Taking care of business (women).

Yesterday I was on the phone with a store owner who is one of the smartest, most talented, entrepreneurs I’ve met. She’s scaled to multiple shops and a beautiful online presence. And yet, here she was questioning whether or not she would ever reopen her doors. Between the texts, calls and zooms, I’ve had this conversation over and over these past few weeks- different businesses, different entrepreneurs, same question. Will I make it out?

I’ve spent the last four years of my life consumed by the question of women’s access to capital. From writing six-figure checks to women-led companies on trajectories to go public via XFactor Ventures, to helping small women makers who just opened up shop via Dough, I’ve seen the struggles and successes of women business owners across the country.

Today, I’m terrified.

Here’s why: women account for over one third of all types of businesses in the United States, and because of historic inequities in access to capital, they may not make it out.

According to the National Women’s Business Council, women are more likely to use their personal savings rather than outside capital to finance their business, making them less likely to have a personal safety net to keep afloat. Further, even if women do raise outside capital, they are historically under financed and are less likely to apply for additional loans and lines of credit.

These differences mean that when challenging times hit, many women business owners don’t have the same relationships and resources to quickly draw on to get them by. We already saw this narrative play out in the 08–09 financial crisis with women owned businesses facing greater credit constraints than their male counterparts.

The challenge is that, while government aid programs are an important start, they are predicated on institutional requirements that unintentionally disadvantage women business owners.

First, the programs are administered through banking partners. With many women choosing to self-finance their businesses, these may not be relationships they have previously cultivated. For things like the Payroll Protection Program, the timing of your application mattered in your ability to receive funds. Owners that didn’t already have a close relationship with a community bank were starting the race from laps behind. I’ve seen this play out repeatedly in my own network.

Second, given the complexity of the programs and changing nature of the requirements, business owners need assistance to navigate where and how to get help. According to a study by the University of Missouri, women business owners are less likely to have affiliations with the organizations that could provide this support.

Finally, the SBA Express Bridge Loan program requires an existing relationship with an SBA lender. Same with debt forgiveness. For context, looking at the SBA’s two largest loan guarantee programs, women-owned businesses from 2011–2016 (the most recent data I could find) made up only 12% and 13% of recipients respectively, meaning a lower percentage of women business owners overall will benefit.

The good news however, is that we have data from 08’ and 09’ and significant recent research to rely on in making small changes that can have an impact on outcomes. As a few examples, if you don’t already have an existing banking partner, figuring out where to start is obfuscated on the SBA website. Something as simple as providing clearer guidance to business owners on where & how to apply, instead of relying on banking institutions to disseminate the information, could close the knowledge gap. Additionally, making new capital available to all, rather than compounded with past interactions with the SBA, and forging creative partnerships with local officials (state representatives, mayors, etc.) + community organizations could help identify business owners in need of assistance missed by the traditional banking system.

I recognize that my perspective is myopic, but raising these questions is important. In the midst of this current uncertainty, we have a chance to make enormous strides towards equity in capital access with the policies we implement. This is hard and messy and we all need help right now- but I’m optimistic for what lies on the other side.

Co-Founder @ Dough & Investor @ XFactor Ventures. On a mission to help women rise with our wallets.