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Small Business Credit Survey: Report on Women-Owned Firms

CDFIsCNoteSmall Businesses

The Federal Reserve Banks of New York and Kansas City just released a joint report on credit access and financial performance trends for women-owned small businesses across the United States.

One Big Takeaway, There’s still a huge gap between genders when it comes to small business ownership:

Credit: (NY FED)

The survey “offers insights into the sources and implications of the ‘entrepreneurship gender gap’ by comparing women- and men-owned firms’ credit risk, collateral, performance, credit applications, and success rates.” We’ve previously written about the gender entrepreneurship gap as it relates to funding.

As a company focused on delivering more capital to financially underserved communities, including female entrepreneurs, we believe this report highlights important issues that we, as a society, need to consider when making policy decisions.

Some key takeaways from this survey:

  • Only 20% of small firms with employees are majority women-owned, whereas 65% of firms are majority men-owned, with the remaining 15% are equally owned
  • Minority ownership rates are 23% for women-owned and 19% for men-owned businesses
  • Women-owned firms are more likely to experience financial challenges and growth limits than men-owned firms
  • Women-owned firms utilize fewer types of debt and equity than men-owned firms, relying heavily on credit cards and Small Business Administration products
  • Women-owned firms face persistent funding gaps and funding source mismatches, even when they have lower credit risk than male counterparts
  • Owners of women-owned firms tend to have younger ownership
  • Women-owned firms tended to have smaller debts levels, even when adjusting for firm revenue
  • Women-owned firms reported better borrowing experiences at small banks


Women-Owned Firms less likely to receive financing and less likely to receive all financing applied for

This is probably one of the most troubling statistics. These figures show that women-owned firms are less likely to be financed, and if financed, are likely to fall short of their financing goals. Men get full financing at a rate 8% greater than women as well.


Credit: (NY FED)


Credit: (NY FED)


Women-owned Firms Were More Discouraged To Apply For Loans Than Their Male Counterparts

The discouragement rate was 7% higher for women. Typically, the explanation here would be that women are more debt adverse, but as the chart demonstrates, women were only 2% more debt-averse than their male counterparts. Accordingly, something else must explain this large divergence in the discouragement rate.


Credit: (NY FED)


Minority Ownership Accounts For Between 23% And 13% of All Surveyed Small Businesses

Minority ownership is highest among the female cohort and lowest among equally owned small businesses.

Credit: (NY FED)


Even When Their Revenue Was Comparable, Women-owned Businesses Took On Smaller Loans Than Their Male-owned Counterparts

What is interesting is that even when controlling for small-business revenue, the loan size on average was smaller for women-owned firms. This figure was most pronounced in the $1M revenue range where men-owned firms sought financing in the $250k-$1M range at double the rate of their women-owned counterparts.

Credit: (NY FED)


Credit: (NY FED)


Women-Owned Firms Generally Took On Lower Debt Levels But Were More Likely To Report Financial Distress

This trend is difficult to explain based on the scope of the study, but an explanation could be the type of financing that these firms take on (this survey also found women are more likely to self-finance using credit cards) can increase the likelihood of credit pressure and distress.

Credit: (NY FED)


Credit: (NY FED)


Credit: (NY FED)


Despite Taking on Less Debt, Women-Owned Firms Were more Likely to self-report as having a higher credit risk than their male and equally owned counterparts

Again, this could be a function of the financing vehicles used, or other variables.

Credit: (NY FED)


Women-owned Firms had Better Lending Experiences at Small Banks

These figures, and the figures below, show that smaller lenders tend to be more responsive to small businesses. If anything, these statistics suggest that small businesses should explore small banks and community lenders before looking to larger banks, and especially before considering most online lenders (which are known to charge high-interest rates).

Credit: (NY FED)

Credit: (NY FED)



Women- and men-owned firms Fared Better at Small Banks as Well

Again more proof that smaller banks (and community-centered finance) are a good option for most small businesses.


Credit: (NY FED)



Women-owned Firms Were More Likely to Get Approval for SBA Loans, But Less Likely to Secure Business Loans

The divergence between the SBA and Business Loan rates is interesting. It’s hard to know if one begets the other, or if campaigns encouraging women to pursue SBA loans have been successful.

Credit: (NY FED)



Despite Fairing Better At Small Banks, Women-owned Businesses Had a Lower Application Rate At Small Banks

Strangely, despite having better experiences there, women-owned firms applied for small bank loans at a rate 8% lower than their male-owned counterparts.

Credit: (NY FED)



The Demographics of Women-Owned Firms Skewed Younger Than Their Counterparts

In what may be a promising trend, it appears younger women are more willing to start their own small business with higher participation rates than men for ages 55 and below.


Credit: (NY FED)



The important question about all these figures: Why?

Why? The statistics above paint the picture of a world where half the population is grossly underrepresented in small business ownership. It also highlights how financial institutions and lending practices may contribute to that imbalance. It is far beyond the scope of this piece to outline every variable or policy that drives this outcome. What everyone can agree on, is that this is a complex question with many inputs that impact small business ownership and participation rates.

There are some factors that are likely to contribute more than others–capital access, obviously, being one of the most likely direct explanations. CNote supports community lenders and is uniquely positioned to help increase capital access for women-owned businesses across the country.

What we are doing to solve these problems

How? At CNote we funnel capital from investors to CDFIs, these community lenders then use that capital to fund community development projects. These projects range from investing in female entrepreneurs to developing low-income housing. Ultimately, this means investments in CNote can help increase capital access and help resolve some of the problems outlined above. Visit if you’d like to learn more about investing.

Download the report: (via NY Fed) (via CNote)

Further Reading:

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