial landscape, women are launching businesses at an unprecedented rate. 

In 2022 alone, women started 1,821 new ventures every single day in the United States and today hold the reins to 42% of all U.S. businesses. 

But despite these strides, women still struggle to access the capital needed to sustain and scale their businesses. In an ideal world, we’d see nearly half of all business loans and investments going to women. Sadly, we’re far from that mark, and this funding gap is throttling business growth and sustainability.

Consider this: in 2023, a mere 7% of venture funds were awarded to women-owned businesses. And when it comes to traditional loans, the numbers aren’t much better. Women are less likely than men to be approved for loans and typically receive smaller amounts. In 2021, for example, women received only 33% of the loans for which they applied, compared to 67% for men.

This disparity isn’t just a coincidence; it's rooted in systemic gender biases that often see women being scrutinized more thoroughly than their male counterparts.

Another hurdle is networking. Connections matter, especially in business. Professional networks link entrepreneurs to investors, mentors, and advisors, and for many women, these connections are harder to come by. This network disparity can limit access to capital and the resources women need to grow their businesses.

An additional reason that women do not receive as much funding as men is that they are not asking. Only 25% of women business owners seek out business financing compared to 33% of their male counterparts. Lack of confidence and understanding of the complex loan and investment processes contribute to the situation and prevent women from pursuing the capital their businesses need.

The type of business also matters when it comes to securing a loan or investor. Manufacturing, technology, and transactions that involve a real estate purchase are easier to fund, partially because a bank can repossess the assets if the business owner defaults. Many woman-owned businesses are services or “Main Street” businesses, such as restaurants, retail stores, and health and wellness service providers. They tend to have small margins or fewer physical assets, making them less attractive to funders.

If they are not able to access traditional funding sources, many women business owners tap personal credit cards with substantial interest rates or deplete their personal savings. These strategies put their financial stability at risk and do not support their objective of running a stable, sustainable, and profitable business. 

A three-location store owner in Cincinnati sells imported olive oil and vinegars, and the owner used her own savings to open her first store. Her second year in business, she was able to secure a line of credit, which she leveraged to order extra inventory for the holiday season. Some banks are addressing the gender funding gap by offering programs to help applicants prepare their documents and by relaxing some of the lending criteria to make it easier for women business owners to qualify.

Entrepreneurial support organizations are also pitching in. The Small Business Development Centers (SBDC) is a federal program that offers free assistance to business owners who need help setting up their financial foundations and finding funding. Local organizations, such as Aviatra Accelerators, serving Greater Cincinnati and Dayton, Ohio, also offer free and paid programs to support, educate, and guide women business owners to faster growth.

It is time for the business community to step up and become changemakers in this narrative. Better education about the funding process, along with mentoring for women business owners to create a strong foundation, are critical steps in equalizing this funding disparity.

When women gain equal access to capital, the benefits ripple across the economy, sparking job creation innovation and strong communities that drive us all forward. The bottom line? Equality in funding is not just fair – it’s essential for a thriving American economy.