Fed Survey: Women-Owned Businesses Face Funding, Profitability Challenges

Majority women-owned firms — those where 51 percent or more of the business is owned by women — are more likely than their male counterparts to face funding and profitability challenges, according to new data from the Federal Reserve Banks of New York and Kansas City. Nearly a third (31 percent) of women-owned businesses were operating at a loss, the survey found, compared to 25 percent of businesses owned by men. Nearly two-thirds (64 percent) said they had experienced financial challenges in the previous 12 months, compared to 58 percent of men-owned firms.

Women-led companies were also less successful at receiving financing: when applying for business loans, they received funding 47 percent of the time. Men-owned businesses, meanwhile, had a success rate of 61 percent. Just 48 percent of low-risk women-owned firms received the full amount of financing they applied for, while 57 percent of men-owned firms did. However, women-owned firms had a higher approval rate for Small Business Administration funding than their male counterparts.

A similar percentage of men- and women-owned firms carried outstanding debt, though women’s debt holdings were significantly smaller. Women-owned businesses also used fewer types of debt and equity and were often more discouraged from applying for credit than men-owned firms.


About Author

Monica C. Meinert

Monica C. Meinert is deputy editor of the ABA Banking Journal and editorial director at the American Bankers Association, where she oversees ABA Daily Newsbytes.