How to close the opportunity gap for women entrepreneurs

By Gina Harman, CEO of Accion’s U.S. Network

Women are key drivers of economic growth and community revitalization. Yet, women entrepreneurs face substantial hurdles in accessing the resources they need to launch and sustain their businesses. Closing this financial inclusion gender gap is an important goal in itself – and it is also sound economics. Estimates suggest that advancing equality for women can add $12 trillion to the global economy.

For these reasons and more, Accion has worked for more than 55 years to ensure that women around the world have access to the financial resources they need to improve their lives. Today, Accion’s global network, which includes 36 partners in 24 countries, serves approximately 70% women. I am privileged to lead the Accion U.S. Network, where we help U.S. small business owners get the resources they need.

In the U.S., women are founding businesses at 2.5 times the national rate, and this growth is especially remarkable among women of color. Women-owned firms employ 8.9 million people across the country. Still, women start their businesses with half as much capital on average as men. Although women own 36% of the nation’s businesses, their businesses only account for 11.3% of national sales.

It is crucial that all women have access to the opportunities and resources they need to start and grow thriving businesses. Here are five ways to make sure that happens:

Close the Wealth Gap

In 2015, only half of small businesses applying for financing received all of the credit they sought. Wealth is important to business owners because it provides a cushion for shortfalls in capital such as a declined loan or unexpected expense. Wealth also provides a source of collateral to help business owners qualify for financing. Unfortunately, women only own 36% as much wealth as men, and this disparity is especially striking among single women and women of color. Given that business ownership plays an important role in generating wealth for people in underserved communities, providing access to flexible capital is crucial to ensure that they can gain an equal footing.

Close the Financing Gap

Women receive only 16% of conventional business loans and minorities receive less than 10%. Accion’s lending model takes a holistic view of applicants and considers the barriers that underserved entrepreneurs face as well as their individual character and strengths. This has allowed us to serve U.S. women and minority entrepreneurs at a much higher rate – 65% of the businesses we fund are minority-owned and 42% are women-owned. Grants and contracting vehicles focused specifically on women are also valuable resources to help close the financing gap.

Understand the Impact of Discrimination

Minority small business owners are disproportionately denied credit compared to nonminority business owners, even after controlling for factors such as revenue, business credit and personal wealth. In addition, both minority and women business owners are more likely to feel discouraged from applying for funding for their businesses. We see the effects of this discouragement in our own data – among our applicants in the southwestern U.S., women ask for 30 percent less capital than men regardless of credit score.

Provide Accesses to Business Resources and Networks

Access to capital is just the first step to creating thriving businesses. That’s why we provide online business resources as well as webinars, workshops and events that connect entrepreneurs with the tools, knowledge and networks they need to reach their full potential. In Other important partners in the communities we serve are Women’s Business Centers, whose singular focus is to level the playing field for women entrepreneurs.

Continue the Conversation

The United State of Women Summit was a key opportunity to reflect on the power of women entrepreneurs and the urgency of ensuring they have equal opportunities to succeed. I had the privilege of joining a panel of incredible women on expanding women’s access to capital, and I look forward to continuing the conversation on how we can drive progress toward a better future for women in the U.S. and around the world. You can join the conversation on gender equality in entrepreneurship and beyond using the #StateOfWomen hashtag.