Banks vs Bootstraps: Women’s Business Financing Woes

Women in start-ups and small businesses are far more likely than men to self-finance. That means money from family and friends, from savings, from her salary…rather than from banks and other financial institutions.


A robust sense of independence is one reason.

A lack of available financing for women is another.

It’s true: Historically, women have had a more difficult time securing bank loans for start-ups and business growth. This can be attributed to a number of things, but one of the biggest explanations involves the types of businesses women are likely to start.

Take retail, for instance. I have found that women are much more likely to open a retail business than men are, and retail businesses typically have:

  • low revenue
  • high expenses
  • low profit margins
  • low credit ratings

…as compared to other male-dominated industries; like tech, for instance.

And when banks see those red flags, they deny, deny, deny.

As a result, women are forced to obtain funding from elsewhere: places like angel investors (who aren’t always so angelic) and high-interest credit cards. And when you consider that investors are only helping a little more than a third of female start-ups, and that women typically pay ½ percent higher interest on credit cards than men[1], it becomes fairly evident that we need the bank financing we’re being denied.

So what are we going to do about it?

Throw our hands in the air and claim defeat?

Or lay claim to the financing we deserve?

Some Heartening Data for Women’s Business Financing

As we have proven again and again, just because business is tough doesn’t mean we’re quitting.

For instance, despite the fact that female business owners are earning about the same amount of money as employees[2], and re-investing a large portion of their profits back into their businesses, they’re still growing in force. When I take a closer look at the Australian landscape for women-owned businesses, I am heartened, to say the least.

I’m not expecting banks to make an about-face and start raining capital on female entrepreneurs. However, I’m also not ruling out investments from venture capitalist firms.

According to the Australian Census, one-third of business owners are women, but only one-third of those women are securing funding from venture capitalist organisations. That’s about to change. Quotas and initiatives are now in place to fund more female-founded businesses[3].

What can we expect? More equitable investments. The massive disparity between business funding for men and women is being recognised, and the 25.4% of start-ups with female founders this year[4] will begin claiming more than the 2.2% of global venture capital they’re currently using.

The money is there.
You’ve just got to find a way get to it.

What’s a Girl to do?

It’s true. Women have a harder time obtaining financing from banks, for a variety of reasons.

Those reasons I cited earlier are still contributing, but now that we have more women in male-dominated industries, the stats should change, right?

Only if we…

  • Take more risks. Women are notorious for playing it safe. It makes perfect sense, really, when you consider the ways in which we were raised and the tasks we’ve traditionally been assigned. The business world is much different though. The willingness to take risks is directly associated with the level of success achieved. So take that leap, ladies!
  • Ask for what you want. Why are we so shy about asking for what we need? Including money for start-up capital? I have been working with female entrepreneurs for long enough to know that they’re not walking into banks with their heads held high and demanding respect like their male counterparts do. I know they’re not touting their abilities nearly as much as they’re apologising for their shortcomings. You deserve this money…and you’ve got to walk into the bank believing that.
  • Break industry barriers. As we’ve already discussed, the types of businesses women typically run aren’t attracting investors and aren’t falling into banks’ favour. If you’ve been considering breaking into a male-dominated industry, now is the time to get serious about it. You can compete; there’s never been a better time.
  • Conquer the fear. Most women hesitate to ask for the financing they need because they fear denial. Instead of filling out the application, they put off hopes of business growth. Instead of applying for the grant, they short-change their lifestyle dreams. Even if you do get a NO, you’ve lost nothing. Jump into the ring with everything you’ve got and if you’re met with denial, move on to the next opportunity.
  • Build your credit. Just because you don’t qualify for a bank loan now, does not mean you can’t reapply after you’ve built your credit rating. Borrow a small amount from a smaller bank. Seek out investors. Lower your overhead. And after you’re showing a profit, go to the bigger bank. You might be surprised at the change in tune.

Women in business are becoming increasingly aware of the barriers they face whilst working to experience success. Financing is just one more stumbling block. You can face-plant on it or you can clear it, comfortably, with a strategised leap.

So before you put your head down and start tugging on those bootstraps, work on making your profile more appealing to banks. Make connections with investment firms, like SheStarts, who recognise women in progressive industries. Together, we can change the landscape of women’s business financing…but first, we’ve got to be heard.

When I started my business, I was working from a closet in my home. I didn’t need a loan at the time, thank goodness, because I doubt Banks would’ve been kind to me, but I learnt some things and translated them into big success. I’ve taken some of what I know and shared that wisdom with you in my business book for women Out of the Closet: You can buy it on Amazon or on my website.


[1] Financial Industry Regulatory Authority
[2] Australian Bureau of Statistics
[3] Imogen Baxter, Square Peg
[4] Start Up Musters report