By Emilia DiMenco, President & CEO, Women’s Business Development Center

As a retired banker and now President and CEO of the Women’s Business Development Center, I have focused my entire professional career on helping small business owners access capital for growth. As any business owner will tell you, financing is critical to business growth.

Traditional bank financing is attractive because of its typically low interest rates. Yet women business owners – who generate more than $1 trillion annually in receipts, and are growing at 1.5 times the rate of average businesses – are consistently denied bank loans. In 2013, less than one in three loan applications for women-owned firms were approved.

A 2014 report issued by the Senate Committee on Small Business & Entrepreneurship on barriers to women’s entrepreneurship found that women receive only 16 percent of conventional small business loans. This amounts to 4.4 percent of the total dollar value of all small business loans, leaving women-owned firms with only $1 out of every $23 that is being loaned to small businesses.

WBDC observes this problem firsthand when a fast-growing female entrepreneur wins a corporate or government contract, then has trouble getting the capital she needs to fill the order. If she’s denied loans, she has a couple of options: she either turns to unregulated, predatory merchant cash-advance lenders or other high-interest sources of capital, or her business stagnates.

The real solution lies in the hands of federal policymakers who have a responsibility to make changes which will help women get capital at a fair interest rate. As a start, policymakers must improve the SBA 7A program’s standards to allow sales from new and prospective contracts to be taken into consideration when approving a loan — not simply a company’s historic cash flow. Next, they must Increase funding for non-profit alternative lenders such as Community Development Financial Institutions and micro-lenders. Finally, they must provide transparency and disclosure for small business lending so that small businesses are informed upfront of interest rates, fees, and other terms.

New measures are desperately needed now to remove the barriers to financing that most women entrepreneurs face. Until that happens, woman-owned businesses won’t grow at the speed and to the levels they could. Sadly, that will impact all of us.

Emilia DiMenco is president and CEO of the Women’s Business Development Center, a Chicago-based economic empowerment organization serving a nine-state Midwest region, which provides programs and services to prospective, emerging and established women business owners. For more information, visit www.wbdc.org.

Share your view on Access to Capital and its impact on your business by taking quick poll.

Tracy Killoren Chadwell, Founder and Partner of 1843 Capital, WIPP Friend

Water makes things grow. Capital makes companies grow. Companies grow jobs.

If job growth is a priority for the U.S. government, then investing in women led startups should be a priority. Women led startups are one of the highest growing categories for job growth. Women start 1,000 businesses every day. Women have added 1,290,245 jobs over the last 10 years. They contribute $1.4 Trillion dollars in receipts annually to the U.S. economy. According to BusinessDynamics Statistics (U.S. Census) existing companies are net job killers (1 million per year) and startups are net job growers (more than 3 million per year). Women are the gardeners and women are starting companies at 1.5 times the average rate.

Women founded companies are seeing a tremendous amount of support at the seed stage. Women focused incubators, accelerators, grant programs, mentors, seed investors and grant programs are in place. They are doing a great job of getting the seeds planted and the companies’ roots to take hold. However, there is a big component missing. The capital is lacking to take the companies from seed stage to a place where they can achieve profitability. Companies reach a place where they are finding traction, gaining customers and hiring people and they are left to wither for lack of funding. Venture capital, the traditional source of capital to grow, goes disproportionately to companies that have all male teams. According to the Diana report, women led companies only receive 3% of total venture capital dollars. 97% goes to male teams. Researchers at the MIT Sloan School, Harvard Business School, and Wharton Business School found that, given the same pitch, men were 40 percent more likely to receive funding than a woman presenting the same pitch. Some may argue that the companies led by men are somehow “better.” We finally have great data that says that isn’t true. A study by First Round Capital, of 300 of it’s portfolio companies, shows that a company with at least one female founder on the team outperformed the traditional all male companies by 63%. A study by Stamford University shows that female led venture backed companies out perform by 35% and have 12% more revenues.

The story on the debt side isn’t any better. Women led businesses received 4% of commercial loans. Loan approval rates for women owed companies are 15-20% lower than for companies with traditional all male teams. When they do get access to loans, they are often subject to higher interest rates.

Amazingly enough, high growth women led companies are not all technology based (although a wise woman once said “all businesses are technology businesses”). They are health care, service, manufacturing and consumer products, every garden variety.

The solutions to this problem are readily accessible. We can empower more female fund managers with capital. We can expand business education and counseling for women. We can change the way credit is created and monitored. We can support and expand small business lending. Women traditionally have achieved so much more with less. On average, women grow their businesses with less than half the capital than men. A little water will yield a bumper crop of new jobs.

Uncle Sam, Mrs. American Startup is here to rescue you. All we need is a little water for the desert.

