Access to Credit Continues to Improve for Women Business Owners
Remains a greater problem for women business owners of color
Remains a greater problem for women business owners of color
Washington — November 17, 1998
Women business owners are seeking bank credit for their firms with greater frequency, obtaining credit in greater amounts, and continuing to use credit for business expansion. However, women entrepreneurs continue to have less bank credit than men business owners, and women business owners of color face greater difficulties in gaining access to capital.
These findings are the latest in a six-year analysis of business financing trends conducted by the National Foundation for Women Business Owners (NFWBO) and sponsored by Wells Fargo.
"Since NFWBO's previous survey on business owners' sources and uses of capital just two years ago, the share of women-owned firms that sought financing increased from 27% to 33% and the share with bank credit increased from 46% to 52%," explained Lois E. Haber, CLU, ChFC, NFWBO Chair and President & CEO of Delaware Valley Financial Services, Inc. in Berwyn, Pa. "However, women entrepreneurs have lower levels of bank credit than their male counterparts and women business owners of color are less likely than Caucasian women business owners to have credit."
Colleen Anderson, Executive Vice President of Wells Fargo Bank, said "As the number one small business lending bank in the country, we've been a significant contributor to the positive national trend identified in the Wells Fargo/NFWBO study. Yet, as the study indicates, there is still room for improvement and Wells Fargo is committed to lending to qualified women business owners the $10 billion in our Women's Loan Program."
Noting that women-owned firms were increasing at twice the overall business growth rate in the U.S., in 1995 Wells Fargo established a three-year $1 billion loan fund for women entrepreneurs, in partnership with the National Association of Women Business Owners (NAWBO). The response from women business owners was so strong that the $1 billion was lent in a year and, in 1996, Wells Fargo expanded the program to a $10 billion, 10-year commitment to women entrepreneurs.
Not only has the percentage of women business owners with bank credit increased during the two years since NFWBO conducted its 1996 study, so has the amount of credit they have available. Today, 34% of women business owners who have bank credit have $50,000 or more available for use in their businesses, compared to 20% in 1996. However, they still lag their male counterparts; in 1998, 58% of men business owners have $50,000 or more in available bank credit.
"Overall, women-owned businesses are maturing so they look more like the profile of all businesses," said Wells Fargo's Anderson. "They have increased their use of earnings from their businesses, credit cards, bank loans and funds from personal savings to finance their enterprises."
NFWBO's trend analysis points out that women business owners are using bank credit for a more varied balance of expansion capital, operating expenses, and reduction of debt than in prior years. In 1998, 39% of women business owners are using their credit for expansion capital, 24% for operating expenses, and 19% for refinancing or reduction of debt, according to the Wells Fargo/NFWBO study.
"The study also documents that women business owners whose firms are beyond the start-up phase are increasingly aware of the need for capital to advance their enterprises," explained NFWBO's Haber. "Women who have owned their businesses for five to nine years are less likely than owners of either younger or older firms to report that they have enough capital for their businesses' growth and development. Likewise, women business owners in the five- to nine-year range are most likely to see access to capital as a more important business concern."
Women business owners of color continue to be less likely than Caucasian women entrepreneurs to have bank credit. Less than one-third (29%) of women business owners of color surveyed currently have bank credit, compared to just over half (53%) of Caucasian women business owners surveyed. There was a similar disparity in NFWBO's 1996 survey.
Women business owners of color also continue to be more concerned about access to capital for both current and long-term business needs. Today, about half of women business owners of color say that access to capital for current and long-term needs is very important, compared to about one-third of Caucasian women entrepreneurs.
The complete report, "Capital, Credit and Financing: An Update-Comparing Women and Men Business Owners' Sources and Uses of Capital," is available for $40; the update, packaged with the 1996 study, is available for $90. Contact the National Foundation for Women Business Owners, 1100 Wayne Avenue, Suite 830, Silver Spring, MD 20910, phone 301-495-4975, fax 301-495-4979, e-mail NFWBO@worldnet.att.net, home page www.nfwbo.org. (Discounts are available for NAWBO members and NFWBO corporate partners.)
The National Foundation for Women Business Owners (NFWBO) is a nonprofit research and leadership development institute. NFWBO is recognized as the premier source of information and intelligence on women business owners and their enterprises by corporations, policy makers, financial institutions and the media. Up-to-date intelligence about women business owners and their enterprises worldwide is documented in NFWBO's original research and analysis. The Foundation is affiliated with the National Association of Women Business Owners (NAWBO).
Headquartered in San Francisco, Wells Fargo has a long history of equal opportunity for women. In the 1860s, bank founder Henry Wells founded Wells College for women in Aurora, NY, and hired women agents to manage Wells Fargo posts. One of the oldest banks in the U.S., Wells Fargo opened its doors in 1852, as a banking and express firm providing a wide array of services to pioneers, including the operation of stagecoach lines, the transportation and safekeeping of gold, and the delivery of the U.S. mail. Today, Wells Fargo is a $196 billion diversified financial services company providing banking, insurance, investments, mortgage and consumer finance through 5,836 stores in all 50 states, Canada, the Caribbean, Latin America and elsewhere internationally.