In the year of Canada’s federal “gender budget,” 2018 has seen many large lenders announce funding for women entrepreneurs. This is a strong signal that gender equality in entrepreneurship, lending and investing has become a priority for the Canadian economy.
At the same time, we need to change our mindset about financing female-led businesses, or the funding imbalance will continue despite these good intentions.
WEOC Organizing Member Women’s Enterprise Centre in BC just published “Money and Mindset: Borrowing is more than dollars and cents for women entrepreneurs,” an article outlining the effect of unconscious bias and other key factors on lending to women business owners.
According to the article, less than 30% of BC women entrepreneurs surveyed in 2017 feel that banks, credit unions and government-funded lenders recognize and respond to their unique goals, wants and needs. Furthermore, less than 10% feel reflected in the lenders’ marketing. The point is this:
The symbols, role models and language that lenders choose in their marketing contribute to unconscious bias and can be a significant barrier to diversity.
The article goes on to list nine other factors that affect women entrepreneurs’ financing and growth, among them: women are less likely to recognize the need for financing, they experience higher documentation requirements and they borrow smaller amounts than their male counterparts. The latter can be a significant barrier to growth, as it leaves women strapped when new opportunities or circumstances arise.
WEOC calls on other lending institutions and business service providers to recognize and respond to the different needs of female-led companies.
It is important to combine greater investment in women-owned businesses with access to comprehensive support, mentorship, guidance and training resources. This illustrates the need for partnerships between lenders and organizations that provide loans and other supports specifically for women business owners.
The Women’s Enterprise Initiative, of which Women’s Enterprise Centre is a part, has supported women business owners with these wraparound services since 1995. A 2016 review of outcomes found that, during the period 2007-2012, WEI-assisted firms grew more than unassisted firms in terms of employment and sales, they stayed in business longer and their labour productivity was higher.
Previous studies have also shown that WEI-assisted firms attribute up to 50% of their revenue growth to the assistance provided by Women’s Enterprise organizations in the WEI, and they are 50% more likely to stay in business longer than 5 years compared to the national average.
Wouldn’t it be nice if these wraparound services were available to all women business owners across Canada, not just in the Western provinces?!
WEOC, the national association of organizations providing services to women entrepreneurs, has been trying to assist the non-profit organizations in each region of the country to get funded to provide the full “wrap”, including loans, which supplement the work which BDC and the traditional lenders provide.
Similar services are provided on a national basis by WEOC’s sister organization in the US. When will Canada invest in this part of the infrastructure for women entrepreneurs?