Discuss inherent sexism and blatant gender discrimination in business financing at your peril. Whenever I bring up my experiences, I am often met with raised eyebrows and snickers. Yet the facts are unarguable – even the banks are concurring. It is much harder to get financing if you’re a female owner.
The Australian Small Business and Family Enterprise Ombudsman’s (ASBFEO) states that “financing for women-led businesses in Australia and worldwide is the number one hurdle to growth”. Endemic, historical and continuing discrimination in financing women-owned businesses is rife.
Of the 97 per cent of businesses in Australia that are small businesses, just over one third are owned by women. The ABS reports a 46 per cent increase in women business owners over the last 20 years. Yet funding for female led businesses is extremely low.
As a woman with my own successful start-up, which had solid growth and was ten years into operations, I expected a pretty simple process when applying for an expansion bank loan. I had solid financials, a positive outlook, complete paperwork and a long history with my bank. I had a major Government contract to underpin my growth and an excellent credit history.
When the small business banking manager asked me if my husband would be joining us, I naturally asked why. After all, I was the sole director, and my husband didn’t play an active role in the business.
The response is etched on my horrified mind. I was told it would look better for my application if my husband supported the business expansion, and he could be sure of a solid male presence to guide me.
No, I am not joking. I promptly advised him of my very strong opinions on sexism in banking and moved banks immediately.
I’m not alone. The Lonergan Research report, commissioned by Westpac in October 2024, indicated that 70 per cent of female small business owners in Australia believe it is harder for women to get funding from lenders than for men, and 48 per cent of men agreed.
The 2022 Deloitte Access Economics report found that even though 22 per cent of Australian start-ups are founded by women, less than one per cent of private sector funding was received by solely women founders (in Australia). The report found that 82 per cent of women founders believed gender impacted their ability to raise venture capital funding
According to a report by the International Women Entrepreneurs Finance Initiative, there are estimated to be 400 million women entrepreneurs around the world, yet female founders receive less than 2 per cent of venture capital globally.
In Australia, the ASBFEO research (2022) indicates that access to capital is still a significant barrier to growth for women-led small businesses, The State of Australian Startup Funding report, stated that 82 per cent of female founders believe gender impacted their ability to raise venture capital funding.
The World Bank concurs and claims that access to finance is a major hurdle as women are left with an estimated $1.7 trillion of unmet demand for credit.
There is hope on the horizon. One of our big four banks in Australia has a woman in business unit. Numerous reports are studies are being completed which validate the issue.
Knowledge is power and if we understand the issue we can advocate for ourselves. A number of Government bodies worldwide are tightening rules around gender discrimination in financing businesses and the World Bank has commenced a number of initiatives. It is on the radar of our Government and our Small Business Minister is actively addressing the issue.
However, we are the best advocates of change. Call it out. Talk about. If you experience discrimination in business financing complain to your institution and if they don’t respond appropriately, go to the Ombudsmen.
Real change will only come when we advocate for ourselves.
Read the full article here
