Research Summary

Women Financing the Business: A Report On Financial Issues From the 1992 Biennial Survey

Center for Women’s Business Research  ·  November 1, 1993

Women Business Owners Report Financial Barriers in Growing Their Businesses

These findings are from a recent analysis of data from the 1992 biennial membership survey of the National Association of Women Business Owners (NAWBO), conducted by the National Foundation for Women Business Owners. This analysis shows that:

Two-thirds of women business owners report difficulties in working with their financial institutions; women business owners are 22% more likely to report such problems than are businesses at large;

One-third of women business owners perceive some degree of gender-based discrimination from their financial institution;

Women business owners utilize credit cards for short-term financing to a much greater extent than other firms;

To fulfill both their long- and short-term credit needs, a significant number of women business owners are turning, or are being forced to turn, to private sources -- and to a wider variety of sources -- than are other business owners.

This study indicates a gap between the financial needs of women business owners and the services they are currently receiving from their financial institutions.

“Although women-owned businesses are an increasingly powerful economic force -- employing more people in the United States than the Fortune 500 -- even established businesses can be faced with financial obstacles,” said Laura Henderson, Chair of NFWBO and president and CEO of Prospect Associates in Rockville, MD. “It is time for all of us -- women business owners, public policy makers, and the financial community -- to address the important issue of business financing for women-owned firms.”

Three-quarters of all women-owned businesses have sought short-term financing within the past year, and more than 60% say they have long-term capital needs as well. Women business owners are solidly in the market for financial services.

Two-thirds (67%) of women business owners reported some problems in working with their financial institutions, compared to 55% among all firms. One of the major problems reported by women business owners is gender-related discrimination. One-third (34%) perceive some degree of gender-based discrimination.

Due in part, perhaps, to these problems, credit cards are the number one source of short-term financing for women business owners -- more than half (52%) have used credit cards for short-term financing over the past year, compared to only 18% of all small to medium-sized firms.

To address both their short-term and long-term capital needs, women tend to use private sources more heavily, and to use relatively more sources of funding, than other small business owners. One-third (33%) of women business owners reported using private sources for short-term financing within the past year, compared to only 10% of all small business owners. Similarly, 34% of women business owners reported using private sources for long-term financing within the past year, compared to only 15% of all small business owners.

NFWBO’s new report of these findings, “Financing the Business,” already has been widely recognized, including being quoted in the November issue of Inc. Magazine and at a recent meeting of the Federal Reserve Board’s Consumer Advisory Council.

NOTE: The report, Financing the Business, A Report on Financial Issues From the 1992 Biennial Membership Survey of Women Business Owners, is available to the public from NFWBO for $9.50 per copy, postage paid.

The National Foundation for Women Busines Owners (NFWBO) is a non-profit research foundation whose mission is to support the growth of women business owners and their organizations through gathering and sharing knowledge. NFWBO is affiliated with the National Association of Women Business Owners.

The 1992 Membership Survey of Women Business Owners was sponsored by leading corporate supporters AT&T and IBM. The survey garnered 1,071 responses from a questionnaire mailed out to 3,855 members of the National Association of Women Business Owners. It was conducted in November, 1992. The sampling error for a survey of N=1,071 is ± 3.2% at the 95% confidence interval. Comparative data are from a 1992 study among small and medium-sized firms conducted by National Small Business United and Arthur Andersen’s Enterprise Group. See Survey Results of Small and Middle Market Businesses: Attitudes, Issues and Outlook, July 1992.

Charts

Types and Sources of Short-Term Financing

Comparison of Sources of Long-Term Financing Used

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