According to Catalyst, a non-profit organization, 21 women are running Fortune 500 companies, including IBM and PepsiCo. The number has tripled since 2002-03.
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Equally encouraging is the fact that women are launching businesses at 1.5 times the national average and, according to the Center for Women’s Business Research, 10 million U.S. firms are women-owned (defined as having a 50% female ownership stake or more). These companies employ more than 13 million people nationwide, and generate $1.9 trillion in sales (as of 2008). In fact, women-owned firms account for 40% of all privately held firms. One in five firms with revenue of $1 million or more is a woman-owned company.
“From 1997 to 2011, the number of U.S. women-owned businesses increased by 50%,” says business coach Debora McLaughlin, author of The Renegade Leader: 9 Success Strategies Driven Leaders Use to Ignite People, Performance and Profits. “Nonetheless, business women still face hurdles. While the number of female Fortune 500 CEOs is at a record high, they represent only 4.25 percent of the total."
Although women are launching businesses at record pace, they still have an upward climb. Only 29% of the small business loan applicants on Biz2Credit's online platform are women. Further, our latest research has found that small business loan approval rates for women-owned companies are 15-20% lower than they are for male-owned companies.
There are three possible reasons why the loan approval rates for women-owned business are lagging.
No. 1: Women-owned companies are often newer businesses. They have not established the same track record of success simply because they have not been operating as long as male-owned firms have.
No. 2: Many women-owned businesses are in industries that banks are wary of funding, such as nail salons, beauty parlors, and retail franchises. Bankers aren't as familiar with the operation of some of these companies, and the industries are perceived as more risky than others.
No. 3: Professional services businesses -- attorneys, CPAs, doctors, dentists, etc. -- tend to be dominated by men. When these firms request expansion loans or business lines of credit, they encounter far less difficulty in securing capital.
Fortunately, as the credit crunch has begun to subside, it is becoming easier for women to secure capital than it was a year or two ago. According to the February Biz2Credit Small Business Lending Index released last week, big banks are approving loans at the highest rate (almost 16%) in more than two years.
Meanwhile, small banks are making more and more loans through the SBA's Small Loan Advantage Program, which offers funding in amounts from $50,000 to $350,000. In fact, they are granting over 50% of loan requests they receive. The SBA's Small Loan Advantage Program requires little collateral, which helps women who are looking to fund startup companies. This lending program has become increasingly popular and has helped countless women-owned businesses get off the ground.
Rohit Arora is co-founder and CEO of Biz2Credit, an online resource that connects 1.6 million small business owners with 1,100+ lenders, credit rating agencies and service providers such as CPAs and attorneys via its Internet platform. Since 2007, Biz2Credit has secured $800 million in startup funding, small business loans and business lines of credit for entrepreneurs across the U.S.