Tracy Killoren Chadwell is the Founder and Partner of 1843 Capital, an early stage venture capital fund focused on women led companies. 1843 was the year Ada Lovelace (the only legitimate daughter of Lord Byron) wrote the first computer program. http://www.1843capital.com

Share your view on Access to Capital and its impact on your business by taking quick poll.

Sallie Mullins-Thompson, Principal, Sallie Mullins Thompson CPA PLLC, WIPP Member

Over the past 20+ years, while conducting my accounting, tax preparation, financial planning, and business management consulting practice, I have had the opportunity and pleasure to work with and mentor the owners of many small businesses – the majority of which have been women.

Time and time again, I find that even though women business owners are fabulous entrepreneurs with high levels of skills, education, and experience in their profession or industry, they are not always given the same chances, as compared to male business owners, particularly in the area of access to capital. The statistics in this area are quite disheartening; for example in 2013, less than 1 in 3 loan applications for women-owned firms were approved and resulting in only 4.4% of the total dollar value of all small business loans.  That’s $1 out of every $23 being loaned to small businesses.

I wonder why that is, given that women-owned small businesses (WOSBs) constitute close to 40% of all small businesses, generate over $1.6 trillion in gross revenues, are growing at four times the rate of men-owned business, and employ approximately 9 million people. Thus, these WOSBs have a huge impact on the economy, especially as it continues to recover from the 2008 recession.

Having capital to start or grow a business is extremely critical. As a matter of fact, not having enough cash is the major reason small businesses fail or are unable to move to the next level. So, as many agree, since small businesses are the economic engine of the economy and WOSBs represent over 1/3 of that population, then I think that the major federal candidates running for office in the upcoming 2016 election need to be talking about the access to capital for women entrepreneurs.

After all women generally vote in higher numbers than men, with the increase growing larger in each election cycle. Plus, women currently make up a majority of the electorate at 51%. Therefore, women are a constituency that these candidates should want to hear from. And, it’s up to us to make sure they do!

WIPP has put together a most impressive program of action in its Economic Blueprint. Check out the Access to Capital Principles section to learn more about these comprehensive policy solutions. Then, let’s see if we can begin the process of changing the conversation of the 2016 candidates as Election Day draws nearer.

Share your view on Access to Capital and its impact on your business by taking quick poll.

Concept of a plant and a lot of golden coins isolated on white background

By Jeanette Prenger, President, EccoSelect, WIPP Board Member

Twenty years ago I founded my company in a way that a lot of entrepreneurs do when entering the service industry; I created a business plan to provide services in a field that I had a lot of experience in – IT. Growing up as a software engineer and earning promotions into management gave me the confidence that I could offer the same type of service as more expensive firms supplying contractors in technology. I was my first billable contractor and did not quit my ‘day job’ until I had the security of knowing I would still have a paycheck coming into our household. By paying myself a salary similar to what I was earning in corporate America and saving the profits, I was able to self-fund a dozen contractors over the next year.

Fast forward twenty years later. We have several million dollars available in a line of credit. I still own 100% of my company but I have a dilemma. In order to accelerate into the next level, I need to look at funding mechanisms other than my line of credit. Those dollars are already spoken for by our accounts receivable.

So what’s the problem? Banks are hesitant to provide traditional loans to grow businesses if the business can get funding elsewhere. The SBA provides loans, of which I leveraged after 9/11, but the price was high. The interest was over 7%, the paperwork extremely time consuming and required outside assistance to help make sure that we could get a loan needed to cover losses incurred by bad receivables.

I’ve seen other companies similar to flourish with a couple of observations. One, they had investor money put into the company and the culture was driven by a quick ROI back to the investors. Ownership was diluted but the investments allowed the company to hire the type of expertise needed to grow the business. Secondly, the businesses had executives who understood how to access capita including what was needed was preparation, where to go and what the risk / rewards could be.

As a woman and a minority, my education did not prepare me to go the route of seeking investors. Nor, do I really understand how to navigate through all the red tape that banks have discussed with me if I want to borrow money to acquire another business similar to mine. Education, especially to small business owners and to disadvantaged businesses (minority, women, vets….) through the SBA, local banks, and community banks on how we can grow businesses with shared risk would be a tool that many businesses would welcome. Banks and traditional lenders were already risk adverse prior to the new regulations and oversight that have caused them to decrease loans to small businesses for growth. They are hesitant to assist in providing education to actually gain capital and yet banks, and the government, bail out big businesses.

Our elected officials need to look at the stimulus they could facilitate if small businesses and disadvantaged businesses had access to capital. If incentives were given to lenders to educate businesses about loans, the types that work best for their companies and actually provided the capital needed.

If small business is truly the ‘engine of our country’ let’s provide some fuel!

Share your view on Access to Capital and its impact on your business by taking quick poll.