By: Rohit Arora
The Women’s Business Ownership Act, passed by Congress in 1988, revolutionized the way female entrepreneurs were able to apply for a small business loan.
Prior to that, it was a requirement for women to have a male relative or spouse co-sign for a business funding.
Since then, female entrepreneurs have made tremendous progress. However, a gender gap reportedly still exists, and it is prominent in the New York metro area, according to a Biz2Credit study that examined more than 2,500 local companies.
The analysis found that women-owned firms had lower annual revenues, credit scores, and loan approval rates than their male counterparts did in 2015.
Average annual revenues for women-owned companies in New York were a healthy $265,373, but paled significantly in comparison to male business owners, which averaged approximately a half million dollars in annual revenue (approximately 60% higher).
Women-owned companies also posted lower credit scores and higher loan default rates. In 2015, approximately 1.25% of women-owned companies nationwide defaulted on their loans, a lower figure than in 2014 (2.03%), but still higher than male-owned businesses in 2015 (0.66%).
However, clear progress was made by women-owned companies, which had revenue figures that were 55% higher than the previous 12 months in a year-to-year comparison.
Meanwhile, loan approval percentages for women-owned businesses increased over the last year.
In comparison to national figures, women-owned companies are thriving in New York. Annual revenues, credit scores (606), loan approval rates and age of business (42) are all higher for women entrepreneurs in the metropolitan area than elsewhere.
Under the direction of Maria Contreras-Sweet, the Small Business Authority has intensified its focus on mentoring female entrepreneurs at more than 100 women business centers nationwide, including locations in the Bronx and Queens.
Further, the SBA’s Women-Owned Federal Contracting program has been a measurable success. Last year — for the first time in 21 years — the agency reached its goal of offering 5% of the estimated $400 billion in federal contracts to women-owned companies.
“When we empower women entrepreneurs, we’re also lifting millions of workers that they employ,” Contreras-Sweet told the Senate Committee on Small Business and Entrepreneurship shortly after assuming her position in 2014.
While the gender-gap in small business financing still exists, the opportunities for female entrepreneurs to secure funding have improved significantly over time. We are seeing more women starting their companies and pursuing the American Dream than ever before.
Rohit Arora is the CEO and co-founder of Biz2Credit.com, a leading online marketplace that connects entrepreneurs with small business loan options to meet their business financing needs. Rohit was named Crain’s NY Business “Entrepreneur of the Year 2011.”
View source version on NY Daily News.