The number of female-led small businesses in Australia has grown by almost 50%, yet for some women, accessing business funding has been a tough journey abounding with gendered assumptions, according to research conducted by fintech business lender Spotcap.
To recognise International Women’s Day last Friday (8 March), Spotcap gathered the experiences of some of Australia’s female business figures on accessing business finance and their thoughts on how to overcome gender bias in the area.
International online credit resource Biz2Credit revealed that approval rates for women are 15-20% lower than males with businesses, while the Asian Development Bank Institute showed women-run businesses are “unconditionally less likely to obtain bank finance.”
When Kate Carnell, Australian Small Business and Family Enterprise Ombudsman, got her first business loan, three banks knocked her back on the basis that she was 25 and a woman. She was even asked when she would be having children.
“Tragically, unconscious gender bias continues, and these traditional views have no utility pervading business funding decisions”, Siobhan Hayden, chief operating officer of online mortgage marketplace HashChing, said in a statement. “If we allow this to prevail, we risk missing out on up to 50% of the innovative potential around us.”
Recognising the importance of female networks, Carnell urges for more “female small business owners to help each other; and older successful women should mentor younger women in their sector. A problem shared is a problem solved.”
The massive rise of fintechs in Australia has been instrumental in pushing the financial industry to promote equality in lending.
Compared to traditional loan processes that potentially put women to unconscious and conscious bias with face-to-face meetings, online lenders solely focus on data and a business’s real-time performance. This results to female business owners receiving greater and fairer access to finance and, according to the Asian Development Bank, a better chance at approval.
“Women might be more cautious in seeking finance for their business, but when they do, watch out… they are very serious about expansion and growth. Women see problems and create opportunities to fix them," Carnell said.
According to Spotcap chief marketing officer Linh Bergen-Peters, the fintech industry holds “the keys to achieving #BalanceforBetter when it comes to improving access to finance for all”.
“The time to start the conversation is long overdue.”