Despite the success stories of many women entrepreneurs in the U.S., women are getting a raw deal in the matter of business loans. In fact, they are having a hard time in expanding their businesses because of the crunch in financing.
Making a change to the scenario is Democrat Senator Maria Cantwell, who has taken up cudgels against the widening gender gap in business and finance, Yahoo News reported.
The chairwoman of the U.S. Senate Committee on Small Business, recently introduced a legislation last July to make women-owned companies get priority in business loans and government contracts.
The Democrat Senator argued that lending to small businesses is a national duty for accelerating job creation because loans give companies the means to expand.
When it comes to women business owners, there is a struggle to get loans from the banks. This is limiting their ability to hire. Though women own a third of businesses in the U.S, they receive only 4.4 per cent of the loans sanctioned.
Gender Gap In Lending
Cantwell said the gap had widened since 1988 when new laws mandated women owners to have a male family member co-sign their application for loan. The perception of men at banks about women-owned companies is different because they do not understand their products. That problem needs to be looked upon. That is why there is a need to have financial products fully tailored to meet the interests of women, Cantwell argued.
Generally banks are interested in micro-financing and intermediate financing through loans in the range of $200,000. But structurally, the Small Business Administration programmes or not oriented towards those kind of products run by women promoters.
Women's Small Business Ownership Act
The Associated Press also reported about Cantwell's initiatives on the Women's Small Business Ownership Act. The spade work for this legislation started with the committee's previous chair, Mary Landrieu. The act was essential to make people understand the gender gap existing in loans and in searching for lending products for women business owners.
Meanwhile the fourth annual Open State of Women-Owned Business Report has reported California as having the most female-owned businesses. It said that the rate of business formation by women is now at the rate of 1,200 new businesses a day.