Money and Mindset: Borrowing is more than dollars and cents for women entrepreneurs

WeBC July 19, 2018
Woman business owner

Earmarking funding for women business owners can be a strong strategy to ensure women entrepreneurs can access the financing they need to start or grow their business.

To achieve targets, lenders will need to employ strategies to connect with, track and deliver solutions to women business owners – and there’s a long way to go.

Women are noticing the disconnect

In 2017, we surveyed women business owners themselves, to determine their satisfaction levels with business service providers in BC. Less than 30% of women entrepreneurs felt that banks, credit unions and government-funded lenders recognize and respond to their unique goals, wants and needs. Furthermore, less than 10% felt reflected in the lenders’ marketing.

This is significant, because the symbols, role models and language that lenders choose in their marketing contribute to unconscious bias and can be a significant barrier to diversity.

“Unconscious bias” is defined as the attitudes, assumptions and stereotypes that unconsciously affect your decision-making and influence your actions.

When we see biased outcomes in lending, it means there’s bias built into the processes and decision-making.

And change needs to happen on both sides of the table – for lenders, and for women entrepreneurs themselves.

Is mindset a barrier to borrowing?

We regularly publish research to ensure that women business owners understand and can access the necessary capital and resources at all stages of business.

We have noted increases in the amounts and the approval rates for women entrepreneurs accessing debt in Canada.

According to the latest Canadian Credit Conditions survey, published in 2017, while approval rates are now similar, male-owned businesses receive almost twice the financing levels of their female counterparts ($310K vs $180K).

But that doesn’t tell the entire story. Women-led ventures only asked for an average of $196K, while male-led ventures asked for over $348K.

We find that women may ask for too little financing, leaving them strapped when new opportunities or unforeseen circumstances arise.

Interestingly, women ask for less while also indicating even greater growth intentions for their businesses than men.

It’s a complex issue

But even if their success rates are similar, there are other factors at play. The WEC Discussion Paper: Women Entrepreneurs – Financing and Growth (see the full paper for sources), outlines nine factors:

#1. Women are less likely to recognize the need for financing

Several studies have found that the vast majority of female business owners who did not apply for funding felt they didn’t need it.

#2. Women borrow smaller amounts

In 2007, male-owned firms borrowed an average of 141% more than female-owned firms.

#3. Women are less comfortable with outside financing

57% of women entrepreneurs were uncomfortable carrying debt. Of those that had not used a traditional lender (bank or credit union), 70% were uncomfortable with debt.

#4. Women finance their start-ups differently

Only 42% of women-owned firms held a commercial loan or line of credit, compared with 50% of firms owned by men in 2007. The same was found for trade credit (30% compared to 41%).

#5. Women finance their business growth differently

Women are statistically significantly more likely to finance their existing business from personal savings, leasing and friends and family, while men are more likely to use retained earnings and trade credit.

#6. Women have lower approval rates for short-term credit

The 2007 Industry Canada SME Financing Data Initiative Report indicates that majority female-owned firms experienced slightly lower approval rates than male-owned firms overall (95% vs. 98%, respectively).

There remained a significant disparity in approval rates for short-term credit (lines of credit and corporate credit cards) in 2007, where male-owned firms had 22% higher approval rates than women (94% vs. 77%, respectively).

#7. Women perceive barriers to accessing financing

In 2007, 31% more female-owned firms considered access to financing to be an obstacle to growth compared with male-owned firms (21% vs 16%, respectively).

The top three reasons why respondents to a 2008 WEC survey believed they had challenges accessing financing were: limited track record (41%), type of business (37%) and the fact of being a woman (36%).

#8. Women experience more declines due to poor security and credit histories

Industry Canada reports that women are significantly more likely to be turned down for a loan due to insufficient security and poor credit histories than their male counterparts.

#9. Women experience higher documentation requirements

Women are also much more likely than men to be asked to provide cash flow projections (37% vs. 23%, respectively), appraisals of assets (46% vs. 29%), and personal financial statements (57% vs. 31%).


Where do we go from here?

As pointed out by Women’s Enterprise Organizations of Canada (WEOC), of which we are a part, bigger budgets alone don’t solve the whole problem for women entrepreneurs.

Our latest report on the goals and needs of women business owners in BC offers recommendations to funders on how to develop varied funding pathways for women business owners. 

Closing the Gap: Meeting the Unique Borrowing Needs of BC’s Women Business Owners” takes a deep dive into the opportunities for funders and support organizations to work together to transform women’s experiences with the lending ecosystem.

Download your copy at

About WeBC

WeBC is a non-profit organization devoted to helping BC women launch, lead and scale their own businesses. Our full range of services includes business loans up to $150K, business advice, skills training, mentoring, resources and a supportive community to help women entrepreneurs realize their business potential. Connect with us today for personalized support for your business!

Leave a Reply

Your email address will not be published. Required fields are marked *