Small business financing profiles – women entrepreneurs

Academic studies in both Canada and the United States have tested the impact of gender on access to financing and terms of credit (Riding and Swift,1990; Fabowle et al., 1995; Coleman, 2000). With the exception of one study conducted by the Canadian Federation of Independent Business, which found
higher financing refusal rates for women-owned businesses (Marleau 1995), no significant differences were found between women-owned businesses and men-owned businesses of similar size, sector and age in respect of access to financing. The financing activity of women and men entrepreneurs in 2000 and 2001 supports these conclusions. Although women entrepreneurs
were found to be less likely to approach financial institutions for financing during this period, it was most often due to the fact that they judged that external financing was not needed. Of those women entrepreneurs that did apply for financing, they were
just as likely as men to be approved. Terms and conditions attached to the financing received were also similar for both women and men entrepreneurs. At the same time, there are clear differences observed in the profile of women- and men-owned SMEs. Women-owned firms are smaller, newer, more concentrated in services industries and, on average, less profitable than SMEs owned by men. Although not impacting on access to financing, these differences do appear to influence the capital and ownership structures of SMEs owned by women. Women entrepreneurs use personal savings and personal
credit more than men, even beyond the initial startup of theirbusiness. Understanding the causes and ramifications of these differences on the growth and development of women-owned businesses is an area for further research.

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