It’s 2019, and yet female small business owners are still experiencing gender bias when it comes to accessing business funding.
In recognition of International Women’s Day, FinTech business lender Spotcap has gathered the experiences from some of Australia’s most prominent female business leaders, founders and CEOs, on accessing business finance, their thoughts on how we can overcome the gender gap in this area and their business advice to other aspiring female business professionals.
In Australia, the number of female-run small businesses has grown by 46 per cent, which is almost double of that to men over the same period of time. Despite this, research suggests that simply being female significantly reduces the probability of being approved for business finance.
Approval rates for women are 15-20 per cent lower than male-led businesses, according to international online credit resource, Biz2Credit, and a 2017 study from the Asian Development Bank Institute showed that women-owned enterprises are unconditionally less likely to obtain bank finance.
The funding gap
For some women, accessing funding for their business has been a difficult journey and one rife with gendered assumptions.
Kate Carnell, Australian Small Business and Family Enterprise Ombudsman, said of her own experience, “When I got my first business loan, three banks knocked me back on the basis that I was 25 and a woman. There were a couple of questions in there like ‘when are you having babies?’”
Siobhan Hayden, Chief Operating Officer of online mortgage marketplace, HashChing, had a similar experience, revealing she was “asked if I needed my ‘husband’ to sit down with me to finalise a car purchase in the last 12 months”.
“Tragically, unconscious gender bias continues, and these traditional views have no utility pervading business funding decisions”, Ms Hayden added. “If we allow this to prevail, we risk missing out on up to 50 per cent of the innovative potential around us.”
Access to business funding is often critical to helping enterprises succeed, so it’s vital that female-led businesses have the same opportunity to reach their potential as male-led enterprises.
Kendall Flutely, founder of online financial education platform Banqer, said, “Whether it’s spoken, unspoken, recognised, or ignored, the bias is alive and as a female founder, this is unsettling.”
The next generation of female business leaders
As role models and mentors, women can shape an environment that inspires and supports more women to reach their own business aspirations.
Kate Carnell recognises the importance of female networks, urging the need for more “female small-business owners to help each other; older successful women should mentor younger women in their sector. A problem shared is a problem solved.”
Finch’s Shahirah Gardner knows first-hand, that the “entrepreneurial journey can be an isolating one, and we tend to forget that we’re not the first to go through it! Lean on your community and network and you’ll be surprised at how many people are willing to support you.”
This sentiment was echoed by Kendall Flutely of Banqer. “My advice to women in business starting or scaling would be to be fearless, courageous, and don’t only change the world for you but all other female founders after you.”
How FinTech is closing the gender gap
The massive rise of FinTechs, in Australia has been an instrumental part of pushing the financial industry to facilitate a fair lending experience.
Traditional loan processes often require face-to-face meetings, potentially subjecting women to unconscious and conscious bias.
However, a growing number of online business lenders are helping to eliminate gender bias from the business funding process by focusing solely on data and a business’s real-time performance.
As a result, female business owners not only benefit from greater fairer access to finance, but according to the Asian Development Bank, they also have a better chance at approval.
Kate Carnell said, “Women might be more cautious in seeking finance for their business, but when they do, watch out… they are very serious about expansion and growth. Women see problems and create opportunities to fix them.”
Linh Bergen-Peters, Chief Marketing Officer of Spotcap, said, “As an industry, we hold the keys to achieving #BalanceforBetter when it comes to improving access to finance for all. The time to start the conversation is long overdue.”
