History Has Shown What Women Business Owners Can Do—Let’s Not Ignore It
Women have come a long way since President Reagan signed the Women’s Business Ownership Act into law in 1988, creating government support for women business owners and eliminating the requirement of male co-signers on loans for female entrepreneurs.
According to American Express’s 2019 State of Women-Owned Businesses Report released last month, women-owned businesses now represent 42% of all businesses, employing 9.4 million people and generating revenue of $1.9 trillion. This rise of the powerhouse woman entrepreneur shows no sign of slowing down: the number of women-owned businesses increased 21% compared to all businesses, which increased 9%.
Women of color in particular are using entrepreneurship to level the economic playing field, starting businesses at 4.5X the rate of all businesses. According to American Express, as of 2019 women of color owned 50 percent of all women-led businesses in America—6.4 million businesses employing 2.4 million people and generating a whopping $422 billion in revenues. These women of diverse ethnic backgrounds represent 39% of the nation’s female population but account for 89% of new women-owned businesses per day, over the past year.
With all of these astounding statistics you would imagine that women entrepreneurs enjoyed powerful financial support. But women business owners aren’t getting what they need to maximize their success, and it’s even less so for women of color. In JP Morgan Chase’s report, “Gender, Age and Small Business Financial Outcomes,” researchers found that women still struggle to get external financing.
In addition, female-owned firms start with revenue levels that are 34 percent lower than their male counterparts, and continue on to have slower revenue growth. And in the report “21st Century Barriers to Women’s Entrepreneurship,” the U.S. Senate Committee on Small Business and Entrepreneurship found that only 4 percent of the total dollar value of all small business loans goes to women entrepreneurs.
Women have continued to show the world what they can do with less support than their male counterparts. In 1972, there were a little over 400,000 businesses owned by women in America, and women were getting loans only with permission from their fathers, husbands, and sons. Now, there are more than 13 million women-owned businesses and counting. Women are responsible for starting 1,817 new U.S. businesses each day.
Bank of America’s 2019 Women Business Owner Spotlight shows that 84% of the women business owners surveyed are expecting year-over-year growth, and 62% (more than the 55% of men) expect revenue to increase in 2020. Imagine what the economic landscape would look like if women saw equal success to men when seeking and receiving the funding essential to launching and growing their business endeavors? Here’s one thing that can help drive things in the right direction: Women’s Business Centers.
Founded 30 years ago, the Women’s Business Center program is a public-private partnership partially funded by the Small Business Administration (full disclosure: AEO’s membership includes a number of these centers). Each of the 150 educational centers dedicated to assisting women entrepreneurs receives an annual grant up to $150K, a cap that has remained the same since its inception. Each center must raise additional funds from the private sector to match, dollar for dollar, their federal grant. Despite that burden, in 2017 WBCs reached more than 145,000 clients, conducting 93,000+ hours of counseling and 15,000+ training sessions in more than 35 languages.
Fortunately, the U.S. House of Representatives recently passed an important piece of legislation in support of WBCs nationwide. The Women’s Business Centers Improvement Act of 2019, introduced by Representatives Sharice Davids (D-KS) and Jim Hagedorn (R-MN), raises the cap on individual grants to centers for the first time. This bill also establishes an accreditation program to raise the standards of excellence among centers, and reauthorizes the program at $31.5 million versus the current $14 million. House FY2020 Appropriations for the WBC program has already passed the House this year at a record $35 million (versus $18.5 in FY2019). We need to see a similar reauthorization bill in the Senate, where FY2020 appropriations for the WBC program is currently at $18.5M, well below the House’s $35M. The WBC program has proven itself a solid investment of taxpayer dollars– for every one federal dollar invested in the program, the program returns $46 to the economy.
Women’s Small Business Month may be close to an end but our dedication to the success of female entrepreneurs can continue. Let’s raise our voices and let our representatives know that we want to see funding increased for programs like the WBC. Women small business owners are too important to the economy to be given less consideration than their male counterparts. We can do something about it. For information on how to contact your congressional representatives, please click here.