NAWBO :: Access to Capital

Access to Capital

Download Spanish version as PDF


NAWBO’s Position

NAWBO supports federal legislation that helps to overcome the current barriers related to access to capital by women business owners (WBOs) and reduces the risk of private sector lending to small businesses.  The major sources of funding that women business owners continue to rely on are personal savings, reinvested business earnings, lines of credit, loans, equity financing, and venture capital, in that order. NAWBO favors a three-pronged advocacy approach in this area, choosing to focus on the various SBA loan programs, the Small Business Investment Company program, and tax incentives to encourage investment in the small business sector.

Secondary Positions

  • The SBA loan program is one of the primary sources of capital for WBEs and must continue to be aggressively funded and subsidized by the federal government. 
  • Women business owners historically have had limited access to private venture capital.  Therefore, equity-based capital programs, such as the SBIC, are crucial in filling that gap and need to be expanded and strengthened.
  • Broad-based capital gains legislation that includes incentives to foster investment in all forms of organizations in the small business sector needs to be enacted.
  • History indicates that robust entrepreneurial activity and small business ownership provide the basis for economic prosperity important to the long term vitality and success of our nation.  Therefore, government policies that foster and encourage growth and expansion of fast-growing small businesses, such as those owned by women, are crucial to the health of the US economy.

Related Facts

  • In the 2010 NAWBO Public Policy Survey, 65% of members considered access to capital to be a very or an extremely important issue. 
  • Of the 59% of NAWBO members that did not seek a new loan or line of credit in 2009, 24% did not do so because they believed they would be turned down.
  • Although women-owned small businesses currently account for less than a fifth of employment, The Guardian Life Small Business Research Institute projects that women-owned business will by account for one-third of the new jobs created by 2018.  This is based on the higher graduation rate of woman than of men from colleges and universities, the faster growth rate of women-owned business as opposed to that of male-owned businesses, and the growth of primarily female-dominated industries. 
  • According to the 2008 NAWBO Member Survey, NAWBO members anticipate the need for additional capital to grow their businesses over the next three years.  One in ten NAWBO members anticipate needing half a million dollars or more in capital.
  • When asked about the types of financing used in 2009, 63% of NAWBO members responded that they used credit cards, 13% used a commercial or bank loan, 11% used a personal bank loan, and only 2% used equity capital.
  • A study by Wells Fargo and the Center for Women’s Business Research found that 52% of women business owners, as opposed to 59% of men business owners, had access to bank credit.  Also, in fast-growth firms, only 39% of women owners had bank loans compared to 52% of men owners.
  • Women business owners still face greater obstacles in obtaining financing for their businesses than similarly situated men do. In addition, access to capital by women business owners is not commensurate with their business growth. Further, although the number and dollar value of venture capital and other equity investments grew rapidly in the late 1990s, women business owners continue to get a very small share of those dollars.  Evidence of limitations on access include:
    • In 2000 women received only 12% of all credit provided to small firms even though, at that point, they owned close to 40% of all US businesses.
    • Despite women becoming more active in the equity capital markets, in a survey conducted in late 1999, just 9% of the institutional investment deals and 2.3% of the dollars among the investors interviewed went to women-owned firms.
    • Women business owners who reported having equity investment in their firms were most likely to have investments from individuals and / or informal (73%) investors, and less likely to have corporate (25%) or venture capital (15%) investors.
    • According to Venture One, in the years 1999 – 2001 only 5% of the close to $100 billion of venture capital annually invested went to firms with women CEOs. The percentage of venture capital backed companies with women founders also remains small – 7.2% in 1999, 8.3% in 2000 and 8.2% in 2001. 
    • Nearly half (47%) of all African American women business owners reported that they have encountered obstacles or difficulties when trying to obtain business financing.
  • President Obama’s 2010 Jobs Plan includes $30 billion for a Small Business Lending Fund which creates incentives for community banks to lend to small businesses.  The plan also proposes to increase 7(a) and 504 maximum loan amounts from $2 million to $5 million and Microloan maximum amounts from $35,000 to $50,000. 

NAWBO Actions

In 2002, NAWBO participated with WIPP in testifying before the House Committee on Small Business on issues related to access to capital for women and minority owned businesses. Click to view PDF of testimony.

NAWBO participated in the Small Business Access to Capital Coalition, organized by the U.S. Chamber of Commerce, which advocated successfully for passage of S 141 in 2003, a bill that addressed deficiencies in the methods used to calculate the federal cost of guaranteeing small business loans.  

In 2004, NAWBO opposed elimination of federal subsidies for the SBA small business loan programs which adversely affected participation of NAWBO members in the 7(a) loan program.  The subsidies were restored by Congress for this fiscal year, although there may be efforts to make the program self-funded again beginning in 2012.