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Women business owners face the same daily challenges all entrepreneurs face, such as finding and retaining employees, maintaining customer relationships, and creating effective marketing campaigns.

But women entrepreneurs face additional challenges as well. And for many women, the primary challenge is getting access to capital. Try this experiment. Go to your favorite search engine and search for “biggest challenges for women entrepreneurs,” and you’ll get pages of articles that talk about the difficulty of raising and borrowing money.

As noted here, the 2022 Women & Minority Business Owner Spotlight from Bank of America reveals that 29% of women business owners don’t believe they’ll ever gain equal access to capital.

Women are better credit risks

As Kiplinger reports, women-business owners are less likely to receive loan approvals from financial institutions simply because of biases against female business leaders.

This is particularly frustrating in light of research from ICA and CNote showing women entrepreneurs are a lower credit risk than men business owners. They “conducted a study to determine whether women (particularly women of color) are riskier borrowers. [It focused] on loan repayment and evaluated risk based on three factors: the probability of default, the likelihood of delinquency, and expected losses.”

Their main takeaways:

• “Women of color were not riskier borrowers than other groups of people. There was no statistically significant difference in the probability of defaulting and delinquency on loans between women of color and other groups of borrowers.
• Women were lower credit risks than men overall. The probability of defaulting on loans was 2 to 4.5 percentage points lower for women than men.
• Women (and women of color) received lower loan amounts but were charged slightly higher interest rates on average than men. Among borrowers in our dataset, men received $110,000 on average while women received $86,000—roughly a $24,000 lending gap. Men were charged lower annual interest rates on average (8%) compared to women (9%).”

Venture capital funding

The 2022 VC picture for women wasn’t pretty. A report from TechCrunch shows that in 2022, “startups with all-women teams received 1.9% (around $4.5 billion) out of around the $238.3 billion in venture capital allocated, according to the latest PitchBook data.” Which is notably less than the 2.4% all-women teams raised in 2021.”

Kiplinger notes research that shows “when women pitch venture capital, they are asked prevention-coded questions as opposed to promotion-coded questions received by men. Investors also tend to back individuals who share a similar background, leaving women at a disadvantage in front of a male-dominated financing team.

And apparently, women’s proclivity for honesty is to our detriment. In an interview with Business News Daily, Gloria Kolb, CEO and co-founder of and a mentor in the University of Connecticut’s Technology Incubation Program, says, “Women are more conservative and don’t overstate projections. When we pitch investors, we often pitch realistic numbers. But men so often overstate and exaggerate that investors often discount the numbers off the bat.”

Kolb adds that the investors, “who are usually men, tend to assume that the women entrepreneurs are operating just like the men and inflating their numbers. Therefore, they will provide funding at lower levels than requested. Women need to understand this dynamic and approach their pitches accordingly.”

The 2021/22 Global Entrepreneurship Monitor’s (GEM) Women’s Entrepreneurship Report notes several promising financing trends, including the rise of women’s angel investment groups, women-focused investment firms, and gender-smart impact investing. In addition, women-focused incubators and accelerators are also emerging to provide a supportive environment for women founders with models that attempt to overcome network barriers and attract more investment capital to support innovation in women’s markets.

Women are making progress

Despite all this, the GEM report shows that, globally, women business owners continue to progress and show resiliency. Given the constant challenges to the survival and stability of their businesses, women continued to prove they could seize opportunities and thrive. Here are some findings from the GEM about how women business owners can overcome financial challenges.

• Seeing opportunity. Nearly half of women early-stage entrepreneurs in the study agreed that the pandemic created new business opportunities. Women entrepreneurs are very aware of new opportunities and fast to pivot in the face of market disruption, especially in the most vulnerable early startup stage.
• Early adopters. About 25% of women-owned startups say the pandemic persuaded them to adopt new digital technologies, and over half plan to integrate more digital technologies into their businesses.
• Globally focused. Women entrepreneurs are very active globally. The owners of the growth-oriented, highly-innovative businesses concentrate on national and international markets and report having 25% of customers outside their countries.
• Perseverant. A GEM finding that’s proved consistent from year to year is that women tend to stick with their businesses longer than men business owners—82 women exit their companies for every 100 men.
• Aim higher. Women entrepreneurs across all industry sectors have ambitious goals and want to build large, successful businesses that impact their families, communities, and local economies.
• Highly innovative. Globally, women entrepreneurs are just as likely as men business owners to offer an innovative product or service (31.4% women vs. 33.9% men).

Change is Needed

Still, according to the GEM report, women entrepreneurs are too often working against the odds. Women must often fight against negative stereotypes and find it hard to access essential resources critical for business survival and growth. Also, the report points out that women business owners frequently have family obligations that cannot be ignored and contribute to a phenomenon GEM calls “the motherhood penalty.”

Another major factor women business owners must overcome is the lack of access to solid network connections. The report points out that what is deemed “doable in business startup and growth” is heavily impacted by how many other entrepreneurial relationships they have. To quote a cliché, “it’s who you know,” and the report found that women were 11% less likely than men to report knowing an entrepreneur (47.2% women vs. 53.0% men).

Failure is Not an Option

It takes guts and bravery to keep fighting against the odds for business success. But GEM reports that worldwide entrepreneurial women are just as “undeterred by fear of failure” as men regarding business startups and growth.

No doubt, these are challenging times for all small business owners. However, having a mentor can increase your chances of success. You can find one here. And check out SCORE’s resources for women business owners.