The number of women entrepreneurs grows to unprecedented levels and shows no sign of stopping, as the younger generations eschew their reliance on corporations for lifelong employment and as immigrants, who are risk-takers by nature, start their own businesses.
To mark Women’s Equality Day, which commemorates the 101st anniversary of the 19th Amendment giving women the right to vote, the SBA hosted an online “fireside chat” featuring SBA Administrator Isabella Casillas Guzman on August 26.
The SBA Administrator outlined her agency’s resources for women small business owners to survive and thrive amid the COVID-19 pandemic, including SBA’s Women’s Business Center network of 136 centers located across the country. The mission of these centers is to empower female entrepreneurs through advocacy, outreach, education and support. Through the management and technical assistance, entrepreneurs — especially women who are economically or socially disadvantaged — are offered comprehensive training and counseling on a vast array of topics in many languages to help them start and grow their own businesses.
“Main Streets are defined by small businesses” said Guzman, whose father owned several veterinary hospitals. “I think that experience was really formative for me — seeing how hard he worked, balancing all the roles that he had to play as owner of this small business.”
Guzman believes that investing in businesses when there is resistance yields strong results and says the SBA has to eliminate opportunity gaps.
“That is why I’m motivated to help make sure SBA is up to the challenge and to help support the changing face of entrepreneurship,” said Guzman, who understands that the COVID-19 pandemic significantly impacted women-owned businesses and entrepreneurs in historically marginalized and rural communities.
“During the past six months we have revamped and launched new COVID relief programs,” she said, noting seven new programs and six adjustments that the SBA launched to provide emergency relief. “(Funding) is still needed by millions of small businesses, especially women-owned small businesses. We want to make sure that we’re reaching the smallest of the small and women and people of color and veterans and others in rural and low income areas that have been historically underserved.”
The SBA administrator highlighted that the agency was able to provide aid to more than 11 million small businesses. The funding included $28.6 billion for the Restaurant Revitalization Fund, which prioritized women and veterans, socially and economically disadvantaged business owners. The government also launched a $16.2 billion Shuttered Venue Operators Grant (SVOG) program that helped more than 10,000 performing arts venues, museums, and other important economic anchors in communities all across the country. Guzman also took pride in the fact that 96% of PPP loans went to small businesses of 20 employees or less.
“We are committed to delivering billions more and doing the necessary redesign and outreach to ensure equitable distribution,” she said. “That’s what SBA is all about.”
“I want to look at all our programs to ensure that we’re meeting small businesses where they are, instead of waiting for them to come to us,” Guzman added. “For women in particular, this means growing our existing network of 136 Women’s Business Centers, particularly in our rural areas, historically marginalized communities.”
“I’m proud that we’ve opened five women’s businesses on HBCU campuses,” Guzman said. “We’re reaching beyond our established networks to reach the small businesses that don’t know they can come to us for help. That’s what we learned during the pandemic: to make sure that they could connect to capital to grow and just connect to networks for advice on ongoing basis.”
What’s the next frontier for a woman entrepreneur? Growth.
Approximately 90% of women owned businesses are sole proprietorships, women-owned small businesses start small and too often stay small because they lack access to the capital that they need to grow.
Earlier this year, the annual Biz2Credit Women-Owned Business Study found that although revenues dropped for women-owned firms in 2020, their earnings grew, primarily because expenses decreased during the pandemic. Women-owned business earnings averaged $330,226 higher than in 2019. However, the total was $421,928 less than the average for male-owned firms ($716,842) in 2020.
During 2020, the effects of the pandemic were especially notable for women-owned companies, many of whom have been historically less-well financed compared to male-owned firms. The SBA administrator is not surprised by this fact.
“It’s no secret that the venture capital world is still largely male dominated. A recent article in Harvard Business Review finds that the disparity between men and women and venture capital got worse during the pandemic,” Guzman said. “Only 2.3% of funding went to women led startups in 2020; we need to reverse that. Women comprise 12% of decision makers of venture capital firms. We need to do more to bring women to the table and make sure that we’re investing in our women entrepreneurs.”
Lower financial indicators among female business owners are indicative of lacking service and attention provided by traditional financial institutions. This creates a financial opportunity gap among women who are running their own companies compared to men. COVID-19 shed light on this trend by exacerbating a gender business funding gap that has long existed.
The average funded amount for women-owned businesses ($39,731) was 36% less than the same for male-owned businesses ($61,958) in 2020. Upon thorough analysis, business-related factors, including lower FICO scores, younger age of business, and higher operating expenses played a more significant role in this gap, rather than gender alone. But there is a gender gap all the same, and many of the SBA’s efforts are aimed at bridging the lending gap between male-owned and women-owned firms.