Despite a rise in female-led businesses in recent years, female entrepreneurs continue to face significant challenges when it comes to accessing finance, networking opportunities, and securing customers. It seems that when it comes to business, it’s still very much a man’s world with only 1 in 3 UK entrepreneurs being female1. The gender gap in UK entrepreneurship remains wide, and the disparities are even more pronounced when it comes to the availability of finance and other resources.
Female-led business owners are often seen as high-risk when it comes to securing finance.
The disparity between male and female business owners when it comes to securing finance has been a long-standing issue. Despite the impressive growth of women-led businesses, a lack of easily accessible capital continues to be a major blockade for these entrepreneurs. Studies have revealed that 35% of women seeking funding have encountered gender bias from financiers.
This bias also affects the amount of funding available; on average, female business owners receive 5% less than their male counterparts. In support of this fact, The Alison Rose Review of Female Entrepreneurship states that “start-up funding is the number one barrier for female business owners” and identifies a “lack of access and awareness of finance as their primary problem.”
Women are also less likely to be approved for business loans and lines of credit.
The gender gap in funding is a sad reality for many female business owners, and it is disappointing that their applications are still less likely to be approved. The research also suggests that they often have to face more hurdles in the application process and are given fewer chances of finding financial support.
The Alison Rose Review of Female Entrepreneurship further notes that “funding barriers are not just a problem for start-ups: at every stage of the entrepreneurial journey, female-led businesses secure less funding than those of men.” Unfortunately, this lack of access to capital has been linked to lower investment in product innovation, market research and hiring new employees, making it more difficult for female business owners to achieve their goals and grow their businesses on an equal footing.
This leaves female-led business owners at a distinct disadvantage when trying to grow their businesses.
The unfortunate truth is that female-led businesses have often been struggling to reach their full potential despite growth ambitions, and even though there is a growing number of women business owners, their companies remain 44% smaller on average than those of their male counterparts2. The matter is further compounded by the fact that male SMEs are five times more likely than female SMEs to hit revenues of £1 million or more2.
It’s clear that women entrepreneurs face numerous obstacles when it comes to success and growth in the business world, from an uneven playing field to a lack of access to certain resources. This leaves many women-run businesses at a distinct disadvantage and it’s essential for strides to be made towards equity for them to fully unlock their potential.
Female-led business owners need to create their own business stability.
Female-led owned businesses have long been historically disadvantaged when it comes to obtaining capital and credit and this can make starting and running a business even more challenging for women entrepreneurs, which is why it’s important that they take steps to create their own stability.
Invoice finance is one way to do this, allowing business owners to access money quickly based on accounts receivable. This ensures that cash flow is consistent, even when other banks or institutions may be reticent about offering short-term loans or growth financing. Taking initiative to ensure long-term success in business can help mitigate any discrimination that a woman entrepreneur may encounter in the pursuit of her dreams.
Women are just as capable of leading successful businesses as men, but they continue to face disadvantages when it comes to securing funding from financial institutions. This lack of access to capital might be one of the main reasons why we see fewer female-led businesses in the UK than we could expect. If women were able to start and scale new businesses at the same rate as men, up to £250 billion of new value could be added to the UK economy3.
Partnership Invoice Finance is committed to helping level the playing field for female business owners by providing them with much-needed access to cash flow solutions and other services. We believe that every business owner deserves a fair chance at success. For more information on how we can help your business, please don’t hesitate to contact us today.
- Calculation based on Global Entrepreneurship Monitor figures for Total Entrepreneurial Activity and ONS Labour Force Survey figures on the size of the working-age population.
- The Federation of Small Business – Women in Enterprise: The Untapped Potential (2016)
- The Alison Rose Review of Female Entrepreneurship (2019) – Appendix 3