Even though women make up 50% of the population in the United States and they own around 40% of all small businesses, they only get about 5% of small business loans. Needless to say, the numbers just don’t add up. Luckily, the federal government and other agencies are doing their part to improve these numbers.
Revenue by the Million
As of 2019, women-owned about 20% of all million-dollar businesses. These are businesses that make at least $1,000,000 in revenue. However, this does not mean that 20% of women-owned businesses make $1,000,000 or more each year. Instead, that number is closer to 4% of all women-owned businesses.
Diversity in the Feild
As of 2020, there were about 12.5 million women-owned businesses in the united states. Every day, women opened an average of 1,800 new businesses. Women of color opened 64% of these businesses. The Merriam-Webster dictionary’s definition of people of color can be summed up as, “people who have skin pigmentation that is other/darker than what is characteristic of someone who is considered to be white.” This also includes mixed-race people. Some people who have a non-caucasian background, but are still “white-passing” may also self-identify as a person of color.
Between ethnic minority groups, Latina-owned businesses saw the most growth as an independent group. The number of these businesses and their revenue grew by about 85% in 2020 alone.
Successes with Loans and Crowdfunding
Women have not historically gotten much in the way of funding when it comes to traditional loans. Slowly but surely, those numbers are going up. While women-owned small businesses only got 7% of venture funds, they did receive about 57% of the total loan amount lent by the SBA Microloan program.
Some of the explanations for why women often get less funding than their male counterparts is that they ask for less money. On average, a woman business owner will request $35,000 less in funding than a male business owner. The reasons for this vary for a variety of reasons. Even though women business owners tend to ask for less money, they only get about $5,000 less per loan than male business owners.
One interesting fact is that women tend to be better at crowdfunding than men. On average, women have a 69% success rate with crowdfunding, while men’s success rates are closer to 61%.
There are many challenges facing women business owners even today. Luckily, those roadblocks are slowly disappearing. As women continue to find success in the business world, more women will be inspired to do the same.