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Business Sense: Funding challenges for female entrepreneurs

RIO RANCHO, N.M. — Four out of every 10 businesses — totaling over 12 million in the U.S. — are owned by women, and the number of women-owned businesses has grown an amazing 58 percent from 2007 to 2018.

In fact, women are now starting businesses at a rate of more than 1,800 (net) per day, according to “The 2018 State of Women-Owned Businesses Report.” These women-owned businesses also employ 9.2 million Americans — 8 percent of the total private-sector workforce — and generate over $1.8 trillion in revenue.

If you look at women-owned businesses in combination with firms owned equally by men and women, they account for 48 percent of all businesses and employ over 16 million people. These businesses also account for over $3.1 trillion in sales.

By all accounts, these numbers are terrific and trending upward. That’s the good news.

Here’s the bad.

Female entrepreneurs surveyed state that their most-pressing challenge in starting and running a small business continues to be funding related — lack of capital and cash flow.

Only 6 percent of women reported that they were able to use a Small Business Administration loan to fund their business, which is 24 percent less than men. This figure is consistent with nationwide statistics, which report that business loan approval rates for women are considerably lower than those for men —15-20 percent lower, in fact.

Without access to traditional sources, women are often left with less capital to start their businesses, which is a clear obstacle to achieving business success. These women are forced to use cash as their primary funding source for starting their businesses and often must rely on investments from family and friends.

In spite of these capital-access challenges, female entrepreneurs are still reporting high levels of happiness – similar to men — as business owners, and most appear to be thriving. In fact, a recent study showed a 12 percent increase in year-over-year revenue for women-owned businesses.

An analysis by Fortune had similar favorable results: Women-led companies had higher overall returns than the S&P 500.

Anyone familiar with small business knows the many challenges that entrepreneurs face on a daily basis, and it’s a shame that access to capital continues to be a primary concern. However, in New Mexico, there are three SBA-approved micro-lenders that offer financing to entrepreneurs who might not meet the criteria of banks and other traditional lenders.

• WESST: With six locations statewide, including Albuquerque and Rio Rancho, the WESST loan program focuses on providing critical business consulting, training and technical assistance for our loan recipients, in order to maximize their chances for success.

• The Loan Fund: The Loan Fund was founded in 1989 to help alleviate poverty by creating and preserving job opportunities throughout New Mexico, particularly in low-income and under-served communities.

• DreamSpring (formerly Accion): Their diverse team of lending officers helps new and seasoned entrepreneurs from various backgrounds. Each loan is designed to meet the unique needs of each client.

(Brad Crowson is the regional manager for WESST, a nonprofit small business development and training organization dedicated to supporting entrepreneurs in Rio Rancho and throughout New Mexico. For more information, visit or call 892-1238.)

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