XhAle ATB Build Her Business Campaign - Why is it harder for women to obtain financing?

Being an entrepreneur is not the easiest of life choices to make - and even harder when you are a woman. Here are a few reasons why...

Why is it harder for women to get financing? 

Females often have 5-10% lower credit scores than their male counterparts. Women are more likely to be pushed into service, education, and caregiver roles from a younger age that are systemically lower paying professions. Then add having children, and more often than not, being the primary caregivers at home. Wage inequality is real, starts young, and lasts a lifetime. 

This means that women start to obtain credit ratings later in life, plus also are given less credit over longer periods of time. Therefore when women apply for financing they are less likely to receive in it, or more likely to receive less than their male counterparts. In fact, only 16% of all conventional business loans made in Canada each year are granted to women.

And when it comes to alternative online lending—an industry that’s supposed to help out the underserved using unbiased technology—women still receive loans less often.

What are the statistics?

According to Forbes, securing a loan isn’t the end of a woman entrepreneur’s challenges. Women only receive 80% of the capital men do: that’s 20% less they can spend on making new products, hiring employees, or expanding their operations.

And while we talked about how women only receive 16% of all conventional loans, that 16% actually only makes up 4.4% of all dollars lent to small businesses each year. You read correctly — half of the population and a third of our country’s entrepreneurs receive less than 1/20th of the funds.

Sadly, women receive smaller loans across every type of loan, from personal and short-term loans to SBA loans.

Make less, but charged more (for everything. Literally)

Did you know that Woman-owned businesses, on average, make 30% less in annual revenue than male-owned businesses? This difference gets bigger and bigger as we look at more successful companies: male-owned businesses making $1 million or more are nearly double women-owned businesses making the same. This could be a chicken-and-egg situation — with less business financing, women-owned businesses can’t grow as much or as fast.

To add to the compounding nature of this, not only do women get fewer, smaller loans, they also get more expensive ones. According to Forbes, their data shows that women pay higher APRs — annual percentage rates, which are a way to compare loans across almost every type of loan. The one exception? SBA (Small Business Administration) loans. Even then, women pay around 1% less than men do, BUT they receive fewer, smaller SBA loans.

The brass tacks...

These 'whys' might feel a bit unsatisfying — that’s because they don’t go far enough. Women don’t have lower credit scores because they’re worse borrowers: they most likely have lower scores because they receive lower salaries, due to workplace discrimination, taking time off for maternal leave, asking for fewer raises, and so on.

In other words, this issue is complicated and difficult to solve. The unequal access to business financing is the effect of other, deeper problems.

XhAle's hope is to continually challenge traditional systems to create better access, and reduce these barriers. But for us to do that, we need help from our community to break those glass ceilings. It’ll take lenders, business owners, policy-makers, and people of all kinds to make these changes happen… but this work needs to be done!

And while some may see this as challenges too hard to overcome, we see it as the challenges that will make us rise to the top. Why? Because overcoming adversity builds a special kind of mindset, resilience and resourcefulness to not just survive but to eventually thrive.

When it doesn't come easy, nothing is taken for granted. 

To help XhAle get to where they need to go, head to...

https://app.atbboostr.ca/offerings/view/1501

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