B2B Payments

Progress for Female-Fronted SMEs

New statistics have emerged that suggest significant progress and growth among the female-led small business community. According to reports, credit marketplace Biz2Credit released its latest study into SMEs and found spikes in loan approval ratings and revenue for women-owned companies.

The research, the findings of which were released Wednesday (March 11), found that among the more than 15,000 companies analyzed, the average yearly revenue for women-owned businesses increased to $127,222 in 2014. That figure compares with the average from 2013, $91,488, and represents a nearly 40 percent year-over-year increase, Biz2Credit said.

Further, the survey found that 36 percent more women-owned companies applied to funding through Biz2Credit in 2014 compared with the year prior. “These are great signs of the growth in small business confidence,” said Biz2Credit CEO Rohit Arora. “Small businesses do not apply for funding unless they believe they can repay their debts.”

Still, Biz2Credit’s research found significant gender gaps between male- and female-fronted SMEs.

For instance, male-owned SMEs yielded about 50 percent more revenue on average than their female-owned counterparts. Similarly, the average earnings for male-owned companies were found to be 55 percent greater than those of female-owned businesses.

In terms of credit score, the analysis revealed that scores for women-owned companies fell below 600 in 2014, down from 610 in the year prior, and that male-owned companies’ average credit scores were 15 points higher, on average, though male-owned companies’ scores also experienced a drop in 2014.

This decrease in credit score could post a significant risk to female business owners, Arora told reporters, as banks are less likely to approve of a small business loan for entities with scores under 600. This trend may be forcing those with weaker credit scores to seek out alternative financing, which can sometimes be more expensive than funding received through a mainstream bank.

“Our analysis shows that a gender-gap still exists, despite the increased profitability that we are seeing with women-owned businesses in recent years,” Arora said. “However, women entrepreneurs should feel a sense of optimism as the numbers indicate that the gap is narrowing.”

Recent initiatives have focused on female-led SMEs, such as the CDFI-based Opportunity Finance Network, which announced earlier this month that it would begin a new small business lending program aimed at female business owners, as well as Pathway Lending’s new effort unveiled in February that similarly looks to increase female business owners’ access to credit.

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