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Female entrepreneurs and funding: The facts

Accessing finance

Access to funding is unfortunately one of the biggest barriers facing female entrepreneurs. Recent eye-opening research from the Women’s Enterprise Task Force showed the scale of the problem.

It found that when starting up, a business owned by women access an average of only £10,000 funding, compared to £15,000 for men. The task force believes that this disparity is likely to ‘constrain business performance’.

Furthermore, it has been found that women tend to be charged higher rates of interest when taking out loans – an average of 2.9%, substantially more than the 1.9% average charged to men.

Pam Alexander, co-chair of the task force, said ‘ the undercapitalisation of women-owned businesses results in under performance and slower growth’.

For this reason, the task force has said that its key priority will be creating better access to funding and appropriate investment. Said Alexander: “We need to work with business support providers and banks to encourage women to be ambitious in their business plans and investment ready.”

But this isn’t to say that women aren’t finding funding opportunitites. Female entrepreneurs generally make better use of alternative sources of funding, with the British Chambers of Commerce finding that though women put in less of their own money than men in the startup stage (£10,106 compared to £13,500), 27% of females will obtain further funding from family, compared to just 17% of men.

And 33% of female-owned businesses compared to 20% of male-owned firms, had used government programmes to fund their business start-up.

For both men and women however, the bank is still the main provider of start up finance. (46% and 43% respectively.) The BCC found there is no statistically significant difference between male and female usage of bank finance. It makes sense then that there is evidence that banks are waking up to the growth of female entrepreneurship and making more effort to attract female clients. For more information on sources of funding, visit our Business Financing channel.

 

 

 

 

 

 

 

 

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