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.

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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.